Harnessing the power of remittances: Advancing employment and entrepreneurship in Nepal

Abstract

Money sent by relatives abroad to support their families at home is often an important source of income for many households in Nepal and has been vital to their livelihoods. Remittances can also foster entrepreneurship and create jobs locally, beyond their immediate use. This study analyzes the use and impact of remittances on job creation and business formation in Nepal with a focus on the latter. The study focuses on how remittance recipients spend and invest their remittance income and the constraining factors to remittance utilization for entrepreneurial initiatives. The study employs both qualitative and quantitative data to give a comprehensive analysis. Qualitative data come from the interviews conducted with 8 returnee migrants, while quantitative data is gathered from a survey of 275 remittance recipients from the Gulf and Malaysia. The results reveal that most respondents (73.1%) did not use remittance funds to launch the business ventures. Only 21.1% invested less than NPR 1 lakh, and 0.7% invested more than NPR 4 lakh. Even though a significant amount of remittances is received, a small fraction is channeled into new business initiatives. This is attributed to various factors, such as low incomes among the population, poor infrastructure, lack of access to bank loans, and administrative difficulties. In addition, the lack of support from families and local governments holds back remittance recipients' entrepreneurial activities. The in-depth perspectives offered by the returnee migrants through interviews focused on the actual problems faced by those trying to start up businesses with remittance dollars. The qualitative narratives provide examples of the challenges encountered; and highlight the need for improved support structures and policy measures. The study provides policy ideas to better utilize remittances for business establishment and employment creation, suggesting initiatives that would allow remittance recipients to use their remittance funds effectively for sustainable economic development in Nepal.