Nepal is a country rich and diverse in nature, geography (60 m to 8848 m), culture, tradition, people, architecture, and resources. It is strategically located between two of the biggest economies in the world in China and India. The potential is boundless - tourism, cheap skilled human resources, hydroelectricity (merely produces 1/80th times its capacity) and other renewable energy sources, mining, export of handicrafts, herbal products, handmade garments and other products and so on. Immense investment opportunities exist in all these sectors, but lack of a conducive environment means foreign direct investment is hard to come by and Nepal still remains one of the poorest countries in the world.
One of the biggest issues for Nepal is the lack of quality and stable opportunities as many people engage in an informal segment of employment which has low earnings, poor working conditions and low productivity. This pushes people to seek opportunities abroad even though these opportunities are exploitative, abusive, inhuman, and risky. Many lose their lives - 726 migrants died abroad in 2013* and this number is ever increasing.
This has continued Nepal’s growing reliance on remittances for growth. Close to 50 percent of Nepalese rely on financial help from relatives abroad, among the highest rates in South Asia*. Remittance has boosted savings but investment is stagnant*. Nepal exhibits the largest gap between savings and investment in South Asia. The factors behind low investment include chronic political instability, bad governance and decline in the manufacturing sector.
The export sector in Nepal has continued to be of little of significance to economic growth – contributing very little to GDP so much so that it’s the lowest in South Asia. Nepal has been plagued by political instability for decades curtailing the growth and development of the country.
Illiteracy is one of the other biggest issues plaguing the country. High dropout rate of children in primary education is a big concern – students drop out of school for several reasons, one being child labor. Child Labor rates are VERY high in Nepal, 11% of boys and 15% of girls aged 5-9 were already in the labor force, and 47.2% of boys and 58.7% of girls aged 10-14*.
The devastating earthquake in 2015 made matters worse, slowing down the already miserable growth further and pushing the country back several years. To fathom the gravity of devastation and havoc the earthquake caused we have to look at some very disturbing data.
- The 7.6-magnitude earthquake and more than 300 aftershocks claimed close to 9,000 lives and more than 20,000 injuries*.
- Economic growth declined from 5.9 percent in 2013/14 to 2.7 percent in 2014/15 and 0.6 percent in 2015/16*.
- Estimates suggest that 5.6 million workers were affected by the earthquake, impacting livelihoods and reducing incomes*.
- $7 billion in losses, affecting 8 million lives*.
- The earthquake pushed an estimated 2.5–3.5 percent of Nepalese into poverty, reversing the downward trend over the last two decades*.
Is there a solution?
First and foremost Nepal needs to bring the migrants back and “rebuild Nepal”. This can only happen if there is a sustained investment in different sectors for e.g. manufacturing, tourism, and hydroelectricity to create quality, high earning and high productivity opportunities keeping its people in the country. Investment in manufacturing will in turn increase the contribution the export sector makes towards the economy and break dependency on remittance.
How does Kalilo contribute?
This is where Kalilo’s contribution comes in, albeit small – we invest in the manufacturing sector and help boost the export. We only work with small businesses that produce handmade apparels using traditional craftsmanship. This injects directly to the local economy, creates jobs and also helps preserve traditional craftsmanship.
*All data was taken from ILO Country Office for Nepal’s Labor Market Update for 2017