The International Day of Family Remittances (IDFR) is a universally-recognized observance adopted by the United Nations General Assembly (Resolution A/RES/72/281) and marked every year on 16 June.

This year’s IDFR observance in Kathmandu on 10 June acknowledged the contribution of remittances to Nepali families, rural communities and the country.

Every year, the IDFR highlights the significant contribution of over 200 million migrants, through the remittances they send home, to improve the lives of over 800 million family members. This Day draws our attention to the economic impact of these money flows nations, and recognises the sacrifice, separation and generosity of migrants.

By 2030, it is projected that globally US$5 trillion will have been sent home by migrants to lower- and middle- income countries. Much of this money goes directly to rural areas where 80 per cent of the world’s poor live, face food shortages, and the impacts of climate change are the most pronounced.

Remittances, sent by migrants and diaspora communities, directly support millions of families to achieve their own Sustainable Development Goals (SDGs). They contribute directly to poverty alleviation, education, healthcare, small business development, gender equality, and rural economic growth.

IDFR 2024 Nepal

In Nepal, according to the World Bank, remittances flows were estimated at US$11 billion in 2023, accounting for 26.6 per cent of the country’s GDP. To put into context, this is more than the combined inflow of Official Development Assistance (ODA) and Foreign Direct Investment (FDI) to Nepal. Moreover, these flows have shown resilience through times of crisis, including the 2015 earthquake and the Covid-19 pandemic.

Celebrating Successes

The Nepalese have much to cherish and learn from in terms of remittances, access to digital financial remittances and financial inclusion. Remittance costs to Nepal have been low and continue on that tendency. The cost of sending US$200 as a remittance to Nepal now averages 3.7 per cent (World Bank RPW), closing in on the SDG 10.c for remittance costs to average 3per cent. Similarly, the Nepalese have made significant advancements in financial inclusion and in offering formal channels for remittance transfers.

According to a 2022 survey by IFC, 90 per cent of adults in Nepal use various formal financial services. This is a significant achievement and can be attributed to the dedicated efforts of many across the country to improve access and usage of formal financial and remittance services. This includes, mandatory bank branch expansion into rural areas, digitising social security payments, mandatory bank accounts for migrant workers to get foreign employment permits and providing additional 1per cent interest on remittance deposit accounts to encourage migrant workers and remittance-receiving households to use formal channels to remit and save.

Leave No One Behind

However, there is still more to do.

• The urban/rural divide still persists in terms of financial inclusion. Findex 2021 reports that 50per cent adults from rural area have an account at a financial institution vs. 60 per cent adults in urban areas.
• The gender gap has significantly narrowed across the board; however, a slight gap in terms of overall usage of banking services remains.
• Lack of necessary documents is still a barrier to opening a bank account.
• There are barriers to usage and uptake in mobile money services.
• The cost of remitting lower value amounts needs to be decreased to attract people using informal methods.
• About 10.4 per cent of adults still rely on informal channels to receive remittances.
• The retention of remittances received in bank accounts is still very low, as cash withdrawals are common. The majority of remittance receivers still lack digital know-how and trust.

In Nepal, IFAD is just closing a 7 year Rural Enterprise and Remittance Programme (SAMRIDDHI) that has benefited rural households in the south east of the country, including migrants, remittance receivers and returnee migrants through financial inclusion and enterprise development activities.

In turn, IOM continues to support safe, orderly, and regular migration in Nepal by having:

(i) established the first-ever Migrant Resource Center as a one-stop solution for migrant workers,

(ii) strengthened the migrant information management system; and

(iii) provided technical and strategic support to the Government in leading the regional forum of Asian labor sending countries – the Colombo Process and through its engagement with international fora.

IOM efforts in promoting ethical recruitment, advocating for human rights in business, and building the capacities of the private sector to achieve these goals represent significant strides towards fulfilling the SDGs.

Working closely with both government and society at all levels of governance, IOM engages with Nepali diaspora and migrants to promote safe migration through initiatives such as: migration schools (in collaboration with universities and academia) to provide 360 degrees view to migration; the reintegration of migrant workers; and counter-trafficking efforts. Its comprehensive approach aligns with the vision of the Global Compact for Migration (GCM), where Nepal stands as a champion, and both IFAD and IOM remain committed to supporting the implementation of actionable commitments.

The Labour Migration Policy drafting and the comprehensive migration policy represent significant initiatives in this regard, which also address the potential of remittances for development.

Join us, and let us work together, one family at a time, to digitise remittances towards financial inclusion and cost reduction, and to leave no one behind.

Agenda