A Tale of an Economic Miracle
It was a day like any other, a quiet Saturday morning. The streets were empty as it was the weekend, everyone was getting ready to get on with their day. Suddenly, things started to move... The 7.8 magnitude earthquake that hit Nepal on the morning of April 25, 2015 scarred the nation forever. Nearly 9000 people died that day and many more were left without homes, properties and family. The personal losses of people can still be left to this day but the nation as a whole, incurred a loss equivalent to US$10 billion. Shortly afterwards, the country suffered a 135-day trade disruption with India, which accounts for 65% of Nepal’s trade.
Such series of unfortunate events caused a major set-back to our economy, something that would take years to come back from. However, the GDP of Nepal in 2016 was estimated to be US$ 21.14 billion, less than 0.7% than the previous year. Amidst the economic turmoil there was a landing cushion for Nepal’s economy. A miracle you say? No, it’s simply remittance.
As of today, more than 4.5 million Nepalese have migrated to Malaysia, Qatar, Dubai and other gulf countries seeking foreign employment. Every day on an average of 1500 people migrate abroad, 30% - 40% of that number being women. In 2015 and 2016 alone the remittance inflow was NPR 665 billion, which puts Nepal at the 23rd spot of the highest remittance receiving country in the world. Sending money from abroad is already digital but the main issue is what happens once that money reaches the recipients. Research shows that 80% of the remittance is cashed out and spent immediately while only 20% is saved.
UNCDF-MM4P is working with IME Ltd., a leading remittance company, to develop a mobile wallet whereby recipients can sign up and have the money stored in their mobile phones which will be accessible through an App. The mobile wallet offers interest-bearing account and the possibility to make deposits, pay utility bills and withdraw at their convenience. A recent interaction with a mobile money beneficiary ensured us that despite being a relatively new concept, mobile money is making a positive impact in people’s lives. It makes an enormous difference if you have US$ 1000 cash in hand as oppose to US$ 1000 in an account. The way you approach that money will be different- you tend to spend it if you have it in your hand.
Mobile money in Nepal is getting a huge traction, within 2016 and 2017 several mobile wallets have been launched in the market. Mobile money is not only a means of a payment gateway, neither is it just another “business trend”, it is a beacon of hope to thousands of people living in remote areas without a formal financial infrastructure. It is a chance for them to make the smart and right choice of saving and safe-keeping the hard-earned money that is sent by their relatives living and working thousands of miles away.