Economic impact of earthquake – Remittance

Surge in Remittance

Remittance flow through informal channels such as Hundi came down as banks and remittance companies gave exemptions on service charges for a month. According to International Money Express, remittance inflow has increased by 20% over the last few weeks. Similarly, NRB and other major banks confirmed that there was a massive increase in remittance inflow.  Natural disasters worldwide in recent times have also shown the same trends. For instance remittance has been high in Indonesia ever since the earthquake and tsunami in 2004. Likewise, the hurricane in Jamaica in the late 80’s resulted in higher migration which increased their remittance by 46% per annum in 15 years.

More jobs to be created

There is much work that the earthquake has left behind in Nepal. Creation of jobs at this point of time will be very crucial. Restoration and rebuilding of the affected areas will require thousands of skilled and semi-skilled workers who can be paid salaries similar to what they would earn doing the same work in the Middle East. With reconstruction a priority, the country will however struggle to handle new influx workers. We are already seeing more workers from India and even Bangladesh that are filling the gap of workers in Nepal.

Remittance for Reconstruction

Migration is likely to increase following the earthquake as the youth go in search of better income opportunities. This is expected to increase the country’s dependence on remittance, meanwhile also changing the pattern of how remittances are used. At present nearly 80% of remittance income is used for household necessities, a large portion of which will now be directed towards reconstruction.

The Cost of Rebuilding

Given the scale of destruction wreaked by the earthquake, rebuilding is likely to require a lot of investment. There could be financial instruments created that will be able to channel remittances for rebuilding. Further, there could be schemes that can be created to encourage skill building.


With increase in wages, if there are necessary legislations put in place on hire and fire of workers, there could be worker contracts in Nepal that will generate equal or more savings than working in Middle East or Malaysia. This will depend however, on Nepali workers being able to put in the same amount of productivity without being sucked in by unionization and other political movements.