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The scale of migration and remittance in Nepal is staggering. Almost half of all households have at least one migrant abroad or a returnee. Estimates of the number of Nepali migrants abroad vary widely, but the most frequently cited estimate, including seasonal workers in India and those who use informal channels, is about 4 million one-third of the working male population. Foreign remittances now constitute a quarter of the income of all households and almost two-thirds of the income for those receiving money from abroad. In FY 2009 official remittance measured by the Nepal Rastra Bank (NRB) totaled US$2.7 billion, or 22 percent of Gross Domestic Product (GDP). This figure excludes remittance from India and informal flows, and therefore total inflows could easily exceed 25 percent of GDP. International migration has thus become the most important economic activity in Nepal. Foreign exchange earned from migration is higher than that of export receipts and official aid combined.
Figure Error! No text of specified style in document.1: Migrant Departures and Remittances (2001-10) text of specified style in document.2: Destinations of Nepali Migrants
Migrant Departures & Remittances (In US $)

Figure Error! No

Destination of Nepali Migrants

350.0 300.0

350000 300000
Migrant Departures (In '000)

Remittance (In Million USD)


220.0 204.5

250.0 200.0

250000 200000 150000 100000 50000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010


165.3 139.7 104.7 105.0 106.7 2194.5 55.0

1350.7 1420.7 2727.7

1500.0 1000.0 500.0 639.5 0.0 2001 2002 2003 2004 618.3 696.8


150.0 100.0 50.0 0.0









Remmitance (In US $)
Source: MoLTM and MoF

Migrant Departures

Saudi Arabia


U. A. E.



2. The ubiquity of Nepali migration is confirmed by its uniform distribution. Almost everyone is migrating the rich, the poor, people from the Mountains, Hills, and Terai, and from all of the countrys five development regions. Migration has spread through networks and now involves the entire country. Worker outflows and remittance inflows are likely to continue, given
Figure 3: Size of Foreign Exchange Inflows to Nepal (1996-2009) *
Size of Foreign Exchange Inflows to Nepal (In US $ billions)
3.0 2.5 2.0

Figure 4: Largest Remittance Recipients in the World (Share of GDP, population above 10 million)

25 20

1.0 0.5 0.0

10 5 0

Recorded Remittances
Official development assistance

Exports of goods and services

Tourism Receipts


Bangladesh Philippinese Senegal



Sri Lanka

the scarce domestic job opportunities, large young population, and the reach of the migrants networks. Migrants 3. The Nepal Migration Survey (NMS) 2009 puts the number of Nepali work migrants abroad at 2.1 million. Their key destinations are India, the Gulf countries, and Malaysia, with notable numbers in other developed countries such as Australia, Japan, the United Kingdom, and the United States. India is estimated to have 867,000 Nepali migrant workers, 41 percent of the total working overseas, and the Gulf countries another 810,000 (38 percent). Malaysia is said to have 245,000 (12 percent), while 186,000 (8.7 percent) are in the other developed countries mentioned above. Oft-quoted numbers of migrants in India range between 1.5-3 million. The differences between the NMS survey and other estimates may be explained in part by the seasonal return of many migrants to Nepal as this survey was carried out at the peak of Nepali farming season (May-June), when many migrants who normally reside in India were back working on farms at home.1 4. India is also the key transit point for Nepali migrants using informal channels. Without documentation, they cannot fly out of Kathmandu, so they use informal agents in India and often fly to destinations prohibited by the government of Nepal, such as Afghanistan and Iraq. Women migrants who could not receive letters of guarantee from Nepali ambassadors in destination countries for the safety of the work also migrate through India. 5. Most migrants are aged 20-44, and the out-migration is causing domestic labor supply shortages in many rural areas. Many migrants are in their mid-20s (Figure 5) and the age-distribution graph of the population remaining in Nepal has a dent around that age. As a result, the labor supply in rural areas has fallen significantly, raising real wages in many cases. Many male members of remittance-receiving households have also less incentive to work and have reduced their labor supply, exacerbating labor shortages.
Figure 5: Age Profiles of Work Migrants and Non-Migrants Are Quite Different Figure6: Non-Parametric Regressions of Probability of Migration and Wealth Indices
Migration Probability and Household Wealth
Probability of a Household having a work migrant:
.5 .25 .05
0 20 40 60 80 Centiles of Wealth Index 100










40 60 80 Centiles of Wealth Index in the Gulf


Any Work Migrant in Nepal Abroad

in India in Malaysia

in other Country

Sources and notes: NMS 2009.


In addition, 1.2 million Nepalis are abroad as non-work migrants many with student visas. There is inadequate information on how many of them actually work while abroad.

6. Migrant destination countries vary by wealth status (Figure 6). Everyone, from the poor to the rich migrate, but the likelihood of a household having a member working abroad is highest when the household belongs to the middle class around the fourth quintile in terms of wealth. There are various economic reasons for this. Households with the least wealth tend to send members to India, but Indias attractiveness declines rapidly as wealth increases. The opposite applies in the case of migration to other developed countries, where migration increases in line with wealth increase. For the Gulf countries and Malaysia, the relationship is non-linear: migration increases as wealth goes up and peaks at the fourth wealth quintile before declining to the wealthiest quintile. In addition, as the wealth index and human development indicators are correlated, those with less education tend to go to India. Relatively better-off and better-educated migrants are more likely to work in other developed countries. 7. Migrant destinations tend to vary according to the place of origin of migrants. Most migrants from Mid- and Far-Western regions travel to India. Migrants from Western and Eastern regions dominate the Nepali workforces of Malaysia and the Gulf countries, with workers from the Central region being a distant third. Other developed countries are often the destinations of those from Eastern, Central and Western regions. Migration to those other countries is also common for urban workers in the Central Development Region, where the Kathmandu Valley is located. The likelihood of migration is highest among people of the Western and Far-Western regions, while those of the Central Development Region have the lowest, though still significant, tendency to migrate (22 percent).
Figure 7 : Household Migration Rates by Destination

Sources and notes: NMS 2009.

8. In terms of ethnicity, the probability of migration is above average for Muslims/others, Hill Dalits, Hill Janajatis, and Brahman/Chhetri (in descending order). Muslim/others and Hill Janajatis tend to go to the Gulf while the major destination of Hill Dalits 3

is India. The Brahman/Chhetris migrate to both India and the Gulf, and smaller but not insignificant numbers go to Malaysia and other developed countries. Newars, who have the lowest probability of migration (21 percent), have roughly equal preference for all major destinations (India, the Gulf, Malaysia and the others). 9. About 6-7 percent of migrant workers are female. In absolute numbers, India, Kuwait and Qatar are their major destinations. Females, on average, earn and remit more than men. Female migration abroad used to be banned out of concern that they were vulnerable to abuse and harassment. But recent legal changes assured equal treatment, because the ban had merely increased female migration through informal channels and exposed them to higher risks. Women still face high risk of abuse, though, and also have a history of being trafficked in the subcontinent. The government, to safeguard women, has now mandated that a guarantee letter must be obtained from the relevant Nepali Embassy before a female migrant can travel to that country. But this practice has reduced female employment opportunities once more, and is driving them back to risky informal channels of recruitment. 10. Migrants abroad are employed mostly in three sectors: manufacturing (32 percent), construction (16 percent), and hotel/catering (16 percent). In India, manufacturing and hotel/catering are the top two sectors for migrants (24 percent and 21 percent), while agriculture, at 12 percent, comes third. This share of migrants who work in agriculture in India is unexpectedly low, even accounting for seasonal factors. In the Gulf countries, manufacturing and construction dominate (35 percent and 21 percent), while in Malaysia 62 percent of Nepali migrants are working in manufacturing. Service-sector employment predominates in other developed countries. Remittance 11. The survey estimates that foreign remittance in FY 2009 was NPR 190 billion (US$ 2.5 billion), or 20 percent of GDP. If we exclude flows from India to make it comparable with the NRB figure of 22 percent remittance was 16 percent of GDP. This is much below the NRBs estimate based on information from the financial institutions. The discrepancy is most likely due to underreporting of income which is typical of household surveys especially for households whose inflows are large. Remittance from India estimated in this survey 4 percent of GDP may also be an underestimate. 12. Of the US$ 2.5 billion in remittance from abroad, about half (US$1.2 billion) comes from the Gulf countries. The remittances received from other destinations are: NPR 41 billion (US$ 530 million, or 21 percent) from other developed countries; NPR 37 billion (US$476 million, or 19 percent) from India; and NPR 20 billion from Malaysia (US$ 260 million, or 10 percent). 13. The amount of remittance a household receives depends on the destination of its migrant members. On average, households with a migrant in other developed countries receive the highest amount of annual remittance (NPR 311,000, or US$ 4,050) followed by the Gulf (NPR 163,000, or US$ 2,120), Malaysia (NPR 113,000, or US$ 1,470), and India (NPR 62,000, or US$ 800). Internal migrants those migrating for work within Nepal send NPR 75,000 home on average, which adds up to 2 percent of GDP. 4

14. Per capita receipt of remittance generally increases with recipients household wealth presumably more skilled and educated migrants tend to receive better income overseas. Of the total remittance, one-third goes to the richest 20 percent while the poorest 40 percent receives 19 percent. However, remittance reception rates are lowest among the wealthiest, implying that only a few actually receive remittance. 15. In terms of regions, the Western Hills and Eastern Terai receive the most remittance. The Western Hills send the largest number of migrants (20 percent), fairly evenly distributed to various destinations. The Eastern Terai sends the second largest number of migrants (17 percent), mostly to the Gulf and other developed countries. In contrast, remittances received by Mid- and Far-Western regions are much lower even though they send many workers to India. This reflects the comparatively low income-per-migrant in India.
Figure 8 : Distribution of Total Remittance by Districts

Sources and notes: NMS 2009.

16. The channels of money-transfer vary by destination. More than two-thirds of remitters in India hand-carry their remittance, either personally or through friends and relatives. The use of official channels (money-transfer companies and banks) is highest for workers in the Gulf. Workers in Malaysia use both money-transfer companies and banks, but surprisingly, many workers also use the hundi system. More surprising was the finding that 30 percent of workers in developed countries opted to hand-carry remittances personally or through friends. 17. Securing a foreign job can be costly. The average cost for a worker going to Gulf countries and Malaysia is NPR 109,700 (US$ 1,430), and NPR 378, 200 to go to other developed countries. Getting a job in India costs about NPR 5,250. On average, migrants pay for about 24 percent of the cost from own savings and help from family members. Loans from friends/relatives cover 22 percent of the cost and loans from village moneylenders, nearly a one-

half of the cost. The average interest on these loans is high 23 percent when borrowed from friends and relatives and 30 percent when acquired from moneylenders. Returnees 18. About 735,000 work migrants from abroad were back in Nepal at the time of the 2009 Migration Survey. More than half had used India as a destination; just over one quarter had returned from the Persian Gulf, and about one-fifth had worked in Malaysia and other developed countries (Figure 9).
Figure 9: Numbers of current returnees by year of return
200000 180000 160000 140000 120000 100000

19. Returnee migration patterns are complex, 60,000 40,000 differing markedly according to destination and 20,000 several other factors. More than half had returned in 0 >2000 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009* the last few years and many, particularly those linked India Gulf Malaysia Others to India, migrate back and forth repeatedly. They are also more likely to be married and less likely to be Sources and notes: NMS 2009. female than migrants currently abroad and nonmigrants. Typically, returnees have households with more children but fewer adult women and elderly members, with less land holding. These are among several reasons why many returnees choose to go back abroad for more work.
*Only till May-Jul


20. Almost three-quarters of returnees were involved in daily wage-work during migration. Many choose to farm or remain inactive after returning. Most try to return to the occupations they had before migrating, but those who switch occupations after migration are less likely to migrate again. Although, those who had been involved in entrepreneurial activities before migration and who switched occupations upon return were more likely to migrate again. This might be explained by the expectation that returnees are likely to move away from entrepreneurial work (maybe to agriculture, daily wage or inactivity) if they think they will migrate again in the near future. It is important to distinguish between real returnees, or those who plan not to migrate again, and those who repeat-migrate because these two groups have distinctly different behavior patterns and needs. 21. The average foreign migrant returns when relatively young and at peak working age (Figure 10). The average age of returnees is just under 30 years. More than half returned at ages 2030 years; three-quarters returned before age 35. In terms of age and educational achievement, returnees characteristics fall between migrant and non-migrant populations. Migrants tend to be younger and better-educated than non-migrants. If we assume each cohort of migrants has a similar age distribution, it is easy to see that returnees are slightly older than the
Number of returnees (in '000)

Figure 10: Age Distribution on Return

Average age = 29.51






40 Age at return




Smoothened trend

Source: Estimates based on Nepal Migration Survey 2009

pool of current migrants but younger than non-migrants. Also, if each cohorts education improves with time (a reasonable assumption), returnees turn out be less literate than current migrants but more literate than average non-migrants. Similarly, returnees are better educated than non-migrants and at the same level or slightly less-educated than current migrants. 22. There is a need to distinguish between returnees who intend to migrate again and those who are back for good. Of all the returnees surveyed, 37 percent said they were very highly likely to migrate again in the next 12 months and 34 percent think it very unlikely (Figure 11). But if we consider only the most recent returnees who returned within 12 months of the survey, 63 percent of them replied as very likely to go back abroad in the next 12 months, and another 14 percent said somewhat likely. So 77 Figure 11: Likelihood of Re-Migration for Work in 12 percent of recent returnees were considering Months migrating again for work very soon. In addition, of those who returned to Nepal two and three years before the survey, nearly 50 percent responded most likely and 20 percent somewhat likelystill significantly high figures. 23. Returnees come back to agriculture and inactivity (Figure 12). Almost three-quarters of the returnees had Source: Estimates based on Nepal Migration Survey 2009 been involved during migration in daily-wage work in manufacturing or construction, and in Figure 12: Occupation Choice During and After work as guards, in the army or as technical Migration for Returnees workers. But, after returning, more than twothirds are either involved in agriculture or inactive. Apart from agriculture and inactivity, the only occupation in which we see a shift after returning is in the others category, which comprises mostly small-scale entrepreneurs running small shops or services. This could indicate that although most of the returnees are inactive or involved in agriculture, there is a slight increase in entrepreneurial activities. Comparison of occupations during and after migration shows Source: Estimates based on Nepal Migration Survey 2009 a more detailed breakdown of the shifts confirming that agriculture is the largest returnee-absorber, followed by inactivity. However, there is a non-trivial shift from agriculture to daily wage work and from technical work to others work. Only 16 percent of returnees continued to work in the same occupation during and after migration. 24. Returnees choose occupations similar to those they held before migration (Figure 13). This indicates a sense of failure by returnees to use their foreign experience to advantage, as they must have been exposed to new environments and gained new skills. This may indicate inadequate returnee incentives or lack of available opportunities. Yet there are some discernable 7

changes. First, a larger proportion of returnees is employed after migration than before (i.e., less inactivity). Second, the proportion of those employed in agriculture and other activities is much higher after than before migration. The higher rate of returnees other activities may reflect a small increase in entrepreneurial activity as discussed earlier. This is also apparent when returnee activities are compared with those of non-migrants; returnees are more active generally and more involved in other entrepreneurial activities. 25. Recent returnees are more likely to migrate again (Figure 14) as discussed above. This finding endorses the expectation that recent returnees have more multiple migration experience. Returnees who have returned within the last year of the survey are more than 40 percent likely to migrate again. The likelihood of migrating again declines gradually with time since their return. The likelihood of migrating again declines sharply, though from a high level, in the first 18 months of return, stays more or less stable around 30-35 percent until five years after return and declines again
Most likely to go back in the next 12 months

Figure 13: Occupation Choice Before and After Migration Returnees Compared to Non-Migrants

Source: Estimates based on Nepal Migration Survey 2009 Figure 14: Likely Re-Migration, with Year Since Last Return (smoothed)
.6 0






3 4 5 6 Years since last returned

Note: 95 percent confidence interval shown by the shadowed region. Source: Estimates based on Nepal Migration Survey 2009 Figure 15: Occupation Choices of Specified Returnees

gradually as duration of return lengthens

3.1 Real returnees are involved in more professional and entrepreneurial activities. Returnees least likely to migrate again, the real returnees, have different occupational choices to those who are most likely to migrate again. Though a large proportion of both are involved in agriculture and almost one-fifth are inactive, the real returnees are significantly more likely to be involved in office and professional activities, and in other occupations, which are largely entrepreneurial. This suggest that the real Note: *Indicates that the differences are significant at 5 percent returnees are more settled in their significance level. based on Nepal Migration Survey 2009 Source: Estimates occupation choices and are more entrepreneurial than returnees who intend to migrate again. On the other hand, the real 8

returnees are less likely to work as cooks and waiters and as daily wage laborers. Daily wage work could be more appealing to returnees who are likely to migrate again, because of its temporary nature. 26. Inactivity before migration is the largest determinant of inactivity after migration. A returnees decision to participate in the labor market is determined significantly by whether the returnee was active in the labor market before migration (Figure 15). A returnee who was active before migration is 17.5 percentage points more likely to remain active upon return even after controlling for a full set of observable characteristics. Another factor that affects returnees labor market participation positively is the marital statusmarried returnees are 5.8 percentage points more likely to be active workers. But if one intends to return to migration, he/she is less likely to participate in the labor market. Macroeconomic Impacts 27. Macroeconomic impacts of the large-scale migration and remittance are significant. Large worker outflows have reduced domestic un- and under-employment in a country where job creation has been limited. Also, the significant foreign exchange inflows have contributed to the balance-of-payments surplus and higher reserves. But, there are concerns that recent developments are similar to symptoms of Dutch Disease (Box 1) although causality is hard to prove. Remittance supports higher consumption and, as a consequence, raises imports and appreciates the real exchange rate. GDP shares of exports and manufacturing value-addition are shrinking as are, anecdotally, investments in tradable sectors.
Figure Error! No text of specified style in document.16: Manufacturing as Share of GDP and Remittance Figure 17: Exports and Remittance
Manufacturing as percent of GDP & Remittance (In US$)
10.0 M a n u f a c t u r i n g

Exports as percent of GDP & Remittance (In US$)

14.0 3500.0

8.7 8.2 7.9 3000.0

E x p o r t s


R e m i 2000.0 t t a 1500.0 n c e

8.0 7.0




7.0 6.6 6.0

5.0 4.0

R 2500.0 e m i 2000.0 t t a 1500.0 n c e 1000.0















% G D P


4.8 4.1 4.3 3.4 3.0 2.4




Source: Ministry of Finance and NRB.

% G D P

0.0 0.0





0.0 2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
Exports to other countries (as % of GDP) Source: Ministry of Finance and NRB. Exports to India (as % of GDP)


2000/01 2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 Manufacturing (as % of GDP) Remmitance ($)

Remittance ($)

Box 1: Dutch Disease The term Dutch disease is used to explain erosion of external competitiveness and the decline in manufacturing that occurs when a large amount of foreign exchange flows into an economy. The term originated in the Netherlands where vast amounts in sales proceeds flowed into that country following the discovery of North Sea gas. Higher disposable incomes (due in this case to remittance inflows) can trigger an expansion in demand, which for externally driven prices of tradable goods cause relative prices of non-tradable goods and services to rise. These higher prices lead to an expansion in the non-tradable sector and contraction of the tradable sector. With higher demand, wages also tend to rise. By definition, an increase in the price of nontradable goods relative to that of tradable goods translates into real exchange-rate appreciation. Wages can also rise due to a decline in labor supply. Migration directly reduces labor supply in countries from whence migrants originate. In addition, the increase in household income due to remittances may lead to a further decrease in labor supply as households engage in more leisure and work less. A shrinking labor supply, in turn, puts upward pressure on wages, which raises production costs, which can lead to a further contraction of the tradable sector. When combined, these effects could cause erosion in international competitiveness and may lead to a contraction of the tradable sector, although the extent varies widely by country.

28. In addition, there is a risk that the Nepal government might not fully appreciate the urgent need for policy action to move the economy forward, because of the remittance cushion. This is also called the vicious policy cycle of large remittance. In this cycle, migrants seek jobs abroad because there are limited opportunities within their own country, and send remittance home to recipients, who then become less eager to hold the government accountable for good economic policy than if there had been no remittance income. As a result, the government does not feel pressed by public opinion to improve economic policy; growth and job creation suffer and more migrants need to leave the country for lack of domestic opportunities.
Figure 18 : Vicious Policy Cycle of High Remittance


Household Benefits and Costs 29. At the household level, remittance has significantly increased income and consumption. The added income is spent largely on consumption and education of children. Male members of remittance-receiving households also appear to be enjoying more leisure and working less. Consumption has become a major driver of GDP growth. In FY 1996-2004 poverty declined from 42 percent to 31 percent. More than half of the decline is due to remittance. It is tentatively estimated that between FY 2004 and FY 2010, the poverty incidence declined further, to 21 percent. Had there been no increase in remittance from FY 2004, poverty would have declined to just 27 percent. 30. Migration has financial and social costs. Migrants pay high, often excessive, fees to recruitment firms, and the high interest rates charged on these informal loans magnify the overall cost. Reducing these costs and lowering the barriers could help make migration more pro-poor. But there are also social costs in family separation, potential abuse by employers or recruitment agencies, and health risks such as sexually-transmitted diseases. Female migrants often face higher financing costs, and are more vulnerable to such abuses. The costs need to be carefully monitored and, where necessary, reduced. Policy Recommendations 31. Maintaining macroeconomic stability in a high-remittance context requires prudent monetary and fiscal policies and enhanced supervision of the financial sector. Macroeconomic prudence can limit public-sector demand that would otherwise augment the already high aggregate demand created by remittance. High remittance also tends to raise the value of financial sector assets. Therefore, improving supervision of financial institutions could help to improve overall intermediation and limit the accumulation of risky assets such as realestate lending based on inflated prices. 32. Most importantly, the investment climate needs to be improved to encourage efficient use of remittance for investment and job creation. While the large remittance flows are expected to continue, the government may wish to consider more fundamental adjustments to change the nature of migration incentives by facilitating economic growth and creating more jobs at home. Policies to strengthen infrastructure, make the labor market more flexible and improve trade facilitation are important priorities. Migration should become a choice rather than a requirement for survival. 33. Improvements should be made in at least two functions at household level. These concern the recruitment process and the markets for remittance services and costs. For both issues, it is critical that up-to-date information is collected and made available to prospective migrant workers. Recommendations for: (i) Improving the Recruitment Process


a) Publicly disseminate up-to-date information on recruitment, assessment of recruitment company performance, costs of migration, available financing methods, and how and where to receive training and orientation. Civil society could play a productive role in this information dissemination. b) Provide migrants with pre-departure orientation courses to provide them with basic information, financial literacy, and knowledge of the languages and cultures of destination countries. Basic skills training would also be advantageous. c) Simplify and systematize the recruitment approval process in consultation with recruiters and returnee migrant workers. d) Re-energize economic diplomacy at Nepali embassies in destination countries, giving them a greater role in verifying employment letters and contracts and in monitoring implementation and employment conditions of migrant workers. Labor attachs in major destination countries could assist the process. Define necessary qualifications of labor attaches and appoint them as soon as possible. Consider requesting major destination countries to open embassies in Kathmandu. e) Intensify communication with governments of destination countries for reviewing recruitment practices and enforcing regulations and bilateral agreements. Negotiate bilateral memoranda of understanding with destination countries and make these public. f) Improve dialogue on migration with the government of India. Not only is India the largest destination, but it is also a transit territory for Nepalis heading to other countries, including the Gulf, through informal channels. Improved information collection and better enforcement of regulations would benefit migrants and recruiters. g) Enhance bilateral communication with Qatar. Nepali workers pay airfare and commissions to Nepali recruitment agencies that, in turn, pay their dues to Qatari recruitment companies. Migrant workers should not be burdened with these costs, according to Qatari Law and the bilateral agreement between Nepal and Qatar. h) Develop a communications program to build public awareness about migration. Such a program could help to reduce misunderstandings and fraud. The program should include information on trafficking of women, girls and boys. i) Periodically review the restrictions on migration to specific countries and lift bans, where applicable. j) Strengthen enforcement of regulations on recruitment agencies by developing and implementing an effective monitoring and regulatory system that rewards good practice and penalizes malpractice. Establish an independent industry ombudsman to handle complaints from or against the various stakeholders.


k) For female migrants, in particular, pursue bilateral country agreements and monitor their implementation to improve conditions for these workers instead of trying to prevent their migration. Disseminate information and provide counseling and shelter services in Nepal and destination countries. (ii) Improving Remittance Services and Lowering Costs a) Develop an efficient electronic fund-transfer mechanism, such as the Automated Transfer System, to improve the payment infrastructure. b) Consider introducing mobile phones and pre-paid cards for remittance services and encourage post offices to handle payments. c) Improve the legal and regulatory framework for addressing issues related to transparency, consumer protection, capital adequacy, anti-money laundering, risk management, dispute resolution, and reporting to licensed remittance service providers (RSPs). Establish a system to ensure that only financially sound RSPs are licensed. d) Consider banning exclusive transfer and payment agreements in order to nurture a competitive remittance service market. e) Increase communication with destination governments, and enter into bilateral agreements with as many of them as possible. Discuss with these governments the possibility of introducing ID cards for migrants, which could be used to open bank accounts, among other things. 34. Migration has clearly become the core of Nepals development strategy. This shift was not planned but evolved naturally and has significantly enhanced disposable incomes and reduced the incidence of poverty. The benefits could be enhanced by further reducing job-search and recruitment costs, limiting, if not eliminating, abuses and other problems of migration, and lowering the transaction costs of sending money home. These measures could increase the access of poorer migrants to more productive foreign employment and, in turn, help the country of Nepal earn a greater share of globalizations benefits. 35. Sound economic and financial policies are crucial to help Nepal grow with more than high remittance inflows. Policymakers should know that no country has ever succeeded in sustaining growth and job creation on remittance alone. Experience shows that improving the investment climate, which leads to sustained growth and private-sector job creation, are the best ways to enhance the development impacts of remittance. Once again, successful improvement in the investment climate can help to make migration more a matter of choice than a survival strategy.