15 Aug 2024
The Nepalese community in Italy is lively and active, contributing to the lives of the Italian population. However, apart from promoting cultural exchange, these expatriates are economic assets to their own country, Nepal. Money transfer from Italy to Nepal is a vital source of financial support for families and communities back home. This article explores the economic impact of the Nepalese diaspora in Italy and the various methods for their contributions that can further strengthen Nepal's financial stability.
Money sent by Nepalese workers living in foreign countries makes up a large part of Nepal’s GDP (Gross Domestic Product). The World Bank put the flow of remittances in 2023 at $11 billion for Nepal. From the above inflow of funds, one can deduce that it constitutes more than a quarter of the GDP of Nepal, making it more critical.
According to the survey, a large number of Nepali households use the money for food, education, and health care for their families. Research done by the World Bank indicates that 40 percent of the income from remittances goes into consumption, thus enhancing the quality of life for many households in Nepal. It also has a multiplier impact on the local economy as people can meet some of their basic needs through these enterprises.
It is common to use the money for consumables such as schooling for children, financing small business enterprises, or constructing houses. These investments, in turn, have long-term implications for the economic development of Nepal by increasing the skilled population.
According to the ILO, the percentage of income spent on education is 16% and this will create a new generation of qualified workers. Further, there is a positive implication on the economy since remittances can be utilized in funding small enterprises thus promoting employment.
The study done by the World Bank highlights that 15% of the remitting amount is invested in business and other ventures. Last but not least, remittances can be employed in construction to build houses that enhances the quality of living standards and may even contribute to the inflation of homes.
Remittance can be helpful in financing developmental sector projects like schools, hospitals, road construction, etc., in Nepal. As per the FNCCI (Federation of Nepalese Chambers of Commerce and Industry), the survey has revealed that more than 12% of the money earned through remittance is being spent on infrastructure development. It will enhance the framework of the country for future growth by creating easy access to education, healthcare facilities, and transportation.
While remittances offer undeniable benefits, there are significant challenges to consider. Firstly, the high cost of money transfers can reduce the amount received by beneficiaries. Additionally, the dependency on remittances can hinder local economic development, as communities may rely more on these funds than on sustainable economic activities. Exchange rate fluctuations can also impact the actual value of remittances.
Furthermore, there is the risk of remittances being used for consumption rather than investment, limiting their potential for long-term economic growth. Lastly, regulatory barriers and limited access to formal financial services can restrict the flow of remittances to those who need them most.
Currently, the cost of using traditional methods of transferring money from Italy to Nepal may end up cutting down the amount of money received by families in Nepal. It could also mean comparing online money transfers from Italy to Nepal services such as ACE Money Transfer to find more affordable exchange rates and probably higher transfers to get more money to the intended beneficiaries.
Poor financial literacy among the remittance receptors can be the main reason why recipients are unable to properly manage their money by investing in other productive sectors. Such measures can help families by providing valuable suggestions on how to make better use of the money that they receive through remittances in the long run.
Thus, instead of remittance being used for consumption expenditure, which is not conducive to sustained economic growth and development in Nepal, it can be used to finance productive spending such as new business enterprises, education, and other activities. These activities will help generate employment opportunities for Nepalese citizens and lead to higher income levels, thereby increasing the total supply of developable land.
The Nepalese community in Italy has the potential to further leverage their resources and skills to contribute to Nepal's economic progress in several ways:
Evaluating Nepalese business people in Italy, they are fully aware of the market in Italy as well as in Nepalese. They can then use this knowledge to locate the best investment opportunities in Nepal for investment. This may call for ventures into new areas where business entities need to be created in different fields, such as tourism, agriculture, manufacturing, etc. Such investments can provide employment opportunities in Nepal, which is a significant factor and also introduce new investments and skilled resources.
The Nepalese professionals working in Italy have also been able to get employment and obtain skills and experience from their field of specialization. They can help play a crucial role in knowledge transfer by:
Mentoring young and passionate Nepali professionals to participate in online or physical mentorship programs strengthens social bonds and facilitates effective knowledge sharing. This approach addresses the shortage of skilled human resources in various sectors within the Nepalese context. Additionally, initiatives such as streamlining the process to send money online to Nepal from Italy, support financial stability and growth.
To teach, providing their skills and knowledge without any monetary compensation for Nepalese institutions such as universities or technical schools. It may, therefore, play a significant role in the process of capacity development and enhance the standard of education in Nepal.
Thus, they can take the help of different online forums to connect with a larger audience in Nepal and impart their insights and learning. This can include webinars, creating online courses, and maybe even producing content that is relevant to the Nepalese education system.
The Nepalese migrants living in Italy can be a strong force pressing for the improvement of the friendly relations between the Italians and the Nepalese in terms of economic visibility. This could involve:
Engaging with Italian and Nepalese governments to create policies that incentivize trade and investment between the two countries. This could include advocating for free trade agreements, double taxation treaties, or streamlined business registration processes.
Raising awareness among Italian businesses about the potential of the Nepalese market. This could involve organizing trade missions, conferences, or showcasing Nepalese products and services in Italy.
Supporting existing organizations that promote economic cooperation between Italy and Nepal, such as chambers of commerce or business councils.
By actively engaging in these areas, the Nepalese diaspora in Italy can become a powerful catalyst for positive change in Nepal's economic landscape. Their contributions can create jobs, foster innovation, and propel Nepal towards a more prosperous future.
The Nepalese diaspora in Italy plays a pivotal role in Nepal's economic well-being. Expats can send money to Nepal from Italy to support local businesses and advocate for Nepal's economic development; they contribute significantly to their homeland's progress.
Looking for digital payment platforms that provide reasonable exchange rates and fewer charges will help them deliver more of their earnings to families and communities in Nepal. If the Nepalese community in Italy remains active and continues to invest, they can be a driving force for change to better the Nepalese economy and help create a better future for the future generation.
Money sent back home by Nepalese workers employed in Italy and other countries similarly injects billions of dollars into the Nepalese economy on an annual basis. It provides for families, stimulates investments, and contributes to the creation of infrastructure facilities.
Using conventional methods of transferring money, some of which are very costly, results in a lower amount being received in Nepal. Also, low financial literacy may prevent recipients from making appropriate investment choices by themselves.
Online money transfer usually gives better exchange rates and lower charges as compared to other modes. This means more funds get to the families in Nepal. One example is ACE Money Transfer which has been discussed in the article.
Italian Nepalese businessmen can invest in Nepal and send more people for job creation and innovation. They can also exchange professional experience and influence decision-makers to support policies enhancing bilateral trade and investment between Italy and Nepal.
The Nepalese community in Italy can become one of the major agents for further Nepali economic development through financial remittances, education, and the promotion of beneficial policies for both countries.
References
https://www.eeas.europa.eu/sites/default/files/eu_and_nepal_2018-11-21.pdf
