A Bumpy Road Ahead: Covid-19 and its effects on the Nepalese economy

FES Nepal: Due to the global economic recession many migrant workers might lose their jobs and will return home in the months to come. This will put the Nepalese labor market under additional stress. Do you see any ways the state can deal proactively with this?

Prof. Achyut Wagle: Although, the Nepali economy is so far expected to maintain a positive growth rate between one to two percent, the creation of enough employment opportunities still remains a distant possibility. When migrated workers return, as you rightly mentioned, it puts additional stress on the economy. They bring in twin risks of virus transmission and exacerbate unemployment levels.

Sectors like agriculture might be able to accommodate the majority of returning workers. Returnees technical knowhow and entrepreneurial skills can contribute to upscale the agricultural economy which alone can provide employment and minimize food supply deficits. Nepal imported $3 billion worth of agricultural and processed food products during the last fiscal year 2018/19. Maybe, this is the time to invest in the sector to substitute these imports with local products, at least to some extent. In addition, the agriculture activities in the rural hinterland are likely to be least impacted by Covid-19 and a little nudge and last mile support could easily reinstate or possibly revitalize the entire sector.

But this would require a bold departure in government policies in providing support and promote agro-enterprises, maintain farm-to-kitchen value chains, and provide logistics as well as market access for these products, which is very limited at these times of lockdown. The cash stimulus in proportion to productivity and creation of direct employment opportunities to prevent the country of famine might be the wisest investment for now.

Government of Nepal needs work in both domestic and foreign fronts to make sure that workers are not deprived of payments for the work they have already done. In addition, the government must spend the revenues collected from the workers themselves in welfare, social security and pension funds. These are extraordinarily difficult times and, therefore, need extraordinary efforts; particularly to protect the economically most vulnerable sections and people in society.

FES Nepal: Citizens have been holding out with great resilience and discipline during the month-long lockdown. Do you see special resources that will help the Nepalese people dealing with this crisis?

Dr. Binda Pandey: Covid-19 is not only creating an immediate crisis, but it also rings an alarm bell for humanity. The message is that nature should be nurtured rather than exploited. Similarly, it also signals that we have to change our lifestyle and be closer to nature again. All these will help to live in a healthy way. After the pandemic, many young people will be returning to their villages and we need to engage them in the agricultural and other areas of production within the country by providing them with appropriate skills. Changing the gender role in these sectors is equally important. More gender-balanced participation should be managed.

Trade unions should be involved to identify the possible areas of employment. They should also adjust their priorities and work together with local government for the wider benefit of the workers. Enhancing the entrepreneurial skills of women in line with available local resources and market potential is be important for their livelihood. Market and product diversification are also important for the future so that farmers can sell their products even during crisis. The trade unions should work in tandem with local government in this area in the future.

FES Nepal: Dr. Pandey, Prof. Wagle, Many thanks for your insightful answers to our questions! Of course, we are looking to work with you in the future and - most important of all these days: Stay healthy!