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Making the most of labour migration for development in the Western Hindu Kush-Himalayas

Display Date: 9/6/10

This article was originally published in the APR Newsletter ‘Making a Difference in Asia and the Pacific’, Special Issue, in September 2010.
Authors: Brigitte Hoermann and Dhrupad Choudhury

Programme on Livelihoods and Ecosystem Services in the Himalayas: Enhancing Adaptation Capacity and Resilience of the Poor to Climate and Socio-Economic Changes
Grant number: G-1113
Grant amount: US$ 1,500,000
Grant recipient: ICIMOD
Geographic region: Bhutan, India, Nepal
Duration: 3 Years (July 2009 to September 2012)
Approval date: 30/04/2009

In recent years, global socio-economic and environmental changes have led to a considerable increase in migration in the western Hindu Kush-Himalayas (HKH) region. The Programme on Livelihoods and Ecosystem Services in the Himalayas: Enhancing Adaptation Capacity and Resilience of the Poor to Climate and Socio-Economic Changes implemented by the International Centre for Integrated Mountain Development (ICIMOD) carried out case studies in the mountainous parts of India, Nepal, and Pakistan looking at migration in general, and the flow of remittances in particular.

Migration generates financial and human capital which, if leveraged for development, can help reduce poverty. The full benefits of labour migration have yet to be seen in the western HKH. In their case studies, ICIMOD analysed why this is the case.

A woman with her child watching the 'blessing of crops', Tangbe, Mustang, Nepal Source: ICIMOD

In total, 545 people, predominantly from IFAD-supported project areas, were interviewed, either in face-to-face interviews or in focus group discussions. Information was collected on the type, volume and mode of transfer of remittances; the impact of remittances in terms of financial flows and the transfer of new skills; perceptions on poverty and development; and effects on gender balance as mountain migration is predominantly male. The study identified reasons why labour migration has not yet been fully leveraged for poverty alleviation and development in the region and made recommendations as to how to address them.

Fostering and managing skilled migration

The outreach and quality of school education and vocational training in mountain areas are very low. The majority of migrants from the western HKH are unskilled. As migrants, they only qualify for low-paid jobs.

Low earnings make it difficult for migrants to save after they have covered their consumption and accommodation needs at their destination. Nevertheless, migrants learn new skills. Unskilled labour is transformed into skilled labour, which can be used at the place of origin. However, such skills mostly find little opportunity to be applied there as the necessary supportive infrastructure is lacking.

Low savings, remittances lost in repaying loans needed to finance the initial migration, and inadequate acquired skills are impediments to development in mountain areas. They can be addressed by fostering and managing skilled migration through the following interventions by development planners and policy makers

  • Increase the outreach of vocational training in rural mountain areas. Skills such as carpentry, sewing, metalwork, making tools, motor mechanics, plumbing, training in new technologies, and language skills are in demand and can help migrants to obtain jobs with higher salaries.
  • Facilitate ‘brain gain’. Evaluate what skills migrants can attain at their destination and which of them are relevant for the development of mountain communities. Focus vocational training on these skills and inform migrants about job opportunities at their destination. Support the return of skilled migrants and the investment of their knowledge and skills in their communities of origin by enhancing a favorable investment climate.
  • Improve the availability of knowledge and information on job opportunities. Increase the capacity of aspiring migrants to arrange jobs independently by providing information and simplifying emigration procedures.

Making more financial services available in rural areas and building financial literacy

The majority of migrants cannot rely on family and friends for funds to migrate. They often turn to moneylenders for credit, as there are no formal lending services. Moneylenders charge up to 12 times the price of formal credit institutions. Savings among mountain people are low partly because they have low earnings and lose a substantial part of these earnings in paying back loans (see figure below), but also because savings and investment opportunities are rare in rural mountain areas and thus there is no incentive to save.

Overall, the western HKH lacks formal financial services for credit, saving and investment. Moreover, the financial literacy among marginalized mountain communities is limited. The studies found that, even where formal financial services are available, they are not used because people are either not aware of them or shy away from the bureaucratic procedures involved.

“Many women and old people do not understand the policies and cannot sign, so they prefer not to use the banks to receive remittances. Women say that bank staff give them a lot of problems and ask for their signature everywhere. Moreover, the banks are located in the district headquarters, which makes it a time-consuming and expensive exercise,” said Dechen Sherpawhile carrying out the Nepal Survey.

The manager of Rastriya Banijya Bank, Bajhang, Nepal does not understand the difficulties of financially illiterate people. According to him, “The process of sending money is not difficult at all. There are different mediums to remit such as International Money Express (IME), Western Union, Express Money Transfer, Banijya Remit.” He added, “As soon as money is remitted, a control number is given. The family member has to come with citizenship and the control number. Money can be remitted in one day.”

When it comes to financial services, ICIMOD’s recommendation is twofold and directed to providers of formal financial services and development planners:

  • Extend the outreach of formal financial institutions, such as banks, microfinance institutions (MFIs) and credit cooperatives to provide cheaper loans and financial services for micro-saving, investment and insurance.
  • Use the extended network of MFIs and credit cooperatives to raise financial literacy among mountain communities.

Increasing competition for remittance transfers and adopting new technologies

The major challenge involved in transferring remittances to the western HKH is the limited outreach of payout locations. In one of the surveyed districts in Nepal, the transfer of remittances through official channels is probably less than 0.3 per cent. In the few cases where payout locations are, or could be, available, regulatory issues or the limited financial literacy and awareness of communities on how to use these services prevents them from being used.

There is an urgent need for an increase in overall financial services in rural mountain areas. The following recommendations specifically address improving the transfer of remittances:

  • Improve the rural outreach of MFIs. Build the MFI regulatory framework and the capacity of post offices to act as payout locations.
  • Increase awareness among migrants about the different methods of sending money back home and the risks involved in informal transfers.
  • Adopt new technologies such as branchless banking and mobile banking to provide cheap, easy and secure remittance transfers. In the Hindu Kush, Vodafone-piloted mobile banking in Afghanistan and Pakistan is already in an advanced stage in expanding the outreach of mobile banking to poor rural people.

Facilitating the investment of social and financial remittances in mountain areas

A farmer in Thakuli, Uttaranchal, India Source: ICIMOD

Migrants return with money and new skills. In most cases, there is little opportunity to invest either, or, as the case studies showed, migrants do not recognize local investment opportunities.

Therefore, it is important to create investment opportunities that are tailored to the financial and human capital that migrants bring home. Development efforts aim to improve gains of producers or collectors of agriculture or non-timber forest products. Such agro and non-timber forest product value chains require examination and intervention to increase the returns for mountain producers. Production technologies and marketing knowledge require upgrading. Farmers need greater support in soil and water conservation, improvement in irrigation, and agricultural financing and marketing, particularly through the wider outreach of extension services

In addition, an interesting finding in India was that in each village a sizeable chunk of land is lying fallow due to the permanent migration of land owners. Possibilities may be explored to facilitate the leasing of fallow land, through the government or the private sector, to economically weak farmers with small landholdings.

At the same time, new investment opportunities require facilitation. The new skills and knowledge that migrants attain at their destination are particularly relevant. From the case studies, services such as those relevant to mountain tourism showed great potential. Both sites studied in India and Nepal are located in areas with good potential for the development of tourism, which is as yet unexploited due to lack of awareness of the opportunity, lack of skills among locals to develop it, poor accessibility, lack of marketing support by the government, and limited business models and financing products. There is a strong need to recognize returned migrants for the knowledge and skills they have acquired and could invest in their home communities and to offer tailored support and guidance.

Strong awareness must be directed to changing values and perceptions among youth, which requires an emphasis on local employment and livelihood opportunities beyond the agricultural sector in order to reduce youth out-migration or to attract them back to village life. “After studying for so many years it is pointless to go back to agriculture. If I had to be a farmer there was no need to study so much,” said one migrant from Bageshwar district, Uttarakhand.

Addressing the feminization of mountain economies

The case studies clearly underline that labour migration in the western HKH is a predominantly male phenomenon. Women are generally left behind. As a result, any intervention to increase the development impact of labour migration in the communities of origin, including in the migrants’ households, requires a strong gender perspective.
The following aspects require consideration:

  • Recognize that migration leads to the feminization not only of mountain agriculture, but also of the overall mountain economy in the western HKH. Women take on more responsibilities at the place of origin, make decisions that are relevant to the development of their communities, and need stronger support targeted to their needs.
  • The workload of the female members of migrants’ households increases substantially. Agricultural techniques that women can handle and that save time need to be developed, piloted and scaled up.
  • Capacity-building initiatives need to target women. Migrants state that they would send more remittances on a regular basis if they were well invested in their place of origin.
  • Only a few migrants are insured for injury or death, even though many work under hazardous conditions. More attention needs to be given to micro-insurance in order to offer basic protection for migrants and their dependent households. Awareness of HIV also needs to increase

These recommendations provide a guiding framework for leveraging labour migration and remittances to support development and poverty reduction in the western HKH region.

Brigitte Hoermann, Team Leader, Innovative Livelihood Options Action Area, Sustainable Livelihood and Poverty Reduction Programme (SLPR), ICIMOD, Dhrupad Choudhury, Coordinator, IFAD, SLPR, ICIMOD

Useful links

International Centre for Integrated Mountain Development (ICIMOD)
Labour Migration for Development in the Western Hindu Kush-Himalayas : Understanding a livelihood strategy in the context of socioeconomic and environmental change (2010)