Remittance help reduce poverty not government policy: UN human rights expert

Nepal's poverty has reduced not due to government policy rather with the help of remittance inflow, according to a UN expert.

"Poverty reduction owes more to remittances than to proactive government anti-poverty policies," the UN special rapporteur and extreme poverty and human rights, Olivier De Schutter, said today after conducting an 11-day official mission.

"A quarter of the decline in poverty can be attributed to outmigration only, with estimates showing that, without remittances, poverty would have increased in Nepal,” he said, adding that remittances in Nepal were 10 times larger than foreign aid and 2.5 larger than total exports only in 2017. "It is clear that much more needs to be done by the government to meet its own target of reducing multidimensional poverty to 11.5 per cent by 2023-2024,” the expert said, suggesting the government to ensure its skills and training programmes reach the poorest families. "While public works programmes such as the Prime Minister’s Employment Programme (PMEP) have considerable potential, in practice the programme has yet to deliver on its promise of providing 100 days of work per person per year. "In the country, 80 per cent of workers are informal, which exposes them to higher rates of abuse, largely because the government lacks the ability to enforce minimum wage legislation in the informal sector.|

Although informal workers should also contribute to and benefit from the Social Security Fund (SSF), there is currently no plan to include them in the programme, he added.

Nepal has one of the most progressive constitutions in the world, but many of its promises still are to be fulfilled, De Schutter, said, adding that Nepal has succeeded in reducing multidimensional poverty by 12.7 per cent between 2014 and 2019, and its Human Development Index (HDI) has improved, as have indicators related to health and education. "But significant gaps remain."

"Women are still lagging on a number of indicators," he said, adding that though banned, caste-based and ethnicity-based discrimination remain a reality in social life, and it is a major factor explaining the perpetuation of poverty. "Land issues remain unresolved, despite the efforts to accelerate the rehabilitation of former bonded labourers and to ensure landless Dalit benefit from land redistribution."

De Schutter’s fact-finding mission began on December 29, just weeks after the UN General Assembly voted a resolution inviting Nepal, along with Bangladesh and Lao People’s Democratic Republic, to prepare for graduation from the status of Least Developed Country (LDC) to that of an emerging economy. Nepal will benefit from a five-year transition period. “Graduation from LDC status is a major milestone for Nepal,” De Schutter said, adding that poverty reduction must be at the heart of the country’s transition strategy to ensure that no groups are left behind."

The UN expert met with communities who suffer from intersecting forms of deprivation. Most were landless daily wage labourers working in agricultural or informal jobs and struggling to send their children to school. Many were from historically disadvantaged and discriminated groups including Dalit, Madhesi, and Indigenous people, as well as women. “The stark inequalities resulting from the deeply entrenched norms and values of the Nepali caste system continue to perpetuate disadvantage today,” De Schutter added.

Women suffer the brunt of a historically patriarchal society, earning almost 30 per cent less than men, suffering from higher rates of informality, owning only 19.7 per cent of homes and land, and enduring a 17.5 per cent literacy gap compared to men, the UN poverty expert noted. "Nepal can and must do better,” he said.

Children experience the worst forms of deprivation because of the poverty their families face, he added. Over one million children work in Nepal, and in rural areas over a fifth of children do.

"During my mission, I met with countless families whose children, especially girls, engaged in agricultural or domestic work,” De Schutter said. "Wealth inequality is a major factor: over 20 per cent of children in poverty work, compared to only five percent of children from rich families."

“The government must take child poverty seriously and take the necessary steps to end child marriage and labor and improve quality of and access to education,” he added.

During his mission, the special rapporteur visited Bagmati, Karnali, Lumbini provinces, as well as Province 2. He met with nine ministries, including six ministers, as well as local and provincial authorities, people affected by poverty, civil society organisations, and development cooperation and UN agencies.

Nepal star performer in cutting multidimensional poverty

Nepal, along with Bangladesh, is star performers in a new study by Oxford University of how countries have reduced multidimensional poverty over time, achieving some of the strongest decreases in poverty in both absolute and relative terms.
Using a poverty measure that assesses a range of deprivations in health, education and living standards, researchers found that the percentage of poor people in Nepal dropped from 64.7 per cent to 44.2 per cent between 2006 and 2011; some 4.1 percentage points per year, while in Bangladesh poverty rates decreased by 3.2 percentage points per year between 2004 and 2007.
In addition to reducing the percentage of poor people, both Nepal and Bangladesh reduced the intensity of poverty meaning that even poor people were on average less poor — deprived in fewer things at the same time — than they had been before, an important element of multidimensional poverty analysis that provides a more balanced picture of poor people’s lives.
India also made significant progress between 1999 and 2006, but at a rate that was less than one third of the speed of its poorer neighbours, with a reduction in poverty rates of 1.2 percentage points per year — compared to of 4.1 per cent of Nepal and 3.2 per cent of Bangladesh, the study revealed.
Nonetheless, India reduced multidimensional poverty more than 50 per cent faster than it reduced income poverty in absolute as well as relative terms.
"The success of Nepal and Bangladesh in reducing poverty despite their relatively low income highlights the effectiveness of social policy investments combined with active civil society engagement," said director of the Oxford Poverty and Human Development Initiative — the research centre at Oxford University that conducted the study — Dr Sabina Alkire.
The poverty measure used by Oxford Poverty and Human Development Initiative, the global Multidimensional Poverty Index (MPI), is unique in capturing the simultaneous disadvantages experienced by poor people, like malnutrition, education and sanitation, providing a high-resolution lens on their lives. If people are deprived in a third or more of ten weighted indicators they are identified as ‘MPI poor’.
Of 22 countries analysed for changes in MPI poverty over time, Nepal, Rwanda and Bangladesh were found to have made the largest absolute reductions, followed by Ghana, Tanzania, Cambodia and Bolivia.
Most ‘top performing’ countries reduced MPI poverty as fast or faster than income poverty with Nepal in particular making stellar progress in cutting both. The strongest reductions in deprivations in Nepal were made in indicators like assets, electricity and school attendance but all ten indicators saw significant reductions. While the rise in income due to increased rural wages and remittances clearly affected the reduction in asset deprivation, the dramatic increase in access to electricity and schooling was largely the result of NGO and government interventions. Nepal’s baseline data were collected in 2006, the year in which the Comprehensive Peace Accord was signed, ending the country’s decade-long civil war.
India, like Nepal, made significant reductions in all ten poverty indicators. However, multidimensional poverty was reduced least in the poorest states — like Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh and West Bengal — and among the poorest social groups like Scheduled Tribes, Muslims, female-headed households and larger households.
Moreover, even India’s best-performing states — Kerala and Andhra Pradesh — progressed little more than half as fast as Nepal or Bangladesh in reducing multitidimensional poverty. "From 1999-2006, India did very well in certain aspects of poverty reduction like MPI among the scheduled caste groups showed a strong reduction, and poverty among the most destitute went down faster than the average,” said Oxford Poverty and Human Development Initiative Researcher Dr Suman Seth.
"Unfortunately, India has not collected official data on MPI deprivations including malnutrition since 2005-6, making India’s MPI the least up-to-date in South Asia," the report said, adding that Oxford Poverty and Human Development Initiative anticipates being able to update the MPIs for Bangladesh, Pakistan and Afghanistan again in the coming year, all using 2011 data. The MPI indicators are built from fewer than 40 survey questions, which make up less than seven per cent of the 600-plus questions present in most demographic and health surveys.
“If Nepal and Bangladesh continue reducing poverty at the current rate, they will halve MPI in less than 10 years and eradicate it in 20," said Oxford Poverty and Human Development Initiative’s Dr José Manuel Roche. "Based on the same assumptions, it will take India 41 years to eradicate acute poverty as measured by the MPI."

Nepal to eradicate poverty in next two decades

Experts today hailed the encouraging trend of poverty reduction in the country claiming that it might take only two decades to eradicate poverty in Nepal, if the current trend continues.
"If the current trend of poverty reduction continues, Nepal will be able to eradicate poverty in around 20 years," said director of Oxford Poverty and Human Development Initiative from the Oxford University Dr Sabina Alkire while presenting the concept and methodology of Multidimensional Poverty Index (MPI), here today.

In 2006, the MPI figure stood at 0.350 (65 per cent poor) but has come down to 0.217 (44.2 per cent) in 2011, she said, lauding Nepal's efforts in reducing the poverty headcount by 4.5 per cent annually. "The Terai has been able to reduce poverty faster than the hills," she added.

The proportion of population living under extreme poverty is the highest  at 29.2 per cent in the Mid-Western Development Region, according to Human Development Report 2013. The second largest population living in extreme poverty is from the Far Western Region, followed by the Central, Eastern and Western regions. While segregating the population of each region too, the highest percentage living in the western mountains are in severe poverty with 60.9 per cent followed by those living in the far western and central Terai with 53.4 per cent of the population.

According to the data, the poorest region has 72 per cent MPI, whereas the least poor region has 30 per cent MPI, which is based on three dimensions — health, education and living standard — and 10 indicators — nutrition, child mortality, years of schooling, school attendance, cooking fuel, sanitation, water, electricity, floor and assets — which are equally weighted.

"A person is identified as multidimensionally poor, if he/she is deprived in at least one third of the dimensions, as one deprivation alone may not represent poverty," according to Alkire. "Likewise, income poverty may not mean they are not deprived of any basic social service and vice versa."

There must be causality analysis as the country has seen reduction in absolute poverty but still relative poverty is a challenging issue, said central bank governor Dr Yubaraj Khatiwada. He also urged for the formation of a global indicator for poverty calculation, as the various indicators including MDG, and Human Poverty Index (HPI) will create more confusion and may not reflect the real comparable picture.

"There could be some indicators that are a must globally and others optional or could be customised according to the national need," he said, adding that Multidimensional Poverty Index would, however, help develop indicators to map development post-2015.

However, UNDP country director Shoko Noda opined that indicators of Millennium Development Goals (MDGs) cannot reflect the complete picture of poverty and countries are encouraged to develop indicators in line with MPI that can reflect the real picture of poverty.

Similarly, director general of Central Bureau of Statistics (CBS) Uttam Narayan Malla explained the difference between MPI — that has claimed 44.2 per cent poor — and third Nepal Living Standards Survey (NLSS III) — that has claimed 25.2 per cent — below the poverty line.

"NLSS is a consumption based survey that calculates on the basis of calorie intake by a person, whereas MPI has its own dimensions and indicators," he said, adding that despite different models, both have reflected a reduction in poverty in the country, which is encouraging.

Likewise, economist Dr Bal Gopal Baidhya said that the poverty headcount rate has reduced in the country, despite sluggish economic growth rate from 2006 to 2011 and weaker institutions

Nepal features in low human development group, ranks 157 in HDI 2013

Almost half of Nepal's population is living under multidimensional poverty, according to a UNDP report released today globally.

The 2013 Human Development Index's (HDI) Multidimensional Poverty Index (MPI) — an alternative to income-based poverty estimates — revealed that some 44 per cent Nepalis are living under multidimensional poverty.

The UNDP today released its 2013 Human Development Index (HDI) along with report – that has ranked Nepal at 157^th position – that has ranked 186 countries in terms of economic and human development indicators. Nepal’s ranking has been unchanged since last report that was published in 2011.
"In South Asia, Sri Lanka is in the high human development group, three countries — Maldives, India and Bhutan — are in the medium and the remaining four — Bangladesh, Pakistan, Nepal and Afghanistan — are in the low human development group," it revealed.

Although South Asia has reduced the proportion of the population living on less than $1.25 a day from 61 per cent in 1981 to 36 per cent in 2008, more than half a billion people there remained extremely poor, the report added. The multidimensional poverty is high throughout South Asia, with the highest rates in Bangladesh (58 per cent), India (54 per cent) and Pakistan (49 percent)," it added.

Nepal, however, has the biggest gap due to inequalities at 34.2 per cent in the region followed by Pakistan at 30.9 per cent. Similarly, Sri Lanka has the least gap of 15.1 per cent in the region.

"Likewise, child labour is relatively high in Nepal, where more than one-third of children of ages five to 14 years are economically active and the lowest is observed in India at 12 per cent," it stated.

The South Asia region’s average employment-to-population ratio stands at 61.2 per cent, below the world average of 65.8 per cent. But Nepal has 86.4 per cent employment-to-population ratio, said the Report — 'The Rise of the South: Human Progress in a Diverse World' — that analyses more than 40 developing countries that have made striking human development gains in recent years. It attributes their achievements to some strong national commitments: better public health and education services, innovative poverty eradication programs and strategic engagement with the world economy.

"The rise of the South is unprecedented in its speed and scale. Never in history have the living conditions and prospects of so many people changed so dramatically and so fast,” said the report, which uses the term 'the South' to denote developing countries and 'the North' to denote developed countries. "By 2030, more than 80 per cent of the world’s middle class will live in the South and account for 70 per cent of total consumption expenditure. The Asia-Pacific region alone will host about two-thirds of that middle class."

The South as a whole is driving global economic growth and societal change for the first time in centuries,” according to UNDP administrator Helen Clark.

New ideas and entrepreneurship are coming from the South and will be the defining movers of the 21st century,” said UNDP regional director for Asia and the Pacific Ajay Chhibber. "In our changing world, solutions are moving across the South, not just from the North to the South."

The new middle class in the South is driving economic, social and political expectations. Increasingly, the most important engine of growth for developing countries is their domestic market. By 2025, annual consumption in emerging markets is estimated to rise to $30 trillion. By then, the South will account for three-fifths of the one billion households earning more than $20,000 a year, creating a new global middle class, the report added.

 

South Asian ranking
Sri Lanka – 92 (High Human Development)

Maldives – 104 (Medium Human development)
India – 136 (Medium Human development)

Bhutan – 140 (Medium Human development)

Bangladesh – 146 (Low Human Development)

Pakistan – 146 (Low Human Development)

Nepal – 157 (Low Human Development)

Afghanistan – 175 (Low Human Development)

(Human Development Index 2013)

Key foreign currency earner export items lose sheen

The key foreign currency earner export items have lost their sheen in last five years.
The weightage of garments, woolen carpet, textile -- the key export items -- have plunged by almost half in the Manufaturing Price Index (MPI) in this fiscal year comapared to the fiscal year 2007-08.
The weightage of garments -- one of the key export items -- has dropped by almost seven times to 1.17 per cent in the current fiscal year from 7.14 per cent in the 2007-08, whereas the weightage of woolen carpet -- another key foreign currency earner -- has dropped by half to 2.91 per cent in the current fiscal year from 4.32 per cent in the 2007-08, according to the Central Bureau of Statistics (CBS).
"Similarly, the weightage of other textile has dropped to 4.17 per cent in the current fiscal year from 6.59 per cent in the 2007-08, whereas pashmina -- yet another key export items -- could not make it to the Index due to its meagre weightage in the Index this time compared to 2007-08, when it had 1.18 per cent weightage in the index.
However, the items of domestic consumption have more weightage in the latest Manufacturing Price Index.
Due to plunge in the key manufacturing items, the Manufacturing Price Index has recorded a growth of a mere 1.23 per cent in the second quarter compared to the first quarter of this fiscal year. In the fiscal year 2007-08, the MPI had recorded a growth of 10.76 per cent over a fiscal year ago.
Entrepreneurs blame the higher cost of production for the drop in the manufacturing. "Increasing cost of production due to frequent labour troubles, power-outage and unfavourable security situation in the country has brought the key exports manufacturing down," said president of Federation of Nepalese Chambers of Commerce and Industry (FNCCI) Kush Kumar Joshi.
"Our products have been loosing competitive edge over other countries' products," he said, adding that the labour and energy could have been our advantages, had the government acted on time to boost the manufacturing and investment climate.
The Manufacturing Price Index has this year listed 44 items based on 2006-07 manufacturing census from earlier 34 items -- that was based on 2001-02 manufacturing census -- to make it more inclusive, said director of National Accounts Division at the CBS Suman Raj Aryal.
"The addition of new commodities is also due to diversification of industry lately," he said, adding that some new industries have made it to the list and the old ones are on the way out as their weightage have started shrinking.
The new industry like furniture has been added, though it has a meagre 0.56 per cent weightage in the Index.