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George Washington University

Publication Date

Spring 2012

Program Name

Nepal: Development and Social Change


Remittances have been integral to Nepal’s economy since the 19th century, and they have never been as crucial to the nation’s income as today, accounting for about a quarter of GDP. Microfinance first appeared in Nepal in the 1950s under the form of agricultural cooperatives, and today both saving and credit cooperatives and formal microfinance banks play an important role in giving rural populations access to financial institutions. Increasingly, both these two flows have begun to interact, and this research aims to shed light on these microfinance foreign employment loans. Is microcredit making migration a more affordable and viable option for individuals in areas with very low potential for income generating activities? i.e., is exporting labor through microfinancing more profitable and beneficial locally than financing a business in an area with limited market potentiality? How are remittances used locally, and do foreign employment loans provide any benefits to the institutions that disburse them? I gathered the information for this study by interviewing managers of microfinance institutions in Pokhara, Hemja and Purunchaur, all located in Kaski district. Other interview subjects included clients of these institutions whom had taken foreign employment microloans and/or their families, as well as other individuals in Hemja and Purunchaur who had a family member working abroad. To compare foreign employment and local business loans, microloan borrowers that are not involved in foreign employment were also interviewed. Interviews were semi-structured and conducted in Nepali and English.


Finance | Growth and Development | Work, Economy and Organizations