IMAGE: SAN FRANCISCO CHRONICLE
EVERY DAY some $35m arrives in Nepal from abroad. A construction worker in Riyadh sends $300 to his parents in Sindhupalchok. A nurse in London settles a debt in Kaski. A software engineer in Sydney buys land on the outskirts of Kathmandu. Across 4m to 5m Nepalis scattered from the Gulf to the Great Plains, these transfers add up to remittances worth $11.55bn in the nine months to mid-April, a 32% bump on the same stretch a year earlier. That sum is now equal to roughly a third of the country’s output.
The total wealth of this diaspora—savings, land, shares and pension funds built in foreign economies—has been estimated by industry analysts at $50bn to $70bn. Nepal’s own GDP is some $42bn. By this measure, the country is arguably richer beyond its borders than inside them.
Yet very little of this wealth finds its way into workshops, tech firms, export industries or other wealth‑building assets on Nepali soil. Foreign direct investment pledges fell by 28% in the first nine months of this fiscal year, to $280m. Manufacturing, which makes up some 5% of GDP, has grown slowly for years—a government white paper in April cited “premature deindustrialisation” as a core problem. Foreign currency reserves have hit a record $23.55bn—enough to cover 21 months of imports—and banks hold spare cash they cannot put to work.
The reasons lie in how the financial system steers remittances. Take a typical household in Chitwan. A husband who spent four years in Qatar has paid off family debt, put two children through school and saved some $8,000. His wife wants a safe home for that money. She buys land. Land in Nepal is tangible and shielded by law. It has risen steadily over two decades of demand fuelled by remittances, especially in Kathmandu and its nearby towns.
The formal alternative—putting money into a registered company—requires a minimum of Rs20m (roughly $131,000) under Nepal’s Foreign Investment and Technology Transfer Act for most sectors. The Nepal Stock Exchange offers a narrow range of bank and financial firm shares, with questionable governance. A corporate bond market is absent; infrastructure bond programmes do not exist; and families receiving remittances lack channels to direct savings into, say, a hydropower plant or a cold-storage shed for vegetables. The financial system gives you land or bank deposits. Most pick land.
In Kathmandu’s land market, the price-to-income ratio has reached 36.6, second only to Colombo in Asian unaffordability. Average civil‑servant pay runs to $270 a month. The gap between wages and land prices is bridged by remittance income from abroad and by land betting that does not answer to local wages, local rents or local output growth. At Bhairahawa’s new airport, the government spent over Rs20bn buying land—three times the cost of building the airport itself. Rental yields on top Kathmandu land stand at 1.7% yearly, among the lowest in Asia, while mortgage rates range from 8% to 12%. A former government economist says: “Why build a business when you can make more money trading land?”
Banks strengthen this mania. More than 80% of all loans use land as collateral. Banks lend against land, land prices rise, collateral swells, banks lend more against land. Manufacturing, farming and tech get little credit, because they do not fit the collateral template.
Nepal’s formal investment climate piles on further hurdles. The World Bank’s B‑READY 2025 assessment saw Nepal’s score fall from 72.21 to 56.15, below the worldwide average of 60.03. On the ease of winding up a business when things go wrong—the yardstick that tells an investor what happens—Nepal scored zero. The country has no dedicated court for business disputes; contract fights must go through a district‑court system where one study named the government itself as a “known contract breaker”. Transparency International scores Nepal 34 out of 100 on its 2025 Corruption Perceptions Index, 109th of 182 countries.
The Non‑Resident Nepali card scheme, brought in under the NRN Act of 2008, gives economic, social and cultural rights—land ownership within limits, investment access, foreign‑currency accounts—but holds back political rights. NRN cardholders cannot vote, cannot stand for office and cannot take part in the running of the bodies that will shape the fate of their holdings.
In September 2025, youth‑led protests against government graft and a ban on social media turned violent. Police fired on those protesting, killing at least 77 people; Parliament was set ablaze; prime minister K.P. Sharma Oli stepped down; the House of Representatives was disbanded. It was the bloodiest political upheaval in Nepal since its civil war. A white paper on the economy, published in April, spoke of “early deindustrialisation” driven by “twisted reward systems that have bred favouritism and policy graft, holding back true business drive”. The paper gave few clear fixes.
Other countries have taken different paths. India has raised $11.3bn through three diaspora bond programmes since 1991, each timed to a payments crisis. Israel has run a never‑broken diaspora bond programme since 1951, raising some $1bn yearly in normal years and $2.1bn in 2024 alone; Israel offers its diaspora full citizenship. Bangladesh issues Wage Earner Development Bonds in both local currency and dollars, aimed at low‑to‑middle‑income migrants, with death‑risk payouts built in. Vietnam is steering the $190bn in remittances it has received over the past ten years into high‑tech, green energy and digital fields; Ho Chi Minh City alone took in $10.3bn in remittances in 2025.
Nepal tried a version in 2010, issuing a Foreign Employment Saving Bond worth Rs5bn aimed at migrant workers, offering 9.75% yearly interest. It failed, mostly because high‑street banks were at the same time offering up to 13% on five‑year fixed deposits.
The Securities Board of Nepal has recently unveiled plans to allow NRNs to trade in the second‑hand share market; has loosened rules for private equity and venture capital; and has cut investment fees by 50%. The 2025-26 budget set aside Rs730m in subsidised startup loans at 3% interest. A diaspora tech founder who returns to Kathmandu finds her firm labelled as a foreign‑backed outfit—though the IT sector is exempt from the Rs20m minimum—yet she struggles to hire engineers because many gifted Nepali graduates have themselves moved to Dubai or Melbourne. She faces shaky power supply, a home market of 30m people with scant buying power, and a landlocked location that adds 30–40% to shipping costs for exports compared with coastal rivals in Bangladesh or Vietnam.
Nepal’s private equity and venture capital industry has put to work a total of $165m since 2012, with a record $64m in 2024. A single mid‑sized venture capital firm in Bangalore or Singapore puts more to work each year than Nepal’s whole PE/VC industry has built up over that same span.
Roughly 2,300 young Nepalis leave for work abroad every day. The World Bank foresees GDP growth of just 2.3% this financial year, down from 4.6% last year. Nepal had been set to graduate from “least developed country” status in November, but in May requested a three‑year postponement, according to the Kathmandu Post; the UN has yet to decide. Public debt has reached Rs2.9trn, or 43.8% of GDP. The government raises a hefty share of its income from import duties and spending taxes, both of which rely heavily on remittance income. A lasting upset to migration flows would at the same time squeeze remittances, shrink spending, cut income from import taxes and hit the government’s bottom line from several sides at once.
Nepal has the power to draw 83,000 megawatts from its rivers, of which just over 4,000MW are now working—less than 6% of what the rivers could yield. Tech service exports topped $1bn in 2025, more than doubling in three years, though the central bank struggles to pin down the number because foreign buyers often label payments as personal remittances rather than export earnings. The government has set a target of $22bn in total tech exports by 2034.
The Non‑Resident Nepali card scheme stands unchanged. No state‑backed diaspora bond programme exists. There is no dedicated investment body with one‑stop regulatory approval. The rules on moving capital in and out of the country have not been eased. Business courts do not exist. Tax breaks and other boosts for hydropower, food processing, tech and light manufacturing are sparse.
The estimated $50bn stays outside Nepal, kept in foreign pension funds, Sydney flats and London bank accounts. Its owners watch from afar as Nepal puts out another government, another white paper, another promise of change. The country’s migrants have built things of worth in tough economies across the world. The question is whether the state can give them a reason to bring that money home. ■
