Nepal SCD Supplemental Annex 0 In the last 20 years Nepal has secured impressive progress in reducing  poverty Source: World Bank. 2016. Moving up the Ladder: Poverty Reduction and Social Mobility in Nepal. World Bank, Washington DC 1 Nepal has also made impressive gains in education and health, and on  many measures, performs relatively well compared to structural peers.  2 This has been achieved despite low growth and almost no productivity  growth during the last 20 years 10 Trend Growth (HP filter) GDP Growth (Percent) 8 6 4 2 0 -2 -4 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 (percent change) TFP growth Trend growth (HP filter) 6.0 4.0 2.0 0.0 -2.0 -4.0 -6.0 -8.0 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 3 Remittances directly account for 27% of all poverty reduction from 1996  to 2011, and high rates of migration also had indirect impacts on poverty Drivers of poverty reduction 1996‐2011 Impact of migration on poverty, 2001‐2011 100% 80% 27 24 32 60% 33 40% 52 50 20% 36 15 16 0% National Urban Rural An increase in the migration rate of 10 percent  Residual reduce the village poverty rate by 7 percentage  Remittances points. This estimate suggests that migration rates  Labor income Household demographics to Gulf‐Malaysia explains 40 percent of the actual  decline in poverty between 2001 and 2011.  Source: World Bank. 2016. Moving up the Ladder: Poverty Shrestha, M. 2017. The impact of large-scale migration on Reduction and Social Mobility in Nepal. World Bank, poverty, expenditures, and labor market outcomes in Nepal. Washington DC Mimeo, World Bank. 4 Indirect impact of migration: an increase in village migration by 10 percentage  points increases wages by 25 percent, largely driven by increase in agricultural  wages and non‐farm wages for women Shrestha, M. 2017. The impact of large-scale migration on poverty, expenditures, and labor market outcomes in Nepal 5 Indirect impact of migration: migration reduced labor force participation (LFP),  estimates vary but suggest that LFP of remaining members of households with  migrants fell Higher village migration rates increase LFP among households with  Wage employment falls, self‐employment increases, hours supplied  migrant members, but the impact is weaker than for households  fall, among households with migrants. (Another study also  without migrants. documents similar results, Lokshin and Glinskaya, WBER 2009) Shrestha, M. 2017. The impact of large-scale migration on 6 Phadera, L. 2016. International Migration and its Effect on Labor Supply  poverty, expenditures, and labor market outcomes in Nepal of the Left‐Behind Household Members: Evidence from Nepal Indirect impact of migration: remittances enabled increased investments  in health and education, particularly female education Shrestha, M. 2017. The impact of large-scale migration on poverty, expenditures, and labor market outcomes in Nepal 7 Other factors also contributed to Nepal’s progress: progress on health  and education was aided by an increase in community and private schools 85% of primary and lower secondary enrollment is in community schools and the number of  community schools has increased rapidly to keep up with increasing enrollment rates.  Share of primary level enrollment Share of lower secondary (number of schools) (by school type) enrollment (by school type) 35000 100% 100.0 100% 90.00 94.5 96.6 30000 86.8 80.00 77.70 25000 80% 80.0 80% 69.30 70.00 72.1 20000 67.5 60.00 0.75 60% 0.88 0.88 0.85 60.0 60% 0.80 0.86 0.84 15000 50.00 0.92 0.94 0.92 46.50 10000 40.00 40% 40.0 40% 31.30 5000 30.00 26.10 20% 20.0 20% 20.00 0 Private Private Private Community Community Community 0.20 0.25 10.00 0.15 0.14 0.16 0.08 0.12 0.12 0.08 0.06 0% 0.00 0% 0.0 1995 1999 2005 2010 2015 1995 1999 2005 2010 2015 Private schools Community schools Community schools NER Private schools Primary (1-5) Lower Secondary NER Secondary (9-10) (6-8) 1995 2005 2015 Sources: Educational Statistics of Nepal (1995), School Level Educational Statistics of Nepal (2005), Flash 8 Reports (2010, 2015), Ministry of Education, Department of Education And increased private spending: private expenditure accounts for 55 percent of  total expenditure in education … making private contributions to education some  of the highest in the world Source: UNESCO. 2016. Global Education Monitoring Report 9 Private expenditure also accounts for 60 percent of total expenditure in health …  making private contributions to health some of the highest in the world 70 60 50 40 30 20 10 0 Out of pocket health expenditure as a % of total Private expenditure as a % of total expenditure expenditure Nepal Strutural peers Remittance dependent Low income South Asia region Source: Find My Friends using the Health Nutrition and Population Statistics 10 Although the share of public spending on health and education is low,  public spending was maintained during a decade of conflict and increased  post‐2006  11 Higher public spending on education and health allowed the government  to remove user fees which substantially increased access to basic services Sophie Witter Sunil Khadka Hom Nath Suresh Tiwari. The national free delivery policy in Nepal: early  evidence of its effects on health facilities. Health Policy and Planning, Volume 26, Issue suppl_2, 1  November 2011, Pages 84–91 Presentation Title 12 Although public spending on education and health increased, government  spending on health and education remains below peers 120 100 80 60 40 20 0 Public health Government Government Government expenditure (as a % expenditure per expenditure per expenditure per of GDP) student, primary (% student, secondary student, tertiary (% of GDP per capita) (% of GDP per capita) of GDP per capita) Nepal Structural Peers Remittance dependent South Asia Region WDI Indicators using find my friends 13 Despite welfare gains, there is an urgent need to change Nepal’s development  model: Growth opportunities are being missed resulting in slow growth Business as usual would result in the trend rate of growth slowing to an  average 3 percent per year from 2017 to 2030 (GNI, 2016$) 1,100 LIC graduation threshold 1,000 900 GNI per capita 800 700 600 500 400 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Source: World Bank. 2017. CEM 14 Inequities that underpin fragility have not yet been addressed Rights, equity and inclusion dominate the  Rates of international migration are higher for  constitution in 2015 much more than in 1990  groups that are less favored in the domestic job  highlighting the importance of this agenda in  Nepal today market (such as Janajati and Muslims) 0.2 Probability of migrating abroad relative  0.6 0.18 to Brahmin in Kathmandu  Sovereign, Sovereignty 0.6 0.16 0.14 Justice 1.9 1.8 0.12 0.1 Rights 0.5 2.1 0.08 0.06 Equity, Equal, Equality 0.4 0.04 0.8 0.02 0.0 1990 2015 Inclusion, Inclusive 0 0.7 Dalit from Dalit from Brahmin Middle Janajati Dalit from rural hills urban hills from urban class from from rural rural Terai 0.0 0.5 1.0 1.5 2.0 2.5 hills urban Terai Terai to India to other external destinations Source: World Bank. 2016. Moving up the Ladder:  Source: Raju, D. and J. Rajbhandhary, eds.  Poverty Reduction and Social Mobility in Nepal. World  Forthcoming. “Youth labor in Nepal”. World  Bank, Washington DC Bank, Washington D.C.  15 Welfare gains are vulnerable to natural disasters and other  uninsured risks Impact of Shocks on Food Insecurity, Non‐metropolitan Nepal, 2016 45% of Nepali are vulnerable to becoming poor. 100% 7 90% 14 22 80% 28 70% 35 60% 45 50% 40% 30% 64 50 20% 31 10% 0% 1995/96 2003/04 2010/11 Poor Vulnerable Middle Class Upper Source: World Bank. 2016. Moving up the Ladder: Poverty Reduction  Source: Walker, Khadka and Pandey, 2017. “Risk and Vulnerability in  and Social Mobility in Nepal. World Bank, Washington DC Nepal” using the  Nepal Household Risk and Vulnerability Survey 2016. Notes: Light-colored bands show 95% confidence interval for share of food insecure households among those reporting/not reporting the given shock between 2014 and 2016. Sample frame excludes 16 metropolitan areas as defined in 2010 Welfare gains are vulnerable to natural disasters and other  uninsured risks (2) Out of pocket spending on health care comprises 3‐4% of expenditure of  those just above the poverty line, pushing many into poverty 10% 8% 6% Proportion of household expenditure 4% in:  Health 2% 0% 1 2 3 4 5 Expenditure Quintile Source: Jacoby, H. 2017. Analysis for Nepal SCD using the 2016 Household Risk and Vulnerability Survey 17 There are also opportunities and risks arising from the demographic  transition that Nepal is undergoing (age group) 2015 (age group) 2050 100+ 100+ 90-94 Male Female 90-94 Male Female 80-84 80-84 70-74 70-74 60-64 60-64 50-54 50-54 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 2,000 1,000 0 1,000 2,000 2,000 1,000 0 1,000 2,000 (thousan (thousan Source: World Bank. 2017. CEM 18 Part B: Elements of a new approach 1. Encouraging political inclusion, reducing institutional capture, and eliminating clientelism.  2. Promoting private sector investment to create more and better jobs.  3. Harnessing the potential of natural resources.  4. Ensuring all Nepalese are equally able to invest in and use human capital.  5. Increasing resilience to natural disasters and health shocks.  6. Getting more from migration.  19 Area 1: Encouraging political inclusion, reducing institutional capture, and eliminating clientelism Governance has deteriorated in Nepal Source: World Governance Indicators 20 Area 1: Encouraging political inclusion, reducing institutional capture, and eliminating clientelism Firms in Nepal have lower rates of taxation than regional and structural peers Total tax rate (percent of profit) 60 50 40 30 20 10 0 Nepal Structural peers Remittance Low income South Asia region dependent Source: Find my friends 21 Area 2: Promoting private sector investment to create more and better jobs Political instability and lack of infrastructure are major constraints to firm  growth and job creation Nepal has large infrastructure gaps 1600 1400 1200 1000 800 600 400 200 0 Fixed line and Electricity Total road Electric power mobile cellular consumption network (km transmission subscriptions (kilowatt hours per 100,000 and (per 1,000 per capita) people) distribution people) losses (US$ lost per 1,000 US$ of output) Nepal South Asia Structural peers 22 Area 2: Promoting private sector investment to create more and better jobs FDI is low 23 Area 2: Promoting private sector investment to create more and better jobs Tariffs are high Source: World Bank. 2017. CEM 24 Area 2: Promoting private sector investment to create more and better jobs Remittances have contributed to real exchange rate appreciation and  increasing real wages which reduce export competitiveness (Index number, 2010=100) (3-m mov. avg. USD m) Weak growth 120 700 and limited job opportunities 115 600 110 500 Low competitiveness Outward 105 migration and Real exchange rate 400 large-scale 100 remittances 300 Skills / educational 95 infrastructure gap Implementation Governance / Geography / 200 outcomes 90 capacity High reservation 85 Remittances 100 wages and appreciation (right) of real 80 0 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17 exchange rate Source: World Bank. 2017. CEM 25 Area 2: Promoting private sector investment to create more and better jobs Access to finance is worse in Nepal than in South Asia on average, and is  worse for smaller firms and women‐owned enterprises Source: Enterprises Survey 2013 26 Area 3: Harnessing the potential of natural resources Nepal has untapped comparative advantage in production on non‐traditional  higher value crops in areas of higher elevation World Bank. 2016. Source of Growth in Agriculture.  World Bank, Washington DC.  Area 3: Harnessing the potential of natural resources Growth in agriculture has been low and volatile driven by high prices and  favorable monsoons rather than any growth in productivity. World Bank. 2016. Source of Growth in Agriculture. World Bank,  Washington DC.  Area 3: Harnessing the potential of natural resources Cereal yields are low compared to neighboring countries, even when  comparing production in lowland Nepal to other lowland neighbors World Bank. 2016. Source of Growth in Agriculture. World Bank,  Washington DC.  Area 3: Harnessing the potential of natural resources Diversification from cereals towards higher productivity fruits and vegetables  has been limited The area allocated to paddy fell from 76 percent in 2003/4 to 72 percent in 2010/11. There has  been a modest increase in diversification, mainly driven by changes in the Hills (although the  mountains are still the most diversified).  World Bank. 2016. Source of Growth in Agriculture. World Bank, Washington DC.  Area 3: Harnessing the potential of natural resources The share of crop produced for market falls significantly with distance Source: M. Shahe Emran and Forhad Shilpi. 2008. “The Extent of the Market and Stages of  Agricultural Specialization” World Bank Policy Research Working Paper 4535 Area 3: Harnessing the potential of natural resources Input use is relatively high (4 out of 5 households use fertilizer) and with a  few exceptions do not show large gradients across consumption quintiles. 100% 90% 80% 70% 60% 50% 40% Poorest 30% 20% 2 10% 3 0% 4 Own/rent tractor or Own/rent tractor or Own/rent tractor or Used improved seeds Used improved seeds Used improved seeds Used pesticide Used pesticide Used pesticide Used fertilizer Used fertilizer Used fertilizer Richest thresher thresher thresher Mountain Region Hills Region Terai Region Source:  Jacoby, H. 2017. Analysis for Nepal SCD using the 2016 Household Risk and Vulnerability Survey  Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Access to good sanitation and clean water is relatively good in Nepal 100 90 80 70 60 50 40 30 20 10 0 Improved sanitation facilities (% of Improved water source (% of population population with acccess) with access) Nepal Strutural Peers Low income South Asia Region Source: Find my friends 33 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Starting primary school on time, finishing primary school on time, being well‐nourished in  early childhood, having clean water to drink, adequate sanitation and electricity are in  large part determined by a child’s gender, parental wealth and education, and location. Circumstances of birth determine investments in a child’s education… Goma is a girl, born in rural (probability) Kalikot. Her parents are 100 100 96 95 100 illiterate, belong to the Dailit community and are in the 90 85 84 90 80 bottom 20 percent of Nepal’s 80 80 69 wealth distribution. 70 70 60 Champa is also a girl born to a 48 48 60 household otherwise very 50 50 similar to Goma’s. But 40 36 31 Champa’s parents are from a 30 40 village in Siraha. 20 30 96 Avidit is a boy born to an 10 65 20 upper caste household in 0 10 urban Kathmandu. Both his parents have a university 0 education and come from Started primary Finished primary affluent backgrounds. on time on time Avidit Goma Champa Avidit Goma Champa Source:  World Bank . 2016. Moving Up the Ladder. World  Bank, Washington DC.  34 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Analysis of performance in national examinations such as the SLC or the National  Assessment of Student Achievement (NASA) administered to eight‐graders, show the odds  of passing to be skewed in favor of children with favorable birth circumstances. Contribution to inequality (percent) Pass Grade 8 Mathematics 38 Pass Grade 8 Nepali 27 Pass Grade 8 Science 29 Passing School Leaving certificate 45 0% 20% 40% 60% 80% 100% Ethnicity Gender 55-73% of inequality is Parental Occupation or Income Parental Education explained by circumstances District HQ/District-Urban/Rural Private/Public of birth Source:  World Bank . 2016. Moving Up the Ladder. World  Bank, Washington DC.  35 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital School quality more generally, proxied by the education of the school head, falls with  remoteness perhaps reflecting the absence of private education provision in more remote  areas or the challenge of providing high quality public services in remote locales. Remoteness and education quality 100 90 80 70 Director of 60 secondary school has a bachellor's 50 degree or higher (%) 40 30 Private to public use 20 of schooling (ratio) 10 0 1 2 3 4 5 Remoteness quintile Source:  Jacoby, H. 2017. Analysis for Nepal SCD using the  2016 Household Risk and Vulnerability Survey  36 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Providing basic secondary health services in remote locations is similarly  challenging. 100 94 Proportion of woemn giving birth in a health facility  90 80 70 65 60 50 49 50 46 or hospital 40 41 38 40 29 30 25 21 20 20 13 13 12 9 10 5 0 0 Taplejung Rasuwa Gorkha Rukum Bajura Five districts District headquarter VDCs within 8 hours travelling distance VDCs >8 hours of travelling distance Kiran Regmi, Senendra Upreti, Maureen Dar Iang, Hom Nath Subedi, Devi P Prasai, Kapil Babu Dahal, Chhaya Jha, Shilu Aryal, Swaraj Rajbhandari, Rachel Phillipson, Stephen Keeling, Alison Dembo Rath, and Deborah Thomas. October 2013. A study on access to maternal, neonatal, and child health services in remote areas of 37 Nepal: consolidated report of findings. (Note VDC is Village Development Committee). Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Household survey data collected in rural Nepal in 2016 shows that spending on  health and education and attendance at private school increases with wealth 10% 8% Proportion of household 6% expenditure in: 4% Health 2% Proportion of household 0% expenditure in: 1 2 3 4 5 Schooling Expenditure Quintile 0.4 0.3 0.2 Private to Public use of: Health 0.1 visits 0.0 Private to Public 1 2 3 4 5 use of: Expenditure Quintile Schooling Source:  Jacoby, H. 2017. Analysis for Nepal SCD using the 2016  Household Risk and Vulnerability Survey  38 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Women have high labor force participation, but are in lower paid and  lower quality jobs than men Women have high labor force participation, but are in lower  paid and lower quality jobs than men 1 140 0.9 121 120 Female to male ratio of… Rank (1=best, 142=worst 0.8 107 0.7 100 93 0.6 85 80 0.5 0.4 60 0.3 40 0.2 16 20 0.1 0 0 Labor force Wages Estimated Legislators, Professional participation earned senior and technical income officials and workers managers World Economic Forum. 2014. The Global Gender Gap Report 39 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Improvements in food security, maternal education and access to good  sanitation, clean water and basic health services resulted in Nepal recording the  fastest recorded decline of stunting rates in the world from 2001 to 2011 “In the 1990s Nepal had the highest recorded rate of child stunting in the world, with around 60 percent of  children younger than 5 years being stunted, many of them severely so. From 2001 to 2011 Nepal achieved the  fastest recorded reduction in child stunting in the world, reducing child stunting from 56.6 to 40.0, a reduction  of 1.66 points per year.” Headey DD, Hoddinott J (2015) Understanding the Rapid Reduction of Undernutrition in Nepal, 2001–2011.  PLoS ONE 10(12): e0145738. doi:10.1371/journal.pone.0145738 40 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital A number of places with the highest rates of malnutrition are places with  the highest rates of diarrheal disease Prevalence of stunting Prevalence of diarrhea Source:  Haslett, S., Jones, G., Isidro, M., and Sefton, A. (2014) Small Area Estimation of Food  Insecurity and Undernutrition in Nepal, Central Bureau of Statistics, National Planning Commissions  Secretariat, World Food Programme, UNICEF and World Bank, Kathmandu, Nepal, December 2014. 41 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Nepal performs well in providing primary health services, but less well in more  complex care provision 80 70 60 50 40 30 20 10 0 Pregnant women Births attended by Cause of death by Cause of death by non‐ receiving prenatal care skilled health staff communicable communicable of at least four visits (% diseases, and maternal diseases of pregnant women) prenatal and nutritoin conditions Nepal Strutural Peers Low income South Asia Region Source: WDI using Find my Friends 42 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Grade‐specific literacy test scores are low, but better than several other  countries 100 Grade specific literacy test 90 80 70 60 50 40 30 20 10 0 Iraq Iraq Nepal Nepal Malawi Guyana Ghana Jordan Jordan Tanzania Guyana Grade 3 Grade 2 Gove (2015) Background paper prepared for the Education  for All Global Monitoring Report 2015.  43 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital The quality of education system and school management scores are at the same  level as structural peers (although lower than the regional average). Quality of education 4.2 4 3.8 3.6 3.4 3.2 3 Nepal Nepal Low income Low income Structural Peers Remittance dependent Structural Peers Remittance dependent South Asia Region South Asia Region Quality of education system Quality of management of schools Source: WDI using Find my Friends 44 Area 4: Ensuring all Nepalese are equally able to invest in and use human capital Few firms provide training Nepal Growth Diagnostic 2014 using Enterprise Survey data  45 Area 5: Increasing resilience to natural disasters and health shocks Climate related risks in Nepal are high • Floods and Landslides– Estimated Annual Loss of USD 14.7m (2001‐2007) • Glacial Lake Outburst Floods (GLOFs) and Landslides – Significant national and regional risk  • The Himalayan range in Nepal constitutes 33,000 sq.km of the estimated 110,000 sq.km of glaciated area. • Glacier thinning and retreat in the Himalayas has resulted/and  continuing to result in the formation of new glacial lakes  and the enlargement of existing ones. These are very unstable and subject to catastrophic drainage causing damage to  lives and assets downstream.  • Nepal has experienced 24 GLOF events in the recent past, several of which have caused considerable damage and loss of  life • the Bhote Koshi Sun Koshi GLOFs of 1964 and 1981. Damaged the only road link to China and disrupted transportation for several months • the Dig sho GLOF of 1985. Destroyed the nearly completed Namche Small Hydroelectric Project • Approximately 26 potentially dangerous lakes exist. Tsho Rolpa and Imja Tsho identified for continued and more intensive study • Himalayan glaciers are water reservoirs for the entire South Asian sub‐region and regulate water resources in the region.  Changing dynamics of the Himalayan glaciers is a significant risk to water resources in the country and the region, that is  already water‐stressed. Imja Tso glacial lake 46 Area 5: Increasing resilience to natural disasters and health shocks Climate related risks in Nepal are high  • Floods and Landslides– Estimated Annual Loss of USD 14.7m (2001‐2007) • Floods and Landslides in non‐Himalayan region • 80% of Nepal’s rainfall (159‐5000mm per annum) occurs during monsoon period (June‐September), the timing has become  unpredictable recently • Projections affirm that risks of flooding will increase considerably in river basins of Nepal. Global Circulation Model  projects a wide range of precipitation changes, especially in the monsoon, 14–40% by the 2030s increasing to 52–135% by  the 2090s  • Severe urban and rural issue. Range of impacts: • Personal security (47% of flood victims die due to drowning, loss of income, diseases) • Buildings and infrastructures (loss of rural houses and roads, inundation of urban roads‐affecting transport, economies, damages to hydroelectric plants,  industries, damage to ancient cultural heritage) • Agricultural production (86% of the population relies on agriculture, loss of crops and livestock, uncertainty in cropping patterns, pests)  • Marginalized populations in Nepal continue to live and settle near rivers, roads and steep slopes. They own and cultivate at risk lands.  47 Area 5: Increasing resilience to natural disasters and health shocks The nature of risk varies across regions: drought has the largest monetary  and welfare impact in the Tarai Shively, G. 2017. Infrastructure mitigates the sensitivity of child growth to local agriculture and rainfall in Nepal and  48 Uganda. Proceedings of the national Academy of Sciences. vol. 114 no.5: 903‐908. Area 5: Increasing resilience to natural disasters and health shocks Public safety nets are not well‐placed to help protect households. Existing  government transfers are poorly targeted to poor households. Percent of people ages 15+ that received  government transfers in the last year 8 7 6 5 4 7.3 7.3 3 2 1 0 poorest 40% richest 60% Source: Findex, 2014 49 Area 5: Increasing resilience to natural disasters and health shocks Removing social assistance or cash transfer programs would cause poverty to  rise by only 0.5 percentage points 35 30 25.6 25 20 32.8 33 32.9 15 25.2 25.7 10 5 0 Current In absence of social In absence of cash assistance transfer programs Poverty Rate Gini Coefficient 50 Area 5: Increasing resilience to natural disasters and health shocks Transfers from family and friends are the most common source of cash in  the face of emergencies 60 50 40 30 20 10 0 Main source of Main source of Main source of Main source of Main source of Main source of emergency funds: emergency funds: emergency funds: emergency funds: emergency funds: emergency funds: family or friends (% financial institution other (% able to raise private informal savings (% able to work or loan from able to raise funds, or credit card (% able funds, age 15+) lender (% able to raise funds, age 15+) employer (% able to age 15+) to raise funds, age raise funds, age 15+) raise funds, age 15+) 15+) Nepal Structural peers Low income SAR Source: Findex, 2014 51 Area 5: Increasing resilience to natural disasters and health shocks Nepali save, and save in formal accounts as much or more than  peers. Savings rates are a bit lower among the poorest.  60 50 40 30 20 10 0 Account at a Saved any money Saved any money Saved any money Saved at a Saved at a Saved at a financial in the past year (% in the past year, in the past year, financial financial financial institution (% age age 15+) income, poorest income, richest institution (% age institution, institution, 15+) 40% (% ages 15+) 60% (% ages 15+) 15+) income, poorest income, richest 40% (% ages 15+) 60% (% ages 15+) Nepal Structural peers Low income SAR Source: Findex 2014 52 Area 5: Increasing resilience to natural disasters and health shocks The sources of borrowing that poorer households have access to have  high interest rates Loan Sources and Interest Rates, Non‐metropolitan Nepal, 2016 35 Average Interest Rate on Loans from  30 Moneylender Moneylender Relatives/frie 25 Other source nds Source Relatives/frie Bank Employer Coop/ROSCA nds 20 Other source Coop/ROSCA 15 Employer Bank Poorest 60% 10 0 5 10 15 20 25 Proportion of Households with Loan from Source Source: Walker, Khadka and Pandey, 2017. “Risk and Vulnerability in  Nepal” using the  Nepal Household Risk and Vulnerability Survey 2016. 53 Area 6: Getting more from migration Migration entails a sectoral shift in employment Agriculture sector worker Unemployed Construction sector Driver Service sector worker Manufacturing/factory worker Wholesale and retail trade… 0 10 20 30 40 (percent of migrants) Work prior to migration Work during migration Source: IOM, 2016 Area 6: Getting more from migration Most returnees that would like to stay in Nepal would like to start a new  business Area 6: Getting more from migration Migrants have access to information before migrating, but it is not always  adequate or accurate Area 6: Getting more from migration Migration to the Gulf and Malaysia is largely low‐skilled .25 30 .2 Migration Probability 20 .15 Percent .1 10 .05 0 0 0 2 4 6 8 10 12 14 Years of education 0 2 4 6 8 10 12 14 Years of education Gulf-Malaysia India Temporary migrants Non-migrants code: 13=Bachelors; 14=Masters; 15=PhD codes: 11= High school (10+2); 12 = Bachelors; 13 = Masters; 14 = PhD Shrestha, M. 2017. The impact of large-scale migration on poverty, expenditures, and labor market outcomes in Nepal Area 6: Getting more from migration The costs of migration for Nepali workers are high but not abnormal (in months of earnings in destination) 12.0 10.0 8.0 6.0 4.0 2.0 0.0 Pakistan Vietnam India India Indonesia Thailand Ethiopia Ecuador Morocco Bangladesh Pakistan Philippines Nepal Sri Lanka Bulgaria Vietnam Saudi Arabia Qatar Kuwait UAE Spain Korea Malaysia Source: World Bank KNOMAD Migration Cost survey dataset. Note: “red line” refers to migration costs in one‐month earning.