RAPID ASSESSMENT of SOCIO ECONOMIC IMPACT of COVID-19 in NEPAL Copyright @ 2020 by United Nations Development Programme, UN House, Pulchowk, Lalitpur, Nepal
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RAPID ASSESSMENT OF SOCIO ECONOMIC IMPACT OF COVID-19 IN NEPAL Copyright @ 2020 By United Nations Development Programme, UN House, Pulchowk, Lalitpur, Nepal. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted, in any form or by means, electronic, mechanical, photocopying, recording or otherwise, without prior permission. The designations employed and the presentation of the material in this publication do not imply the expression of any opinion whatsoever on the part of the United Nations Development Programme (UNDP) concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. The fndings, analysis, and recommendations of this Report do not represent the ofcial position of the UNDP or of any of the UN Member States that are part of its Executive Board. 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RAPID ASSESSMENT OF SOCIO ECONOMIC IMPACT OF COVID-19 IN NEPAL PREPARED BY ACRONYMSACRONYMS ADB Asian Development Bank ADO Asian Development Outlook AOAN Airlines Operators Association of Nepal BoP Balance of Payments CBS Central Bureau of Statistics CCRT Catastrophe Containment and Relief Trust COVID-19 Corona Virus Disease 2019 DoC Department of Customs DoFE Department of Foreign Employment EU European Union FDI Foreign Direct Investment FHAN Federation of Handicrafts Association of Nepal FY Fiscal Year GDP Gross Domestic Product GEP Global Economic Prospects HAN Hotel Association of Nepal IMF International Monetary Fund IOM International Organization for Migration JHU Johns Hopkins University JITCO Japan International Trainee & Skilled Worker Cooperation Organization KYC Know Your Customers MoCTCA Ministry of Culture, Tourism and Civil Aviation MoF Ministry of Finance MSEs Micro and Small Enterprises MSMEs Micro, Small and Medium Enterprises NAFEA Nepal Association of Foreign Employment Agencies NATTA Nepal Association of Tour and Travels Agents NDCs Nationally Determined Contributions NEA Nepal Electricity Authority NEC Nepal Economic Census NFDN National Federation of the Disabled Nepal ACRONYMS NLFS Nepal Labour Force Survey NPC National Planning Commission NPI Nepal Policy Institute NPR Nepali Rupee NRB Nepal Rastra Bank NRNA Non-Resident Nepali Association NST Nepal Standard Time NTB Nepal Tourism Board NWC National Women Commission OECD Organization for Economic Co-operation and Development PDNA Post Disaster Need Assessment PERC Public Expenditure Review Commission PMEP Prime Minister’s Employment Programme PNP Projects of National Pride PPE Personal Protective Equipment PSO Payment Support Operators PSP Payment Support Providers REBAN Restaurant and Bar Association of Nepal SDGs Sustainable Development Goals TAAN Trekking Agencies Association of Nepal UAE United Arab Emirates UN United Nations UNCTAD United Nations Conference on Trade and Development UNWTO United Nations World Tourism Organization US United States USD US Dollar VNY Visit Nepal Year WEO World Economic Outlook WHO World Health Organization WTO World Trade Organization WTTC World Travel and Tourism Council CONTENTS ACRONYMS 4 FOREWORD 8 LIST OF STAKEHOLDERS CONSULTED 10 ACKNOWLEDGEMENT 12 EXECUTIVE SUMMARY 14 CHAPTER 1 INTRODUCTION 16 1.1. Background 17 1.2. Objectives of the study 18 1.3. Methodology of the study 18 1.4. Limitations 20 CHAPTER 2 MACROECONOMIC OUTLOOK 22 CHAPTER 3 SOCIO-ECONOMIC ASSESSMENT 28 3.1. Travel and tourism 29 3.1.1. Background 29 3.1.2. Current status in Nepal 29 3.1.3. Possible impacts in Nepal 30 3.2. Foreign employment, migrant workers and remittance 34 3.2.1. Background 34 3.2.2. Current status in Nepal 35 3.2.3. Possible impacts in Nepal 39 3.3. Labour and employment 40 3.3.1. Background 40 3.3.2. Current status in Nepal 40 3.3.3. Possible impacts in Nepal 43 3.4. Vulnerable groups 44 3.4.1. Women 44 3.4.2. Micro, small enterprises (MSEs) and informal economy 45 3.4.3. The Poor 48 3.4.4. Persons with disabilities 50 3.5. Delicate sectors 52 3.5.1. Dairy 52 3.5.2. Vegetables 52 3.5.3. Poultry 52 3.5.4. Handicraft 52 CHAPTER 4 PROVINCIAL OVERVIEW AND SURVEY ANALYSIS 54 CHAPTER 5 STRUCTURAL CHALLENGES AND FAVOURABLE CONDITIONS 58 CHAPTER 6 STRATEGIC RECOMMENDATIONS 62 Annex 1: Findings from the survey (in tables) 72 Annex 2: Recommendations classifed across short-term and medium-term 79 Annex 3: Sample questionnaire 80 References 87 LIST OF TABLES Table 1.1. Allocation of Study Sample by district 20 Table 2.1. Macroeconomic outlook (in percentage) 23 Table 2.2. Sectors at risk globally with special focus on Nepal 24 Table 2.3. Impact analysis matrix 25 Table 2.4. Specifc sector output growth between 2018/19 and 2019/20 (in percent) 26 Table 3.1. State of Tourism 30 Table 3.2. List of bilateral agreements and MoUs signed by GoN 36 Table 3.3. Status of COVID-19 in Nepali migrant workers’ key destination countries 37 Table 3.4. Projections of remittance fow to Nepal in 2020 39 Table 3.5. Employment by industry 40 Table 3.6. Employment in formal and informal sectors 40 Table 3.7. Number of establishments by registration status 40 Table 3.8. Women with formal and informal employment across sectors (in percentage) 44 Table 3.9. Distribution of formal and informal employment across formal and informal sectors in Nepal (in percentage) 46 Table 3.10. Status of MSMEs in Nepal (in percentage) 46 Table 3.11. Dependency structure and migration within poor and vulnerable households in Nepal 50 Table 3.12. Employment status of respondent by gender 72 Table 3.13. Distribution of monthly saving of family by gender 72 Table 3.14. Severity of impact of COVID-19 by gender 72 Table 3.15: Coping strategy during the lockdown by gender (in percent) 73 Table 3.16. Top three supports rated by respondent during and after lock down by gender 73 Table 3.17. Distribution of respondents across province by type of business (in percent) 74 Table 3.18. Status of business startup and operation by province 74 Table 3.19. Average gross sales/revenue and Business expenses a month by province 74 Table 3.20. Strategies to sustain business during lock-down 75 Table 3.21. Distribution of sample by province and ecological regions 75 Table 3.22. Proportion of type of business by province and registration status (in percentage) 75 Table 3.23. Summary of impact of lock-down on businesses 76 Table 3.24. Choice of strategy to cope up from the economic shock 76 Table 3.25. Support needed to sustain during and after lock-down rated by respondent 76 Table 3.26. Distribution of respondents by province and gender 77 Table 3.27. Distribution of monthly saving of family by employment status 77 Table 3.28. Job loss and payment of salary by gender 77 Table 3.29. Impact of COVID-19 on individuals 78 Table 3.30. Summary of support for vulnerable groups 78 Table 3.31. Coping strategy during the lockdown by type of employment 78 Table 6.1. Roads and highways in Nepal (as of March 2019) 65 Table 6.2. Imports of basic food commodities (2018-2019, NPR billions) 70 LIST OF FIGURES Figure 1.1. Status of COVID-19 globally 17 Figure 1.2. Status of COVID-19 in Nepal 17 Figure 3.1. Employment by gender in tourism subsectors 31 Figure 3.2. COVID-19 total cases and deaths in Nepal’s top tourist export destinations 32 Figure 3.3. Female to male labor force participation rate 45 Figure 3.4. Share of enterprises by scale 47 FOREWORD The COVID-19 pandemic is the biggest human crisis since the and medium-sized enterprises. Finally, the Report provides Great Depression, causing simultaneous health and socio- comprehensive policy options to address the stated challenges. economic sufering all over the world. More than 12 million I believe these recommendations will be very useful across people have tested positive for the virus, with half of a million government entities and development actors. people having lost their lives. The world economy has been stalled for several months, leading to the loss of hundreds of The Government of Nepal has — and will continue — to millions of jobs. implement various measures aim to support those afected by the crisis. In this vein, the national budget for fscal year The Government of Nepal enforced a lockdown, beginning 2020/21 introduced several policies and programs to jumpstart 24 March, to slow the spread of virus. Till now, more than 16 economic activities, focusing frst on job creation. thousand people have tested positive and 38 among them lost their lives in Nepal. While the lockdown was successful in The National Planning Commission (NPC) has also initiated slowing infection rates, it has resulted in signifcant socio- a study to assess the socio-economic impact of COVID-19 in economic impact.