With over 30 million Africans living outside of their home countries, the continent’s diaspora has the potential to be a major source of development financing. The financial power of the diaspora shows in the high remittance figures that Africa receives annually from its foreign-based communities. In 2010, estimates reached a record US$ 40 billion, or 2.6% of the continent’s GDP, not counting informal money transfers. Further, the diaspora saves an estimated US$ 53 billion annually.
These statistics, coupled with the fact that around one-third of the diaspora population are in the middle class, make it a formidable force for potential development partnerships. To engage with members of the diaspora and host a conversation about trade and education, the World Bank Group and the African Development Bank have organized the first annual African Diaspora Trade, Investment and Skills Forum on June 10, 2015. Those unable to attend can watch some of the sessions live here.
At this forum, participants will discuss and brainstorm around the potential benefits that Africa can reap from its diaspora population. Foreign-based Africans are often eager to invest and trade in their countries of origin. The benefits from such investments are numerous for both the potential investors and recipient countries. African investors are likely to be more socially conscious investors than their foreign counterparts due to social, cultural, and/or religious connections to their homelands. Their in-depth understanding of local contexts can lead to well-informed business choices and thus translate into more sustainable investments.
And this engagement is vital to the continent. The need for sustainable investments has never been more pressing, as youth unemployment numbers of over 50% and job-creation remain urgent issues across the continent. The ability of diaspora populations with much-needed capital to create jobs can contribute to local employment. In addition, the affinity that diaspora populations feel for their countries of origin creates a balance between purely profit-driven business motives and social investing, allowing for greater local value-addition.
Additionally, skilled diaspora populations have significant technical expertise. The continent’s brain-drain problems are a widely-known hurdle to development; it is also known that significant numbers of Africans abroad are highly skilled in areas that the continent severely lacks. There are perennial shortages of skills such as those in the math, science, technology, and engineering fields. African diaspora populations have shown significant interest in capacity-building and skills transfer partnerships with their home countries.
In spite of the diaspora’s eagerness to contribute to their countries of origin, significant barriers exist that threaten the realization of these interests. If African countries are to overcome these hurdles and benefit from the large potential that their diaspora populations offer, there is need for a deliberate and coordinated diaspora engagement effort. The World Bank Group and African Development Bank hope to use the diaspora forum and a related survey as a launchpad to kick-start meaningful debate and knowledge sharing that will provide a solid and informed foundation for these efforts to occur.
This article was first published by The World Bank’s The Trade Post blog. Publication does not imply endorsement of views by the World Economic Forum.
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Authors: John Speakman is a Lead Private Sector Development Specialist in the Africa Region in the World Bank, and a co-author of the Growth Pole chapter in the African Competitiveness Report 2013. Donald Agaba consults with the Trade and Competitiveness Global Practice at the World Bank.
Image: Job seekers wait for employers seeking casual labour in Africa, June 13, 2003. REUTERS/Mike Hutchings.