Diaspora Remittances

Geoffrey Irungu (Business Daily)- The World Bank plans to tap into diaspora remittances to fund its proposed $13 billion projects in Africa over the next three years through a structured fund that will support the continent’s development goals.

Diaspora remittances have become a key foreign exchange earner for Africa with about $5 billion released annually but the piecemeal nature in which they are doled out has limited their impact on the continent.

Kenya alone receives about a quarter of the funds entering the continent with money going to education and health needs of the senders relatives.

At a more sustainable level, however, the money has been sent to fund managers, trusted relatives and lawyers for investment in real estate, stock exchange and the transport sector with returns shared between those in the diaspora and their dependants here.

It is such an arrangement that the World Bank is keen to pursue under a collaboration with the Africa Union, though regular interaction with those in the diaspora.

At the moment, the bank is exploring the possibility of setting up a Diaspora Remittances Investment Fund modelled along successful initiatives in Latin America.

There remittances are leveraged to finance Diaspora-led projects ranging from housing to social concerns like education and health.

The Bretton Woods institution sees the African Diaspora - defined as peoples of African descent/origin living outside the continent - laying an increasingly important role in the continent’s development.

Besides financial resources the role of the expatriate community in home countries can come in the form of professional expertise.

"The World Bank is in a very strategic position to assist in the mobilisation of the African Diaspora in support of economic development on the ground in Africa" said Melvin Foote, President of the Constituency for Africa (CFA) a 16-year-old Washington-based network of groups and individuals professing commitment to progress in Africa.

The World Bank estimates remittances to be in excess of $6 billion per year due to a significant number of professionals from the continent currently living outside of it. Kenya is only second to Nigeria is terms of the remittances in Africa.

On Thursday last week, the World Bank held an African Diaspora Open House in Washington with over 200 representatives from groups based in the United States and Canada to discuss opportunities for closer collaboration.

The bank is exploring several approaches for working with the African Diaspora in the design and implementation of the ongoing portfolio of World Bank-assisted projects valued at $22 billion.

It is also seeking to involve them proposed projects for the 2008-2010 period estimated at $13 billion. In all, 338 projects are ongoing and 248 projects proposed for the next three years.

The World Bank intends to form partnerships with private sector organisations, multi-national corporations with strong business interests in Africa and donors to contribute to a proposed African Diaspora Engagement and Facilitation Fund in support of the activities.

It will also facilitate dialogue and research on policies such as regional infrastructure, energy and transportation in order to build capacity to harness the potential in Diaspora potential.

"Engaging the Diaspora in providing technical assistance in Africa may well create the necessary synergy to transform how development will be pursued on the continent in the future," Mr Foote said.

Studies show that the most educated Africans increasingly opt not to return to the continent and stay in their host country after completion of their studies. A survey of African PhD students in the US and Canada in 1986-96 showed that about 44 per cent decided to stay.

The impact of the non-return has been debilitating on Africa’s public and private sector, in some cases forcing countries to rely on high rates of international consultants to tackle development work.

A partnership with the African Diaspora for the continent’s development is considered essential to increase Africa’s capacity to use and apply knowledge and increase its access to financial resources.

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