Mobilizing and Organizing Africans in the Diaspora for Economic Development by Almaz Negash
In May 2012, the African Union (AU) Commission organized the Global African Diaspora Summit with a view to facilitating further engagement of the African continent with its Diaspora. The Summit was built on earlier programs that were focused on developing a realizable program of action in order to create sustainable dialogue, partnerships and Pan-Africanist solidarity to advance Africa and its Diaspora. The AU declaration’s broad based agenda calls for collaboration on political, economic and social issues between African nations and the millions of Africans living in the diaspora. These include, but are not limited to, private sector and infrastructure development, capacity building, trade and technology. Furthermore, the AU agreed on adopting five legacy projects in order to facilitate the post-Summit program and project implementation. The five legacy projects focus on the following developments to engage Africans in the diaspora: skills database, volunteer corps, investment fund, marketplace, and remittances institute. This paper aims to highlight how Africans in the United States, especially the many highly educated and successful entrepreneurs, can play a role in the legacy projects specifically in the development of a professional African database and the development of a marketplace for the Diaspora in order to facilitate innovation and entrepreneurship.
The African community in the United States is diverse, heterogeneous and hardworking. They are well educated, highly entrepreneurial, and include successful doctors, engineers, educators, nurses, restaurateurs, social workers and laborers. Regardless of their profession, they generously support their families and friends in Africa. However, remittances are not scalable, which gives African governments and diaspora Africans a vested interest in utilizing remittances to better tackle economic and social challenges in the continent. As such, this paper will further examine the resources needed to create a robust professionals database and the infrastructure needed to facilitate innovation and entrepreneurship with a keen focus on implementation. The paper will provide practical implementation strategies and best practices on how African public and private sector institutions can draw expertise and financial resources from the Diaspora through mobilization and engagement. It will demonstrate why it is important for Africa to harness, acquire and apply new knowledge by utilizing the Diaspora.
Poverty and Prosperity:
The global news is filled with information about Africa ranging from the civil wars in Somalia and the Congo, to the destruction of Timbuktu and the challenges of poverty, to the emergence of a few countries as beacons of hope for prosperity. One can get overwhelmed and discouraged by the amount of work that needs to be done. In fact, with all the discouraging news coming out of Africa it often seems as if the continent is on the brink of total collapse. While wars and conflicts do end fortunately, the ensuing struggle for economic development continues.
The issue of poverty is multifaceted and complex, but the leading cause of poverty is economic policy that inadequately addresses the needs of society. With 47 percent of Africans living on less than $1.25 per day and an estimated 386 million Africans living in extreme poverty without access to basic needs such as education, healthcare and water, change needs to happen.
Additionally according to the United Nations Food and Agriculture Organization almost one in three Africans are hungry; this is higher than in any other part of the world. Yet, the International Development Research Center (IDRC) has found that over one trillion dollars has been spent on aid to Africa, without significantly reducing the need for more aid. This is a result of the focus of the aid being on “poverty reduction,” rather than on “wealth creation” or investing in Africans to solve the challenges facing their continent.
Precisely to address the question of lifting people out of poverty, in September 2000 the international community under the leadership of the United Nations (UN) agreed to adapt eight dire global challenges to create sustainable development in countries facing widespread extreme poverty. The eight Millennium Development Goals (MDGs) range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015. The UN reports that since 2000 there has been significant success in many areas of the MDGs in some specific parts of the world. According to the United Nations Development Program (UNDP), Africa has made some progress in enrolling children to primary school, women inclusion and participation in parliament, and HIV/Aids prevention. However, the report points that Africa still lags behind in income inequalities, lack of access to good paying jobs and to healthcare. Further, the report points out that with only three years left for the 2015 deadline, African leaders and policy makers need to emphasize creating and improving access to quality jobs, as well as providing safety net services for the most vulnerable members of society: the youth, children, women and the elders.
Despite the challenges Africa faces, there has also been tremendous progress made by individual countries to improve the socioeconomic condition and well-being of their communities. African countries that are considered the fastest growing include Ghana, Ethiopia, Liberia, Mozambique and Angola. The UN Economic Commission for Africa (UNECA) rates Ghana as one of the fastest growing economies in Africa, with almost twelve percent economic growth, followed by Ethiopia with ten percent. The significant economic growth occurring in these nations speaks to the vast opportunities in economic development in the continent.
The African Diaspora Role in Improving the Economic Well-being of the Continent:
Globally there are an estimated 30 million immigrants from North and sub-Saharan Africa and they commit a significant amount of remittances to Africa, providing much needed income. Remittances to Africa in 2010 exceeded $40 billion and Nigeria receives approximately $1.3 billion in remittances per year.
The World Bank states that the diaspora Africans who live in North America are the most educated, skilled and resourceful community of Africans anywhere in the world and it is estimated that they save $53 billion annually. As there is currently no lack of remittances being pushed into Africa, the question is: what needs to take place in order to turn the savings and remittances into investments? One suggestion is an online platform and database to
facilitate the needed connections to turn the savings and remittances into investments.
Subsequently, what needs to take place to create a platform to engage the Diaspora to contribute to the wellbeing of the continent? For one thing, the home country has to be inviting, engaging and willing to implement policies that are conducive to conducting business and other investments. With regards to Africans in the diaspora, it is also important to understand their relationship with the continent in order to figure out the best way to engage them. Some identify with the whole of Africa, while many identify with their nation of origin or with an ethnic or regional identity.
Government Role and Best Practices for Diaspora Engagement:
There are many countries in the world that depend on remittances, one such country is India. India has been the largest recipient of remittances since 2003 and it is estimated that in 2008 India received $52 billion in remittances. The Indian government has made an effort to lure professional Indians to invest in the country through economic policy liberalization in trade and investment. In addition, to harness the financial and technological resources of the Indian diaspora, the government established the Ministry of Overseas Indian Affairs. The ministry coordinates and engages the diaspora through cultural education, youth teaching, and annual awards to eminent Indian diasporans. African governments can learn from India’s experience collaborating with the Indian diaspora.
The African Union and individual government leaders have an opportunity to engage the Diaspora in a meaningful and impactful way. The engagement can take many different forms however; it must include a plan with specific goals and objectives. Most importantly, there also needs to be a bridge to foster a relationship and build trust. On the ground engagement and relationships can only be built through coordinated activities at the grassroots level, not only in Washington, D.C., but throughout the United States with individuals, community organizations, local Embassies, Universities and businesses. A sustainable solution demands active participation of the African Diaspora. Since Africans in the diaspora are constantly seeking to expand their experience, share knowledge, mentor and build skill-sets for the benefit of society, a first step must be the development of a database and a marketplace through which they may facilitate innovation and entrepreneurship.
- Develop skilled database and online platform:Currently there is neither a comprehensive database of professional diaspora Africans nor an online or offline forum where diasporans, friends of Africa and Africa-focused organizations and businesses can communicate, form partnerships, exchange ideas, share expertise and support one another. An interactive platform that offers African organizations and entrepreneurs the tools to grow will result in an Africa that is more competitive in the global market and can combat the many challenges facing the continent. African Diaspora Network (ADN) will do just this; it will offer Africans and friends of Africa the opportunity to enhance their impact on the continent and grow both professionally and personally. As an online and offline platform, ADN will promote dialogue and action on economic development in sub-Saharan Africa. Indigenous Africans from around the world will benefit through collaboration with one another and other individuals and groups interested in Africa’s future. By sharing knowledge and forming partnerships, Africa can harness the intellectual, financial, philanthropic and entrepreneurial capacity of diaspora Africans and friends of Africa for the greater good of the continent. It will do this by creating a safe and trusted communications and knowledge sharing platform directed at:
- Investors/Entrepreneurs:African Diaspora Network will be a forum through which organizations investing in Africa, or African entrepreneurs directly, can detail their projects, share business plans, and seek financial support.
- Philanthropists/Volunteers:The ADN platform will be a vehicle for identifying new members and sources of income. Philanthropists can profile their work and share experiences and best practices with like-minded individuals and organizations. Potential volunteers can identify organizations operating in the countries they would like to work.
- Donors/Lenders:African Diaspora Network can serve as a clearinghouse, or hub, where donors and lenders seeking collaboration can easily access information about ongoing and proposed development projects across Africa.
- Creation of a Marketplace:At the 2012 AU Summit, the African Diaspora was formally recognized as the sixth economic region. AU member countries signed a formal partnership between the African Union, the governments of the Caribbean, South and Latin America, and the World Bank African Diaspora program to implement five legacy projects of which one is the formation of Capital Market Place. To date, there have not been clear goals and objectives set by the AU on the development and scalability of the Diaspora Marketplace. However, there is an existing body of work that is available for the Diaspora to tap into.
The African Diaspora in the United States and around the world is known for its creativity, ingenuity and risk taking. Africans use their savings to start their own businesses ranging from restaurants to hairdressing shops to small factories. The African Diaspora saves an estimated $53 billion per year, providing an opportunity for home country governments. Mobilizing and tapping into these funds could bring much needed investment to Africa. In 2011 the International Monetary Fund summarized the possibilities as follows: “If one in every 10 members of the diaspora could be persuaded to invest $1,000 in his or her country of origin, Africa could raise $3 billion a year for development financing.”
African governments know that there is a need for capital investment in order to develop an infrastructure that allows their people to work and earn wages. By reducing the barriers for investments and by providing incentives, the home country governments can lure many from the Diaspora. The Diaspora has a vested interest in investing in their home countries to develop sustainable projects and their participation in the capital market can provide Africa with start-up capital for small and medium sized enterprises. Africans in the diaspora, collectively and individually, if given an opportunity can contribute their knowledge and experience accumulated while working abroad. In fact, many intellectuals and entrepreneurs see giving back to their home country as a privilege. Mr. Gibril Faal, the president of the African Foundation for Development, was asked in 2011 whether Africans in the diaspora would like to invest back in their home country. Mr. Faal responded as follows:
“Diaspora entrepreneurs who run businesses in destination countries tend to set up businesses in countries of origin as well. However, a significant number of people who are not entrepreneurs in their destination countries use their experience and skills to start up new commercial ventures in their countries of origin. In each case, there are multiple motivating factors.
Setting up a business enables individuals of the diaspora to transfer—profitably—the knowledge, skills, experiences and opportunities gained in countries of destination. Businesses are also vehicles through which the diaspora can make substantive contributions to innovation, production and development in their countries of origin. Jobs are created in the local economy and the profits accumulated afford entrepreneurs a quality of life higher than they enjoy in their countries of destination.”
It’s clear from his response that there is a strong interest in setting up businesses in Africa and this has been recognized by other organizations as well. At the 2010 Africa-EU Migration, Mobility, and Employment (MME) partnership meeting, the team recognized the need for fostering the ‘capacity of the diaspora to invest in their country of origin’ by opening investment facilities specifically tailored to their needs. The MME went further to suggest the establishment of a tax-incentive system for remittances. The African Diaspora can facilitate and channel trade and investment to the home country. They can do this because of their ability to leverage their knowledge and connections with the host country. The Diaspora is able to form strategic partnership with foreign businesses and suppliers, and their wealth can be used to mobilize capital markets deposit accounts and the securitization of remittances flows.
Use of Technology and Innovation:
The African Diaspora is utilizing innovative methods such as online collaboration forums to give back and invest in Africa. For example, the ADN online platform is being developed to support an online collaboration where a specific project listed on the ADN secure site can be invested in. It is also the space where ongoing impact assessment will be done to track intended and actual outcomes. There are also other programs that encourage African entrepreneurs living in the United States to partner with local businesses in Africa to develop new sustainable businesses.
One such example is the African Diaspora Marketplace, a joint program of USAID and Western Union. The purpose of this program is to support US-based African diaspora entrepreneurs who have innovative and high impact projects to establish business in Africa. Entrepreneurs with the strongest ideas and projects are awarded up to $100,000. The winner of the award must then look for a local partner in Africa to establish the business. The widespread use of technology provides the opportunity for countless new projects, such as those fostered by the African Diaspora Marketplace, to develop and allow for the investment in and creation of sustainable local businesses.
It is well-established that the African community, particularly in the United States, can provide important support to Africa beyond just remittances. By utilizing their knowledge and investments, Africa can better tackle their economic and social challenges. The use of technology to develop entrepreneurship, such as an online platform and database to connect Africans in the diaspora, is an important step towards harnessing the power and innovation of the African diaspora.