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Wednesday, 18 March 2009

Return of the diaspora?

Jenny Abura on the renewed interest on the continent to engage the diaspora in development :

Remittances: Time for payback, Jenny Abura, The Guardian, Comment

I, like many other people of African origin living in the diaspora, send money to relatives and I know at first hand the tangible lifelong benefits that this money can bring to people who do not have access to any other safety net, resources or opportunities.

It is increasingly acknowledged that remittances play a significant part of the development story because of the huge amounts being transferred and the significant impact on the recipient country's economy. According to the World Bank, remittances to developing countries totalled $188bn in 2006 - double the amount of international aid received. In 2007, remittances to Africa were more than £20bn. But the value of remittances to developing countries is acknowledged to be far higher because a significant proportion of money is transferred through informal methods, so it is not officially accounted for.

World Bank figures show that families in Uganda now receive about $0.9bn in remittances from relatives in the diaspora, which ranks the country fifth in sub-Sahara Africa in the amount of money it receives in this form. This financial inflow amounted to 8.7% of the GDP in 2006.

The resources at the disposal of recipient households make them powerful agents of economic development. Typically the money is spent on health, land, education, marriage, small businesses and food or to offset any crisis. A significant proportion is also available for investment or savings. The money strengthens social welfare and livelihoods, essential for economic development at both local and national level. Remittances are not handouts that keep the poor dependent and in bondage. Remittances are empowerment tools that lift the poor out of poverty, since they promote economic growth and access to financial services.

However, despite the significance, the contribution made by the diaspora is largely ignored in the formal debate about development. By the same token there are few mechanisms that allow senders and recipients of remittances to engage with development activities at a formal level.

The World Bank and a few African governments are slowly waking up to the huge economic potential of remittances to benefit national economies. Ways of engaging with senders and recipients to encourage them to invest in their countries are now being developed. These include the Kenyan Diaspora Bond, through which remittance money can be invested in specific projects. Kenya also boasts the M-PESA financial transfer system, which allows money to be transferred through mobile phones, at a small cost, without the need for bank accounts. In the first two weeks of its launch, more than 10,000 user accounts were set up and more than $100,000 was transferred.

In December, a diaspora investment summit was held in Gulu in Acholiland, northern Uganda, to discuss how Ugandans living outside the country could participate in private investment back home.

However, traditional government and NGO development activities lack a comprehensive strategy and policy on remittances to tackle poverty at a local or national level. There is no overt acknowledgement in Uganda, for example, of the tangible benefits of remittances to development, which can clearly be seen in the local economies of towns like Lira, in northern Uganda, where success is not down to government or international donor investment.

The time is ripe for the Ugandan government, international donors and NGOs to work together with senders and recipients of remittances, to recognise them as stakeholders and support them to take a lead in the sustainable development of the whole country. If government and international development professionals are genuine in their assertions that development is about empowerment and sustainability then they need to allow the people into the driving seat and remove the road blocks that hinder it.


  1. Just as remittances are outstripping FDI as a source of capital inflows, IRIN reports that NGOs supported by private individuals are overtaking government donor budgets. The Diaspora plays a vital role in attracting and tailoring the activities of such organizations to Zambia.

  2. more importantly remittances are more stable and resilient to shocks than FDI flows...the other point is that FDI follows growth....while remittances even go up with low growth in receiving countries (Zimbabwe being the latest example)....


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