Editor’s Note: January 28, 2019

What happened to the diaspora investment boom?

Remittances to developing countries hit $528bn in 2018 according to the World Bank. Of this $45bn is thought to have gone to sub-Saharan Africa, more than total foreign direct investment (FDI) of $40bn.

For years governments and businesses have sought to harness such flows to drive development on the continent, touting the diaspora as the next big thing in investing.

From diaspora bonds, to dedicated investment platforms, much has been done to unlock its perceived potential. Given the volume of remittances It makes intuitive sense, but success has been sporadic at best.

The problem is likely an overestimation of the number of people in the diaspora with both the capital and desire to invest back home. Exact data is unavailable, but a plausible scenario is that the bulk of remittances are small cash transfers from people making ends meet.

Nigeria’s $300m diaspora bond raised in 2017 – one of the few sizeable  examples of diaspora investment – is a case in point. The sale is said to have been restricted to private banks and wealth managers, effectively barring most of the diaspora from the exercise.

Africans abroad are a crucial lifeline for millions on the continent, but their credentials as a force for investment are looking questionable.

From The Continent

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$220m

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The International Monetary Fund is set to release the fifth tranche ($2bn) of Egypt’s $12bn loan taken out in 2016. The programme is part of an ambitious economic reform programme under Abdel Fattah el-Sisi. More: The National

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