Transcript AFRICAN DIASPORA INVESTMENT

Send Money Home
Department for International
Development – launch
31st March 2005
DR BANJOKO
AfricaRecruit
Background
In 2003 over $300 billion is estimated to have been sent from
developed to developing countries. This is the second largest source
behind Foreign Direct Investment of external funding for developing
countries. It is a more stable source of capital than private capital and
is expected to rise. This does not account for flows within Africa
Africa accounts for approximately 15% ( $45 billion of the total global
remittance flow). It is estimated that remittances accounts for countries
such as much as 27% of the GDP for some African countries. Our
survey indicated that on average $300 US dollars is sent home.
African governments have now come to value the flow and are
developing systems to support the flow
AfricaRecruit survey in 2003 indicated that at least 60-70% of the
African’s remit money intermittently or regularly to Africa. Of this
only 6% of the remittances is invested.
Background-2
One of the conclusion from the Recent International Development
select committee UK, 9 month enquiry concluded that “well-managed
migration is hugely important, economically and politically, because
of the links it establishes between countries”. If remittances is invested
well, these funds could play a major role in reducing poverty.
The development potential of remittances must be secured by
encouraging remittances, reducing the costs of sending money home,
and improving the investment climate for remittances in developing
countries.
Need for Information
The actual figure on remittance is under-quoted as a significant
proportion goes through informal channels and is not reported.
Reasons for this include:
•High commission
•Poor infrastructures in sending and receiving countries
•Wide differences between official and black rate
•Alternatives- bartering, people transfer
•Control in dispensing to local rate by the receiver
To gain a greater understanding of the types of remittances and how
to harness:
•Family
•Personal investment e.g. property(31%), business (38%), capital market (9%)etc
•Community/Social investment (20%)
•Pensions etc
Need for Information
At the moment is a dark and uninformed market that evolved due to
the changes in the global markets in particular the exchange rates.
The market depends on word of mouth from the senders and
receivers with no direct input by governments on creating the
necessary infrastructures to bring about an open and transparent
market with healthy competition. The aim would be to inform
policy in both the sending and receiving nations on how best to
ensure that “consumption remittances” is translated into
“investment remittances
Our survey on Diaspora investment cited lack of transparency and
information as well as poor infrastructure as some of the obstacles
to investment
Need for Information
Benefits to African countries ability to:
•translate some of the current cash transfer (30%) to formal
channels ( increased FDI)
•capture more information, plan and forecasts its FDI
•create policy enhancers, alternatives and incentives to the private
sector
Benefits to senders the ability to:
•make more informed choices
•more conveniently transfer e.g. direct debit
Benefits to recipients the ability to:
•Receive on a regular basis and plan ( direct debit)
•Receive more from the money sent
•Consider investment options
•Enable micro finance and credit capacity
Dissemination
•Using Africa’s well organised socio-economic networks at
grassroots' levels- e.g. religious, shops, etc
•Media
•Online
•Embassies
•Within Africa
•African’s in the Diaspora
Way forward
•Increased involvement of African governments, institutions
private sector in particular the financial sector in Africa to
develop policy, create more packages and incentives to
encourage formal flows e.g. phone card type of transfers,
healthcare insurance, using mobile phones as an
infrastructure etc
•Host countries to work with Diaspora communities and
private sector MTO
•African Diaspora greater understanding of the impact of
remittances to Africa as a continent and family level
•Using the remittances as leverages for Africa’s
development
AFRICARECRUIT
Africarecruit
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United Kingdom
Tel: +44(0)20 7024 270
Fax: +44(0)20 7024 8201
E-mail: [email protected]
Website: www.africarecruit.com
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