This week, from October 11-17, 2015, is Global Diaspora Week. The United States Department of State announced the week to celebrate the fact that the country is home to more than 230 million people who live outside of their country of birth.
The unofficial theme of Global Diaspora Week is ‘partnerships and the networks that exist to leverage diaspora finance for development’.
The number of people that comprise the diaspora in the US alone would make them the fourth largest country in the world. Imagine if you add in all the diaspora from every country!
Approximately $581 billion in remittances flow from the global diasporic community into their original countries, a figure that is 16 times more than America’s aid development funding assistance. The US government estimates that only 30 per cent of that money goes towards education, land purchase or starting a business. That means that 70 per cent of the remittances are used for basic consumption and day-to-day living.
The money that the diasporic community uses to create businesses in the US is also often used to create businesses in their original homeland. But there are often challenges to creating a business back home, especially if their homeland is a developing country.
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One challenge is the lack of acceptance in their homeland: even though the diasporic community has local knowledge, the fact that these individuals have left their native country may make them feel distanced from the people they once knew.
Another challenge is that their homeland government usually does not offer financial incentives for the diaspora to establish businesses in their homeland, even though the businesses will aid the country’s economic growth.
This often goes hand-in-hand with corruption. Government officials in their homeland may impose restrictions and rules that the diaspora must ‘buy their way out of’ to expedite the business set-up costs.
But the biggest challenge is usually lack of infrastructure in their homeland, such as lack of adequate technology for transportation of goods, digital communications and electronic financial transfer systems.
Some countries, however, provide support and cooperation for the diaspora so that they can help their homeland. One of these countries is India. The Indian Diaspora Investment Initiative is a partnership between the American Government and an NGO to mobilise funding from the Indian diaspora. Lebanon, too, is a good example of diaspora cooperation.
The models for diaspora cooperation that work well are those that receive government-to-government support – that is, the government of the homeland and the government of the new country. Financial partnerships, trade agreements and incentives can then make it easier for the diaspora to help their own communities back home.
