Prof. Kevin Urama says there is a need to overcome the challenges in mobilizing Diaspora funding for Africa’s development.
Urama, the Chief Economist and Vice President, Economic Governance and Knowledge Management African Development Bank( AfDB), said this while speaking on“ Diaspora Funding for Africa’s Development” at the Global African Diaspora Symposium.
The symposium is on Building Stronger Connections between Africa and the Global Diaspora.
He listed the challenges to include the high cost of sending remittances, lack of effective engagement by national governments with diaspora investors, and inadequate data to profile diaspora investors, leading to information asymmetry.
He said the perception of high sovereign and foreign currency risk in Africa and limiting the diaspora’s full exploration of opportunities in Africa, were part of the challenges.
“There are low levels of financial sector development in most African countries which limit the development of diaspora-related financial instruments such as securitization of remittances and diaspora bonds.
“We have the complexity and high costs of preparing, marketing, and distributing diaspora financial instruments, compounded by regulatory compliance requirements in multiple jurisdictions.
“Complex, bureaucratic, and long investment processes and procedures in African countries and insecurity of assets – Multiple restrictions and portability of rights are part of the challenges.
“There are less developed legal frameworks for mobilizing diaspora funding and differences in financial regulation frameworks in both source and recipient countries.
“`These make it challenging to transfer capital across borders, thereby hampering investment prospects,’’ he said.
Urama said AfDB was collaborating with other development finance institutions to develop innovative financial instruments to securitize diaspora remittances, reduce transaction costs, and increase efficiency.
“We are working to de-risk investments, create crowdfunding platforms, and enhance remittance flow and their channeling into more productive investments that deliver desired social and economic development goals of African countries.’’
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While stating some other roles the bank was playing, he said it would among other things, collaborate with relevant stakeholders to resolve the Africa Diaspora challenge of mobilizing funds.
On the role of African governments, he said they had important roles to play in leveraging the power of the African Diaspora for economic development and social progress in their countries.
Urama highlighted some of the roles of Government, including working to improve the business environments to attract diaspora investment and repositioning embassies to better engage with their diaspora.
He said there was a need to create incentives to help channel diaspora funds toward domestic investments in productive infrastructure.
He urged them to implement policies that removed constraints remittance service providers encountered in partnering with the domestic commercial banking sector across the continent to reduce the costs of sending remittances.
The economist said they should implement reforms to promote rapid digitalization and fintech development to reduce costs and inconveniences for senders of remittances and their families.
He also urged them to strengthen the institutional and financial architecture of the bonds market, improve governance, strengthen institutions, stem corruption and illicit financial flows, and other crimes.
Speaking on the role of the African Diaspora, Urama enjoined them to continue to be good Ambassadors of Africa’s development in their countries of residence.
“They should be a key driving force for forging a global Africa, work with AfDB to accelerate designing and inaugurating innovative instruments to securitize and scale remittances and diaspora bonds.
“They should actively participate in Africa governance processes in their countries of residence to represent the African values, cultures, and development aspirations in law-making and public policy at home and abroad,’’ he said.
According to the economist, there are ample investment opportunities in Africa, which the African Diaspora can tape and contribute to finance Africa’s development.
