Put diaspora remittances to good use

Opportunity is knocking from the Diaspora but it may not last into the second generation of the Kenyan diaspora
Opportunity is knocking from the Diaspora but it may not last into the second generation of the Kenyan diaspora. FILE PHOTO | NMG 

Former American Boxing champion Leon Spinks once said, “Opportunity knocks only once. You never know if you'll get another opportunity.”

Opportunity is knocking from the Diaspora but it may not last into the second generation of the Kenyan diaspora.

For the first time, recent World Bank shows that Diaspora remittances exceeded Foreign Direct Investment (FDI) into low and middle-income countries.

These countries received $462 billion between 2013 and 2018 compared to FDI of $344 billion received over similar period ending 2013.

East Africans abroad sent home $17.38 billion within a five-year period between 2013 and 2018. Kenya topped its neighbours with $10.74 billion, more money than the $7.2 billion that we owe to China.


This kind of opportunity comes once. Migrant transnationalism is largely a first-generation phenomenon, for that is the generation that still has emotional attachment to their birth countries.

The behaviour of the children of migrants is markedly different except in cases where their parents made viable investments in their birthplace. Studies show that second-generation remitters are mostly driven by altruism or by self-interest. Often, such remitters are in the minority.

Much of the first-generation remittances, if not all, is used in consumption and in fixed asset items such as real estate. The resource is simply tied up or wasted in some village “investment.”

Governments have never made efforts in developing a constructive engagement with the diaspora to invest their resources in key sustainable investments with greater returns than the existing ones.

For example, one third of remittances to Kenya is sufficient to salvage Kenya Airways, buy new aircraft and leave some change to refurbish the airport, assuming that the funds are not stolen. If that were to happen, the airline will build a loyal clientele from diaspora than it does at the moment.

It will require selfless leadership to create an attractive investment environment that diaspora can consider.

Governance in some organisations has been wanting. Delays in the judicial processes also discourage investors.

A lot of cleaning up must be done to improve on the credibility of investable opportunities as well as create deliberate efforts to develop a constructive engagement strategy.

Several countries have had a constructive engagement with their diaspora to optimise the financial and human resource capacity. India acknowledges that “the question facing policymakers is not so much whether the Diaspora can benefit their countries of origin, but what kind of government policies and programmes can foster and promote these relationships.”

The benefit of diaspora is not just the remittances which are not just vital to economic development but which also play an important role in knowledge transfer as well as mediating international relations between host and home nations.

Ethiopia’s continued engagement with the diaspora has led to mega investments in several areas including the energy sector that has seen the development of the $4.8 billion Grand Ethiopian Renaissance Dam with a capacity of 6,000 megawatts (MW).

Ethiopia’s new Prime Minister, Abiy Ahmed, has been traversing the globe inviting diaspora to invest at home and they are responding positively.

In Jamaica, diaspora has been the source of innovation and development support. Diaspora remittances contributed about 17 percent of GDP in 2016.

Remittances are driven by emotional attachment. For instance, some immigrants are still attached to their relatives back in their countries of origin, which explains why first-generation migrants remit funds to their country of birth.

There is a need to build a more sustainable industrial development leveraging financial and human resources capacity of the diaspora.