DIASPORA INFLOW: Monetary transfers made by the diaspora into their country of origin. As private transfers or as funds invested, deposited or donated.
REMITTANCES: Monies sent from individuals or households to other individuals or households residing in their country of origin.
DIASPORA INVESTMENTS: in a start-up, in an existing enterprise or in a business being privatised (Community Sector and Private sector investments)
FORMAL: bank transfers or money transfers via intermediaries (Western Union)
INFORMAL : carrying money (self-friends-relatives) or informal services (retail shop, currency dealer). No documentation.
Financial Development Economic development & Growth Investments Rationale: Diaspora inflow and development Economic Gowth & Development Poverty Reduction Remittances Entrepreneur- ship Diaspora Investments
Help reduce the level of poverty and have a greater influence on its severity (in rural areas)
Are associated with improved schooling outcomes for children (by helping to relax household constraints) and better access to health services for recipients
Promote entrepreneurship as the extra source of income could be put in new income generating activities
Help promote economic growth in less financially developed countries by positively impacting financial development
Diaspora inflow into the region: The Challenge 1. The SSA region attracts relatively low volume of remittances through the formal channels Recorded remittances in developing countries: comparative review Source: World Bank At approx. US$ 3.2 billion this represented less than 5% of total remittances to developing countries (US$240 billion)
Top 3: China, India, Mexico
Only Nigeria in the top 25 - Bengladesh, India & Pakistan
Diaspora inflow into the region: The Challenge The SSA region channels a limited proportion of remittance inflow into private sector investment The SSA region attracts less diaspora private sector investment
Less than 10% of received remittances are channeled to income and employment generating activities
Compared to the large number of technology firms by the Indian and Chinese diaspora
Diaspora inflow into the region: The Challenge Increase % of R channelled to Savings & income generating activities Increase Volume of Diaspora Investment (Community & Private) Increase Volume of R through formal channels Diaspora Inflow 1 2 3
Action required at the Origin and Host Country levels as well as the level of Multilateral Institutions and the Diaspora community + Private Sector Private Sector Services: Addressing the Challenge Private Sector (RSPs, MTOs, MNOs Banks, NB financial Institutions)