Remittances outstrip any other form of flows – Size – Resilience Do Remittance flows = Diaspora Investment Flows?

1. Facilitating Diaspora Investments
Back Home
A New Development Finance Paradigm
London, United Kingdom
2014

2. What are the facts?
• What we know about Diaspora capital flows:
– US$450B in remittance flows from West to
Emerging Markets (10%-15% per year) - WB
– US$40B in flows into Africa alone (P2P)
– Conventional Wisdom: Subsistence Consumption

3. What do Remittances say?
• Remittances outstrip any other form of flows
– Size
– Resilience
• Do Remittance flows = Diaspora Investment
Flows?
• What do we know about remitters and our
motivations…

4. GWU – Western Union Research
• GWU-Western Union Afro Migrant Study:
– About 1,000 members of US-based African
Diaspora were surveyed – sponsored by WU
– Research Objectives:
• Profile?
• Investment interest and activity?
• Obstacles to investments?
• Diaspora investment advantages?
• Investment motivation?

5. GWU-WU Findings (1)
• Profile?
– Average stay in the US: 22.18 years
– 72.2% plan to return “Back Home”
– Average age of respondent: 46 years old
– More than 50% have annual incomes in excess of
US$100,000
– Average remittance in past 3 yrs: US$12,974 (std
dev: US$22,873.)

6. GWU-WU Findings (2)
• Demographics:

7. GWU-WU Findings (3)
• Risk Tolerance

8. GWU-WU Findings (4)
• Contact with “Back Home”

9. GWU-WU Findings (5)
• Investment Interest (%)

10. GWU-WU Findings (6)
• Investment Activities (%)

11. GWU-WU Findings (7)
• Diaspora investment motivation summarized:
• Financial
• Emotional
• Social-status
• Political

12. Implications?
• How to translate into a palatable proposition?
• Need to:
– Facilitate Access to Impactful Opportunities
– Provide Reasonable Prospects for Returns
– Provide Process Transparency
– Address Voice Mechanism
• Must do this in a single proposition…

13. Solution…

14. Next Steps?
• Diaspora and Other interested Investors
• Registering at the average rate of 100 a month
• Growing book of Opportunities
• Private Equity Funds
• Diaspora Bonds (gvts, corporations, n/profits)
• Housing (investment, lending, buying)
• Deals (co-investment and stand-alone)

15. Case Studies I – Diaspora Bonds
• Sovereign Infrastructure Bonds issued
• Pay coupons on semi-annual basis
• Maturity between 5 – 12 years
• Yields between 5%-15% (local currency)
• Financing Roads, Water and Power
• Countries: Kenya, Ghana, Ethiopia, Nigeria
• Looking at Corporate Diaspora Bonds…

16. Case Study II – SMEs
• Key challenge – Selection and Governance
– Partner with experts: private equity funds
– Filter per key criteria
– HS Members vote and commit
– Co-invest with PE funds
– Industries: manufacturing, retails, real estate…

17. Case Study III – Real Estate
• Work with Top Developers: Kenya, Ghana,
Nigeria
• HS members have 3 options:
– Invest in mortgages
– Invest in housing projects
– Buy units directly from Builder
• New Opportunity: Buying Cities (Renaissance)
– Ghana and Kenya

18. RENAISSANCE PARTNERS
INTERNATIONAL
Innovation in Urban Planning

19. Investing in Cities on HS?
• RPI will divide up each planned city into key
investment opportunities:
– Commercial Real Estate (Malls, Stations, Offices)
– Residential Real Estate (Gated Communities, Lots)
– Roads, Power, Public Services (Municipalities)
• Investment instruments available per:
– Bonds (5yr, 10yr)
– Equity (Operating Company)

20. Conclusion
• Homestrings – a repository of investment
opportunities for Diaspora and other investors
• Homestrings – a platform for vetted project
promoters
• Homestrings – first impact investment
“shopping mall” for the Diaspora.

21. Contacts
• Eric V. Guichard – Founder/CEO
eric@homestrings.com
• Address: www.homestrings.com