What Is a Diaspora Bond?
The proposed design of the Grand Renaissance Dam, an infrastructure project that the Ethiopian government hopesto finance through diaspora bonds.
Well-planned infrastructure and development projects improve people's daily lives and spur economic growth, but they often a fortune to complete. It can be difficult to pay for a new bridge all at once, so a government might choose to issue a bond to raise enough cash to cover the construction cost. In issuing such a bond, a government can borrow money today from investors, promising to re-pay the full amount of the loan plus a set amount of interest after a specified number of months or years.
However, governments in less developed or unstable countries may have more difficulty raising enough cash to pay for large-scale projects for two important reasons. First, these governments may be unable to access standard international capital markets. Second, mainstream investors may only be willing to lend such governments money at prohibitively high interest rates.
Diaspora bonds are marketed to members of the diaspora and offer a strong alternative to governments facing such hurdles.
The World Bank estimated in February 2011 that diaspora groups from developing countries likely hold upwards of $400 billion in savings. Writing in Foreign Policy magazine, Ngozio Okonjo-Iweala, Nigeria's Minister of Finance, and Dilip Ratha, manager of the World Bank's migration unit, challenge us to imagine what could be accomplished if even a small portion of this $400 billion in diaspora savings were harnessed for development:
These savings are mostly held as cash under the mattress or in low-yielding bank accounts in the countries of destination…[But] if one in every 10 diaspora members, whether rich or poor, could be persuaded to invest $1,000 in his or her country of origin, developing countries could potentially raise $20 billion a year for development financing.
Members of a country's diaspora tend to be wealthier than its resident citizens, making them more likely to have means to invest in their homeland.
Diaspora investors sometimes offer what is called a "patriotic" discount to governments in their country of origin/ancestry. According to George Washington University's Liesl Riddle, when diaspora members invest in their homelands, they are motivated by more than just profit: "Social and emotional motivations also play a role."
[…]increasingly, diasporans are searching for avenues to extend their development impact beyond politics and philanthropy. They seek ways to leverage the human, social, and financial capital they have acquired to make investments and establish new businesses in their countries-of-origin.
Diaspora investors might be willing to accept a lower rate of return and have a greater tolerance for uncertainty when buying diaspora bonds than a mainstream investment. Diaspora investors might partially view the purchase of a diaspora bond as an act of charity and might also have a greater understanding of a country's level of risk than other foreign investors. The diaspora bond allows individuals to put their money to work for a cause that they support.
Learn more about diaspora bonds from these resources:
http://www.dilipratha.com/index_files/DiasporaBonds-JICEP.pdf
http://www.migrationpolicy.org/pubs/diasporas-markets.pdf
http://www.tcgillc.com/tcgidocs/Jamaica031124.pdf
http://www.nytimes.com/2011/03/12/opinion/12ratha.html
http://www.economist.com/node/21526324
http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1100792545130/Diasporabonds.pdf
My People:The Nigerian Diaspora Bond initiative is a worthy one. Provided it is:- sovereign-guaranteed- dollar-denominated- has different small-, medium- and high-investment thresholds- reasonable coupon rates (rates of return)- reasonable (or even variable) maturity dates- focused infrastructural projects that have a national breadthI think that it will have many initial takers (followed later by more initially-skeptical takers) once the periodic interests due are paid on time. Although called a "Nigerian Diaspora Bond", it need not be confined to "Nigerian Diaspora", even if the Diaspora could be first preferred takers before opening it up to others.If it is to be launched in March, this is the time to publish the Prospectus.Bolaji AlukoPS: The essay below gives a good insight in Diaspora savings and bonds....Billions in African diaspora savings could bolster growth
The African diaspora and migrants have for years been instrumental in helping family and friends at home get by, as huge annual remittance flows illustrate, but their contributions beyond remittances could have a significant impact on development, if tapped into.
According to the World Bank, African diaspora savings, at US$53-billion every year, exceed annual remittances to the continent and are mostly invested abroad.
"If one in every 10 members of the diaspora could be persuaded to invest $1 000 in his or her country of origin, Africa could raise $3-billion a year for development financing," Dilip Ratha and Sonia Plaza write in the World Bank's 2011 report, "Diaspora for Development in Africa".
Many Africans living abroad feel a strong sense of connection and want to contribute to development at home. Dr Girma Tefera, chair of the US-based Ethiopian-American Doctors Group (EADG), says among professionals in the diaspora there is a real desire to use their expertise and skills to make a difference in home countries.
"A lot of my colleagues' primary motivation is to give back to the society at large back home," Tefera says of the 171 Ethiopian physicians in the US who have pledged money and time to the EADG's project to build a state of the art hospital in Addis Ababa.
Gaetan Gatete, president of the Rwandan Diaspora network USA, says they are looking at what they can give, but also at what they can get in return. "We are thinking about how we can invest our money, how we can be the business link between here and our homeland," Gatete told Irin.
Through entrepreneurship, skills and technology exchange, increased trade links, philanthropic foundations, investment, and heritage and tourism links, diaspora groups, individuals and networks are giving back in various ways.
Governments not doing enough
Even so, few African governments have managed to engage expatriates successfully in poverty reduction efforts and development. A recent policy brief from the Migration Policy Institute (MPI), a US-based think-tank studying the movement of people globally, says governments need to be much more proactive if they are to reap concrete benefits from their diaspora.Kathleen Newland, MPI's migration and development specialist, says African governments need to find out more about their diaspora populations, and to build solid relationships with them to implement coherent engagement policies, rather than treating them as either foreigners or locals.
"Social marketing is not something that many countries have done well, and few have developed good communications with [their] diaspora on a regular basis," Newland says.
At least 32 African countries have now set up specialised units or ministries to engage with the diaspora, but these are often understaffed and underfinanced. As a result, "There is not a wide knowledge among diaspora [members] of government initiatives," Newland said.
Chukwu-Emeka Chikezie, Director of Up!-Africa Limited, a consultancy firm working with diaspora members in the private sector, says home-country governments cannot rely solely on emotional bonds to get people in the diaspora involved in homeland development. "The Office of Diaspora Affairs is there, but have they been able to really integrate it within their development agenda? That's where there has been a failing," said Chikezie.
Ethiopia, Rwanda
A few countries are making progress, notably Ethiopia and Rwanda, which are reaching out to their expatriates through targeted campaigns seeking investment in development projects in the home country, formal diaspora policies, dual citizenship for diaspora members, and supporting global diaspora networks to forge strong connections with their foreign-born populations.The Ethiopian Diaspora Directorate, established in 2002, now has a web portal with information for their diaspora on investment and trade opportunities in Ethiopia, development projects, the government's diaspora policy, and which support services are available in Ethiopia.
Foreign-born Ethiopians can apply for a "yellow card", allowing them similar rights and privileges to a homeland citizen. Yellow card holders can enter the country without a visa, work without a permit, and are eligible for state pension schemes.
Ethiopia's ministry of health has set up a diaspora unit to work with closely with Tefera's EADG hospital project. The ministry has also been active in skills exchanges, bringing home expatriate medical professionals to work in the health sector, which has led to the country's first emergency response residency programme.
In August 2012, Rwanda's government set up the Agaciro fund, a "solidarity fund" aiming to get Rwanda off foreign aid and to self-finance development. The fund, managed by the ministry of finance, will close at the end of 2013. According to its website, contributions have reached RwF20.4-billion ($30.3-million).
Fidelis Mironko, focal point for the diaspora at the Rwandan Embassy in Washington, says people in the diaspora are eager to contribute but the government has not yet decided how the funds will be used.
Diaspora bonds
Bonds targeting expatriates have worked for other developing nations, including India. Some African countries – Ethiopia, Rwanda and Kenya – have issued such bonds to fund particular infrastructure and development projects, but without much success.A bond is a government-issued IOU, or acknowledgment of debt, to support government spending. It promises to pay the purchaser periodic interest and the face value at the maturity date. Diaspora bonds target members of a country's community abroad, presuming that their emotional, cultural and familial ties will attract them to invest where the average foreign investor might not.
Diaspora bonds typically offer small denominations and are marketed to expatriate communities, whose long-term and emotional connection to their homelands often make them open to smaller returns or riskier propositions than the average foreign investor.
Dele Meiji Fatunla, a Nigerian-British writer working at the Royal African Society in Britain, says the limited success of African diaspora bonds lies in misgivings about the ability of governments to deliver, and poor marketing. "As an African in the diaspora I haven't really seen any targeted information that would compel me to… invest in diaspora bonds. There has to be a lot more focused marketing and encouragement to invest."
If African governments were to offer their diaspora voting rights, this would be an added inducement. "You would certainly have more of an investment if you are able to vote. And you will be more likely to invest once you are part of choosing a government and being involved in the political process," Fatunla notes.
MPI's Newland says offering voting rights to people in the diaspora is complicated because they will form a significant part of the electorate but do not necessarily have to live with the consequences of their vote.
Donors and diaspora
Many diaspora groups looking to contribute to development at home are led by volunteers with full-time jobs, which often results in a lack of organisation and oversight, and less strategic and sustainable interventions.For these reasons Western donors have been wary of engaging with diaspora groups in the past, though they are increasingly interested in capitalising on the unique position of diaspora members to help in achieving development objectives.
Romi Bhatia, an advisor for Diaspora Partnerships at USAids's Office of Innovation and Development Alliances, says one of the biggest challenges to making use of diaspora resources is capacity. "Often, diaspora [organisations] want to work with USAid but there is a capacity gap. We need them to be a registered NGO, and more capable in what they are doing so we can partner with them," Bhatia told IRIN.
USAid is working with a management consulting firm, Accenture, to provide skills training for US-based diaspora non-profits looking to work in their countries of origin.
Chikezie, who also co-founded the African Foundation for Development (AFFORD), a non-profit drawing on diaspora expertise for philanthropic and investment projects in Africa, says the key is creating partnerships that mix diaspora and local knowledge. "The examples I've seen of success are where you have that mix of the diaspora 'can-do-ism', thinking outside of the box, mixed with solid local context and understanding."
But he also warns against thinking the diaspora will be a panacea for Africa's ills, and urges governments to incorporate their expatriates into sound development policies.
Most of the African diaspora and migrant workers are living and working elsewhere on the continent. According to the World Bank's Migration and Remittances Factbook 2011, Africans living abroad in Africa account for over 14-million people, nearly half of all those in the African diaspora. Ivory Coast and South Africa both received over 2.3-million migrant workers in 2013.
While much research, policy work and media focuses on the African diaspora in the West, Chikezie says more efforts are needed to quantify the contributions of the African diaspora within Africa. – IRIN
On Wed, Jan 11, 2017 at 11:31 PM, 'Joeckeshi@yahoo.com' via AfricanWorldForum <africanworldforum@googlegroups.com > wrote:--I am really looking forward to the establishment of the Bond. When l first muted the idea of the Bond in 2005, very few in government showed any interest. Accompanied by John GEORGE, former NIDO chairman (Europe) l took the case for the Diaspora Bond to the CBN Governor, Prof Soludo. He was supportive but worried about cost and gave the assurance that the CBN would look into it. The battle was later taken up by Ngozi and now we have Kemi Adeosun set to implement it almost 12 years after l first proposed the idea.I was told a few minutes before l put on my iPad to read my mails by a professor who called to invite me to a conference later in March this year, that ideas don't die. How true this is. Good 12 years after. To the Nigerian Diaspora, make this a success please.
On Jan 11, 2017, at 5:52 PM, Joe Attueyi topcrestt@yahoo.com [NaijaPolitics] <NaijaPolitics@yahoogroups.com> wrote: Dr KassimI already have the vote---and already invested in Nigeria. Two strikes.Here is opportunity for Diaspora Nigerians like Dr JUI to walk the talk. After all they reportedly already send $20 billion yearly to Nigeria via Western Union. Let's formalize a small portion of these. No?Joe
Sent from my iPhone
Pastor Joe:
There are more than enough loaded Nigerians abroad
to fund the $300 Million USD Diaspora bond.
Do not forget that the Nigerian Diaspora now include folks
like Mrs Diezani, Nigeria's former Minister of Petroleum,
and her friend and business partner Mr Kola Aluko
not to mention folks like High Chief Elder Ibori who has just
regained his freedom after serving some jail term in London.
I doubt if the call for purchasers of the Diaspora bond would
accept those with clean money while rejecting those with dirty
money.
Needless to say, I can also mention thousands of of Diaspora Nigerians
who have worked very hard for their money who might be interested
in helping out Mother Nigeria by investing in the Diaspora Bond.
And at the rate that you are frequently traveling out of Nigeria
either for pleasure or business, you may qualify as a
a honorary Diaspora Nigeria and use your funds to bolster
the percentage of the holdings from the Diaspora with clean funds.
Bye,
Ola
---- Original Message ----
From: Joe Attueyi <topcrestt@yahoo.com>
To: yahoogroups <naijapolitics@yahoogroups.com>; yahoogroups <NIgerianWorldForum@yahoogroup s.com >; rotfash <rotfash@yahoo.com>; Ishola Williams <isholawilliams@gmail.com>; TalkNaija <TalkNigeria@yahoogroups.com>; Ra'ayi Riga <Raayiriga@yahoogroups.com>; vincentotuonye <vincentotuonye@msn.com>; Omo Oodua <OmoOdua@yahoogroups.com>; Okonkwonetworks <okonkwonetworks@googlegroups.com >; Truth As My Weapon <igboworldforum@yahoogroups.com >; olakassimmd@aol.com <OlaKassimMD@aol.com>; Yahoo! Inc. <YanArewa@yahoogroups.com>; Yahoo! Inc. <NaijaObserver@yahoogroups.com>; Agbor Ike <ikeagbor@yahoo.com>; African GM <africanworldforum@googlegroup s.com >; Mgbajala Eziokwu <NigerianID@yahoogroups.com>; ebohon <ebohon@dmu.ac.uk>; nebukadineze@aol.com <Nebukadineze@aol.com>; Michael Adeniyi <mgadeniyi@aol.com>; Abba <abba2007@gmail.com>; NaijaEvent@googlegroups.com <naijaevent@googlegroups.com>; jigietseme <jigietseme@gmail.com>
Sent: Wed, Jan 11, 2017 10:48 am
Subject: Fwd: [CSJ] Adeosun: $300m Diaspora bond out in March
When Diaspora Nigerians invest $300 MM in Nigeria I will campaign for them to have the vote.
Until then---no taxation; no representation!
Joe
Sent from my iPhone
Begin forwarded message:
From: Omale Omachi Samuel <samsam2011@gmail.com>
Date: 11 January 2017 at 8:56:32 AM GMT
To: csj <csj@pfm-ngr.org>
Subject: [CSJ] Adeosun: $300m Diaspora bond out in March
Reply-To: Centre for Social Justice <csj@pfm-ngr.org>
Adeosun: $300m Diaspora bond out in March
Minister of Finance, Kemi Adeosunhe Minister of Finance, Mrs Kemi Adeosun, yesterday said the $300 million Diaspora bond approved by the National Assembly would be rolled out in March.Mrs. Adeosun spoke yesterday when the Senior Special Assistant on Foreign Affairs and Diaspora, Mrs Abike Dabiri-Erewa, visited her in Abuja."The Diaspora bond which the National assembly has approved where Nigerian in the Diaspora who wants to invest can key into, we are hoping that by March the Diaspora bond will be rolled out."Beyond that of course, the investment opportunities in Nigeria are very huge, a lot of Diasporans who are interested in investing at home are encouraged to do so."Government is putting in place a lot of incentives, such as infrastructures; and also creating conducive environment for them to thrive. We are encouraging them to come back home and join the trend," she said.Mrs. Adeosun noted that the Ministry of Trade and Investment was working to reduce the bottlenecks hindering people from doing businesses.Mrs. Adesoun, who was optimistic that 2017 would be a better year for Nigeria, said the country was going to overcome its challenges and all hands must be on deck to restore the economy."We are very confident that Nigeria is going to overcome its challenges; we have to ensure that we invest and ensure that the economy is moving," she said.
_______________________________________________
CSJ mailing list
CSJ@pfm-ngr.org
Unsubscribe: <mailto:csj_pfm-ngr.org-unsubscribe@pfm-ngr.org >__._,_.___
Reply via web post • Reply to sender • Reply to group • Start a New Topic • Messages in this topic (1)
Have you tried the highest rated email app?With 4.5 stars in iTunes, the Yahoo Mail app is the highest rated email app on the market. What are you waiting for? Now you can access all your inboxes (Gmail, Outlook, AOL and more) in one place. Never delete an email again with 1000GB of free cloud storage.
Disclaimer:
Forum members are reminded that NaijaPolitics is established to be a moderated forum for gavel-to-gavel discussion of political developments in Nigeria, Africa's largest democracy. Freedom of opinion/expression is inherent in NaijaPolitics. Views and opposing views expressed in NaijaPolitics forum are the rights of individual contributors. Mutual respect for people's views is the corner stone of our forum. Freedom of speech applied responsibly within the guiding parameters of Yahoo! Inc (our hosts) and NaijaPolitics Rules and Guidelines (broadcast monthly and accessible to all subscribers in our archives) is our guiding principle. Everyone posting to this Forum bears the sole responsibility for any legal consequences of his or her postings, and hence statements and facts must be presented responsibly. Your continued membership signifies that you agree to this disclaimer and pledge to abide by our Rules and Guidelines.
NaijaPolitics is division of Afrik Network Groups.
Latest Version of Disclaimer released (December 15, 2005)
.
__,_._,___
---
You received this message because you are subscribed to the Google Groups "AfricanWorldForum" group.
To unsubscribe from this group and stop receiving emails from it, send an email to africanworldforum+unsubscribe@googlegroups.com .
To post to this group, send email to africanworldforum@googlegroups.com .
Visit this group at https://groups.google.com/group/africanworldforum .
To view this discussion on the web visit https://groups.google.com/d/msgid/africanworldforum/3B800D32 .-4C37-4A80-9FB2-1853A1D47765% 40yahoo.com
For more options, visit https://groups.google.com/d/optout .
Listserv moderated by Toyin Falola, University of Texas at Austin
To post to this group, send an email to USAAfricaDialogue@googlegroups.com
To subscribe to this group, send an email to USAAfricaDialogue+subscribe@googlegroups.com
Current archives at http://groups.google.com/group/USAAfricaDialogue
Early archives at http://www.utexas.edu/conferences/africa/ads/index.html
---
You received this message because you are subscribed to the Google Groups "USA Africa Dialogue Series" group.
To unsubscribe from this group and stop receiving emails from it, send an email to usaafricadialogue+unsubscribe@googlegroups.com.
For more options, visit https://groups.google.com/d/optout.
No comments:
Post a Comment