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Re: The Diaspora Bond and the World Bank Research
Here is an interesting story, where African Governments can sell Diaspora Bonds if they can convince the Diaspora to be engaged proactively
Please read the following and suggest your creative alternative ideas. First, Read and understand the issues.
Latest findings from joint World Bank, AfDB research
WASHINGTON, DC, March 30, 2011 – With about 30 million Africans living
outside their home countries, migration is a vital lifeline for the continent.
Yet African governments need to do more to realize the full economic
benefits of the phenomenon, says a new report by the African Development
Bank and the World Bank.
The report, Leveraging Migration for Africa: Remittances, Skills, and
Investments, presents data from new surveys. The report finds evidence
that suggest migration and remittances reduce poverty in the origin
communities. Remittances lead to increased investments in health,
education, and housing in Africa. Diasporas also provide capital, trade
, knowledge , and technology transfers.
“Migration pressures will only rise in the future as a result of demographic
changes of rising population in Africa and falling labor forces in Europe
and many developed countries,” said Hans Timmer, director of
development prospects at the World Bank. “Therefore, adapting policy
responses to demographic forces and crafting multilateral arrangements
for managing future migration is essential.”
Two-thirds of migrants from Sub-Saharan Africa, particularly poorer
migrants, go to other countries in the region, while more than 90
percent of migrants from North Africa have moved outside the
African continent. The top destinations for African migrants
are France (9 percent of total emigrants), Cote d’Ivoire (8 percent),
South Africa (6 percent), Saudi Arabia (5 percent), and the United
States and the United Kingdom (4 percent each).
Shantayanan Devarajan, chief economist of the Africa region
at the World Bank, said, “Migration of skilled labor is particularly
high in small and low-income African countries, which already have
low levels of human capital. Fragile and post-war countries face even
bigger challenges because of the flight of human capital. African
governments and policy makers should focus on increasing education
and skill levels and establishing an environment in which high-skilled
workers have productive opportunities at home.”
“African governments need to strengthen ties between diasporas and
home countries, protect migrants, and expand competition in remittance
markets,” said Dilip Ratha, main author of the report and lead
economist at the World Bank. “Otherwise, the potential of migration
for Africa remains largely untapped.”
One innovation worth considering are diaspora bonds, which are sold by
governments or private companies to nationals living abroad. These bonds
have already been successful in tapping into assets of Israeli and Indian
citizens living abroad. According to Ratha¸ Sub-Saharan African countries
can potentially raise $5–$10 billion a year in diaspora bonds. Countries
with large diasporas in high-income countries that can potentially issue
diaspora bonds include Ethiopia, Ghana, Kenya, Liberia, Nigeria, Senegal,
Uganda, and Zambia in Sub-Saharan Africa and Egypt, Morocco, and
Tunisia in North Africa.
“African banks can improve their access to international capital markets
by issuing bonds that are securitized by future remittance inflows,” said
Mthuli Ncube, Chief Economist of the African Development Bank.
“The African Development Bank, the World Bank and bilateral donors can
play a significant role in facilitating remittance securitization and mitigating
the risks to African countries of issuing these remittance-backed bonds.
Efforts can include technical assistance in project design and creditworthiness
analysis, prudential debt management, and helping African countries obtain
Recorded remittances into Africa, which grew fourfold between 1990 and 2010
to reach nearly $40 billion in 2010, are the continent’s largest source of foreign
capital after foreign direct investments. Recent surveys show that investments
such as land purchases, building a home, and starting a business were the
highest uses of remittances sent home by African diaspora. As a share of
total investment, these represented 36 percent in Burkina Faso, 55 percent in
Kenya, 57 percent in Nigeria, 15 percent in Senegal, and 20 percent in Uganda.
Education was the second-highest use of remittances from outside Africa into
Nigeria and Uganda, the third highest into Burkina Faso, and the fourth highest
However, official remittance flows to Africa are significantly underestimated,
with only about half of the countries in Sub-Saharan Africa collecting and
reporting remittance data with any regularity.
The report finds it is still very expensive to send remittances to African countries,
particularly within Africa. According to Ratha, these high costs encourage the use
of informal channels and are an unnecessary burden for African migrants and
The report recommends that post offices, savings and credit cooperatives, rural
banks, and microfinance institutions that have large branch networks can play
an important role to expand access to remittances and financial services among
the poor and in rural areas. But they should avoid exclusive agreements with
money transfer operators, which limits competition and tends to increase
the cost of sending money. There is also a need to assess the implications
of telecom companies in Africa offering mobile money transfers and other
financial services for banking stability and systemic risk.
About the Report
Leveraging Migration for Africa: Remittances, Skills, and Investments fills
important knowledge gaps on African migration, remittances, and
Diasporas. It is produced jointly by the African Development Bank
and the World Bank as part of the Africa
Migration Project. The project has the financial support of
the African Development Bank; the Canadian International Development
Agency (CIDA); the Department of International Development (DFID);
the French Ministry of Immigration, Integration, Asylum and Solidarity
Development; the Danish Ministry of Foreign Affairs; the
International Fund for Agricultural Development (IFAD);
and the Swedish International
Development Cooperation Agency (SIDA).
Two companion volumes—Remittance Markets in Africa, and
Diaspora forDevelopment in Africa—have also been published.
Also newly published are primary databases from six household
surveys on migrants conductedin Burkina Faso, Kenya, Nigeria,
Senegal, South Africa, and Uganda.
The full report and the latest migration and remittances data are available
Registered journalists can access the report under embargo via the
Online Media Briefing Center at: http://media.worldbank.org/secure.
Accredited media may request for passwords at: http://media.worldbank.org/
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