Tuesday, April 05, 2011

30 Million African Diaspora can Buy Diaspora Bonds if African Governments can sell them

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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 
 sovereign ratings.”

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 
into Kenya.

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 
remittance recipients.

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
 at www.worldbank.org/migration.

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/

In Washington: Rebecca Ong +1 (202) 458-0434, rong@worldbank.org
For TV/Broadcast: Cynthia Case +1 (202) 494-3465, cynthiacase@gmail.com

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