Globally, remittances are estimated to add up to some US$500 billion a year worldwide – largest recipients are India, Mexico, and the Philippines. According to the World Bank, officially recorded remittance flows to developing countries are estimated to have reached US$436 billion in 2014, a 4.4% increase over the 2013 level. The top five migrant destination countries remain the United States, Saudi Arabia, Germany, the Russian Federation, and the United Arab Emirates.
In 2012, Africa was estimated to have received about US$31 billion in remittances, of which Nigeria was the largest recipient with 67% of inflows to the region followed by Senegal and Kenya. In Ghana, remittances through the formal channels amounted to US$2.1 billion in 2010, rising to US$2.2 billion in 2011, US$1.8 billion in 2012 and US$1.97 billion in 2013. The World Bank estimates that the global average cost of sending money remained broadly at 8% in Q4 2014 (about 12% in Sub-Saharan Africa). Rising costs are due to compliance costs for commercial banks and money transfer operators, and delaying the entry of new players and the use of mobile technology.
As has been extensively argued in many academic articles and policy documents:
“Remittances remain a key source of funds for developing countries, far exceeding official development assistance and even foreign direct investment. They have proved to be more stable than private debt and portfolio equity flows …The World Bank’s shows that remittances are also less volatile than official aid flows. Annual remittances are also larger than, or equal to, foreign exchange reserves in many small countries. Even in large emerging markets, such as India, remittances are equivalent to at least a quarter of total foreign exchange reserves.”
Clearly, this provides ample room for us to concentrate more effort on mobilizing not only diaspora savings and channelling them into critical infrastructure investments with the biggest multiplier effects and social impact on the economy, but on the wider array of talent available for national development. Against this backdrop, one is inclined to ask: How well does Ghana’s diasporan talent feature in the country’s foreign policy and domestic economy beyond just remittances? Is there a coherent blueprint and policy in place that actively seeks this new and vast diaporan talent and resource pool (myself included) to invest and set-up base back home? It is estimated that over a million Ghanaians live overseas with the majority concentrated in the United States, United Kingdom, continental Europe – mostly Germany, Italy, Spain and France, West Africa and in recent times in South East Asian countries fostered by globalisation and the enhancement of trade ties.
As Ricardo Hausman notes,
“East Asian industrialization exploited the links created by the network of overseas Chinese. India’s high-tech industries were to a large extent created by returning migrants and are deeply connected to the diaspora. Israel is an entire country created by its diaspora, and its thriving high-tech sector, too, has benefited from sustained ties. By contrast, many Latin American countries have substantial diasporas abroad, but few equivalent success stories…. a diaspora can work its economic magic only if the host country tolerates it and the home country appreciates it. Governments should have a diaspora strategy that builds on natural feelings of identity and affection to cultivate this social network as a powerful source of economic progress.”
NB: This piece was inspired by Ricardo Hausman’s Project Syndicate post titled “The Diaspora Goldmine”