Exploring credible alternatives for diaspora investments in the real sector
Today, goods, capital, people, and ideas are flowing as never before and foreign individuals and companies invest money in productive activities that foster development. According to a report by Inter-American Development Bank, about 215 million people live away from their home country and many of such diasporas are prospering abroad and are eager to extend such successes by investing in their homeland.
Recent years have witnessed a renewed interest in the complex relationship between migration and development. The role of Diasporas can be broadly defined to include migrants and their descendants who maintain ties with their countries of origin have often been overlooked or are discussed only in general terms.
Yet a growing body of evidence suggests that Diasporas play a critical role in supporting sustainable development by transferring resources, knowledge, and ideas back home, and in integrating their countries of origin into the global economy.
Economists and policymakers also emphasise the role of migrants in promoting trade and investment, as the presence of a large diaspora can create markets for products manufactured in their countries of origin and strengthen bilateral trade flows.
Financial flows from migrants and their descendants are at the heart of the relationship between migration and development. There is little doubt that remittances are a large and important intra-family financial flow that can have important effects on financial development.
Substantial foreign financing is necessary to fund investment due to the small pool of domestic savings. Another result of a limited pool of domestic savings is that it is typically necessary to attract substantial foreign capital to fund domestic investment that is important exception to this generalization.
The appropriate balance of foreign and domestic financing has been much considered in recent years particularly in the light of global economic crises. External finance or foreign savings can be highly volatile and susceptible to sudden changes in direction.
Overall, experts agree that financial liberation and integration with the global economy are indispensable for economic growth and improved living standards. But, as noted by the commission on growth and development, there is “no case of a sustained high investment path not backed up by high domestic savings.’’ Domestic savings are necessary but not sufficient.
Heifer, NiDCOM Collaborations
The recent collaboration between Heifer Nigeria, a global non-profit institution working towards eradicating poverty and hunger with the Nigerians in Diaspora Commission (NiDCOM) is to link diaspora investments to Nigerian agribusinesses in order to stimulate economic growth.
Featuring its initiatives at the fourth edition of the Nigerians Diaspora Summit held at the presidential villa in Abuja, country director, Heifer Nigeria, Mr. Rufus Idris, said that the organization is implementing strategies to attract diaspora investments and innovations into Nigeria’s agricultural sector.
Nigeria accounts for over a third of migrant remittance flows to Sub-Saharan Africa. These flows amounted to US$23.63 billion (2017: US$22 billion) in 2018, and represented 6.1 percent of Nigeria’s gross domestic product (GDP). The 2018 migrant remittances translate to 83 percent of the federal government budget in 2018 and 11 times the FDI flows in the same period. Over a 15-year period, it is expected that total remittance flows to Nigeria will grow by almost double in size from US$18.37 billion in 2009 to US$34.89 billion in 2023.
With over $25 billion annual diaspora remittance, Heifer International has opened discussions with Nigerians in Diaspora with a view to investing in the Nigerian agricultural sector.
The country director, Heifer International in Nigeria, Rufus Idris said at the just concluded Diaspora Investment Summit in Abuja, that his organization was working to bridge the investment gap in the agricultural sector with funds from diaspora Nigerians.
“For us, we know that there is a huge deficit in terms of investment in the agricultural sector. So what we are doing is that we are investing heavily in different aspects of the agricultural sector in the country. What we are doing here is to try and see how we can collaborate with other organizations that can help us channel diaspora investments into the agricultural sector to address areas where we have problems and such investments can help unlock those areas,” he said.
On the specific areas of agriculture in which Heifer wants to partner diaspora investors, the country director said that his team was looking at different sub-sectors and the value-chain where Nigeria had a comparative advantage.
“We are looking at sectors and value chains where we can address the issue of food self-sufficiency, Nigeria with over 200 million people and growing to 400 million people by 2050, we cannot feed ourselves. We rely so much on importation. So, we are looking at areas that can help reduce importation that can support local production to meet the growing local demand,” Idris said.
Heifer International which has been in operation in more than 25 different countries, globally, for about 77 years, has commenced a Tractor Initiative in Nigeria.
“We are new in Nigeria; we are piloting collaboration with Hello Tractor that is deploying the ‘Pay as you Go’ tractor model. It is a way you get more tractor service providers to own tractors closer to farmers so that they can make tractors available to smallholder farmers. Not just the tractor itself, other components that come with the tractor like harrower, harvester, planters and any other component that have shortages in the country as well,” Idris said.
Boosting Local Production via Agribusiness
As part of Heifer’s ambitious target to help 10 million households achieve sustainable living income by the year 2030, the non-profit organization is investing heavily in agriculture to help improve local production to meet fast-growing demands, investing in youth creativity and technology in agriculture to drive economic growth in Nigeria.
“Today, more than ever, Nigeria’s Agricultural value chains require investments at transformational scale to unlock their potentials and to improve the productivity and competitiveness of the sector. We cannot overlook the potential of diaspora investments to contribute to transforming this sector.”
On the mechanized tractor business for smallholder farmers, he said that the Heifer Tractor Initiative accommodates farmers who do not own tractors, adding that the organisation is in partnership with ‘Hello Tractor’ to make available usable tractors for farmers.
‘Pay as you Go’ tractor model is a way you get more tractor service providers to own tractors closer to farmers so that they can be able to make tractors available to smallholder farmers. Not just tractor itself, other components that come with the tractor like harrower, harvester, plower, planters and any other components that have a shortage in the country as well,” he said.
The diaspora is a resource and asset for national development. Nigeria is not left out of this understanding of the need to acknowledge the significant contributions of the diaspora.
Nigerians in the diaspora have a significant role to play in the development of Nigeria, now and for years to come because Nigerians in the diaspora constitute an important constituency that contributes to their wealth of experience, exposure, vast human network, among others to the socio-economic development of the country.
“The need to leverage on the diaspora not just for remittances and bonds, but for their unwavering support to join hands in nation-building cannot be overemphasized,” Chairman/Chief Executive Officer, Nigerians in Diaspora Commission (NiDCOM), Abike Dabiri-Erewa said.
Ajia writes from Lagos