The trouble with relying on the diaspora

OPIC and other organizations have begun to realize the potential benefits of partnering with the diaspora (particularly the African diaspora) to finance and implement risky projects. Diaspora investors, as OPIC’s Executive VP pointed out, are often better than the average investor because:

  • They have a better understanding of what risks they’re dealing with
  • They have more foresight and have a bigger stake in the long-term outcome than non-native investors solely interested in profits
  • They have a better network of connections in-country to help facilitate the project implementation and keep it going
  • They’re less likely to cave in and give up at the first signs of difficulty

However, this fails to point out the potential pitfalls on relying on diaspora finance alone: like most others in a globalized economy, diaspora lenders and investors are also affected by fluctuations in income and they can only do so much. How can you expect a working taxi driver from Pakistan to contribute the same amount in a boon economy as in a year where he makes an average of $30/day and has to support 5 kids? And sure, OPIC helps by buffering for risks, but it can only do so much. While relying on diaspora financing and projects is probably much better than working solely with an outside corporation, relying on the diaspora as the main source of investment seems careless on a continent (Africa) that needs as much investment from possible.

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About Development_Tango

Every nation's refugee. But more specifically, an open-minded French- and Russian-speaking former Moldovan-Ukrainian jumping between New York and California. Who hugs trees but tries to be logical about it. And wants to heal this broken planet by helping others help themselves.

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