Poverty reduction, the building of individual creditworthiness, dual citizenship and enhancing the AU are all part of the mix - By Robert K Mugo
Like other members of the East African Diaspora, I have, over the years since I have been abroad, sent money back home to assist various family members and to contribute towards many worthy causes. Over the past few years, there has been an increasing recognition on the part of the East African governments, the private sector, NGOs and international agencies of the important role that such transfers (referred to as remittances) can play in development. The money sent is used by family members for such things as school fees, seeking healthcare and buying food. Some of it is also invested in small businesses or is saved in financial institutions. Estimates from the World Bank indicate that remittances by the Africa Diaspora have continued to grow over time, with roughly US$30 billion remitted in 2007. This amount is more than double the amount of international aid received. According to the World Bank, in 2006, official remittances to Kenya were roughly $525 million, or the equivalent of 2.2 % of the Gross Domestic Product (GDP).
Comparable figures for Uganda in 2006 were $ 845 million, or 9.3 % GDP. Tanzania receives much lower levels of remittances, both in real terms ($16 million) and as a percentage of GDP (0.1 %). There has been much debate in the Diaspora, national governments and regional and international agencies on the best ways to leverage Diaspora remittances for development and poverty eradication. For example, the World Bank has proposed tapping into remittances from Africans in the Diaspora in helping fund a portfolio of projects worth as much as $13 billion to help support the continent’s development goals. The African Union has also been active in trying to develop Diaspora-friendly policies and has proposed to “invite and encourage the full participation of the African Diaspora, as an important part of our continent, in the building of the African Union.” Most of the East African countries have, to varying degrees, been active in developing policies for Diaspora engagement. Although the approaches pursued by different countries differ, most share common elements, including some policy and institutional changes, to recognise and take advantage of the role of the Diaspora within government planning, proposals for dual citizenship and engagement of the Diaspora through conferences and skills and investment seminars, either at home or in the major capitals abroad.
For example, the Tanzanian Government in 2007 established an inter-ministerial committee to look into issues pertaining to the Tanzanian Diaspora, including the development of a framework for Diaspora involvement, review of laws that hinder Diaspora involvement and review of dualcitizenship. In 2008, the Tanzania High Commission in London also held the first-ever Tanzania Diaspora Investment and Skills Forum.In Kenya, there are a number of efforts underway to encourage Diaspora investments. For example, the Ministry of Foreign Affairs now includes Diaspora Diplomacy as one of its five pillars in Kenya’s newly-formulated foreign policy (see story elsewhere in this issue). A number of Diaspora investment initiatives have also been held in places such as London, Washington and Toronto. The idea of the Kenyan Diaspora Bond, through which remittance money can be invested in specific projects, has also been mooted.
In Uganda, organizations such as the Uganda Investment Authority (UIA) and various business communities have since the mid- 2000s been holding annual Diaspora investment summits geared at bringing the Ugandan Diaspora into active participation in private investment in the country. Given recent developments towards full regional integration through the East African Community (EAC), it is imperative that the handling of Diaspora issues evolves and becomes more harmonized and integrated across the East African countries. A starting point in this regard might be the creation of a Regional Diaspora Office within the EAC. This taskforce would have as one of its first priorities the development of a harmonised policy agenda for the East African Diaspora. One typical problem most members of the East African Diaspora face is that despite the amount of money they send, and even when they have bank accounts in the East African countries, access to credit through local banks is still a problem Given the fact that most Diaspora remittances tend to be steady, and often increase with time away from a country, banks and governments should find ways to solve this problem by viewing remittances as way to build credit history in combination with the ownership of bank accounts. Another important area of remittances and development is the willingness of the Diaspora to invest.
Because most East Africans are prepared to invest and also to contribute to development in their native countries, it is important to offer incentives and mechanisms conducive to that end. A possible avenue for this is the matching of remittances for development projects from individuals or groups with funds from development partners. One of the most significant hurdles in Diaspora remittances is the cost of sending money from abroad. For example, the cost of sending $100 dollars (KSh6,700) from Canada to Kenya though Western Union is $17 or almost 20 % of the amount remitted. The development of new money transfer systems such as Safaricom’s M-PESA transfer system, which allows money to be transferred through mobile phones, at a small cost, without the need for bank accounts, is helping to lower costs. However, the system is still not widely available. Governments and international agencies should encourage the development of easier and cheaper transfer systems wherever possible, so as to lower transfer costs and leverage remittances for maximum development. With proper planning Diaspora can develop East Africa significantly.
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