Are diaspora Africa’s biggest asset?

Unlocking the immense potential of Africa’s diaspora requires a strategic approach encompassing better governance, deregulation, and increased stability. Currently, millions of Africans living abroad, including an estimated 17 million Nigerians, contribute significantly to global development through work, businesses, and education in countries like the US, Canada, the UK, and the Gulf.

While the diaspora’s economic impact is mixed, analysts believe that with an enabling environment, these individuals could drive a development boom in Africa. The key lies in addressing governance issues, fostering innovation, and creating opportunities for talent to flourish.

The brain drain, where skilled professionals emigrate from Africa, poses a challenge. Approximately 70,000 skilled professionals leave the continent each year, impacting sectors like healthcare, technology, and banking. The loss of human capital contributes to a productivity deficit and worsens talent shortages in African markets.

The diaspora’s positive influence is evident in the form of personal remittances, surpassing foreign direct investment (FDI). In 2019, Africa received $82.7 billion in remittances, nearly double the $46 billion in FDI. Remittances provide vital financial support to households, especially in smaller and more fragile economies.

However, the COVID-19 pandemic highlighted the volatility of remittance flows, affecting Africa’s poorest during lockdowns and economic disruptions. Despite challenges, remittances played a crucial role in supporting consumer spending and livelihoods.

Governments must implement reforms to ensure that the diaspora’s contributions lead to sustainable growth. Reducing the cost of remittances and creating channels for formal transfers can channel funds into development financing. Forward-thinking policymakers could guide remittances into specific sectors like property, health, agriculture, manufacturing, education, and tourism.

To entice successful diaspora members back, governance reforms are essential. A World Bank survey revealed that 60% of African professionals would consider returning if judicial and regulatory systems were more predictable. Simplifying business regulations, tax codes, and promoting political and economic stability can encourage entrepreneurship and foster economic growth.

Ultimately, for Africa to capitalize on its diaspora’s potential, governments must prioritize comprehensive reforms, foster innovation, and create an environment where talent can thrive, reducing the need for individuals to seek opportunities abroad.