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Setting up an Africa Diaspora Fund for Development
VC4Africa seeks to connect African based entrepreneurs with the knowledge, network and capital they need to grow and scale their business. Part of this mission is to see how we can mobilize communities on both a local and international level. According to the report Leveraging Migration for Africa: Remittances, Skills, and Investments, a joint publication produced by the African Development Bank and the World Bank, Africa gets nearly US$40 billion a year in remittances. Between 1990 and 2010, these inflows into Africa actually quadrupled. Now combined they are equivalent to an estimated 2.6% of Africa’s gross domestic product (GDP) as per 2009. The actual numbers could be significantly higher when we take into consideration that only half of the countries in Sub-Saharan Africa actually collect, process and publish remittance data on a regular basis. And some countries really don’t have a clue as to what comes into their communities from abroad. But all of the guessing work aside, remittances combined are clearly more than development aid and only second to foreign direct investment (FDI).
I always wonder in how far these funds are used to empower entrepreneurs and new venture creation. Clearly a bulk of the remittences go to things like school fees and medical bills, but what % goes into supporting new business via a friend or local contact back home? Often times small sums sent by people who don’t show up on the FDI radar. AfDB vice president Professor Mthuli Ncube hinted similar thinking at the recent World Economic Forum for Africa when he said, ‘Brain drain is not a problem but it’s an opportunity for Africa. There is need to strengthen their (Diasporans) participation back home without them necessarily relocating.’ In short he is saying, let’s stop fighting reality and see how we can benefit from it instead. If there are some 30 million Africans that live outside their country of origin (64 percent of these living in other African countries and the rest overseas) than how can we leverage this international network?
Looking for answers to these questions I was pleased to connect with the Africa Diaspora Fund for Development (ADFD) based here in the Netherlands. The ADFD is an inspired group taking what in my view is a really innovative approach. Instead of organizing within their own communities i.e. the Ghanian’s investing together back into Ghana, they are actually working to mobilize resources from across the African communities based here in the Netherlands and seek to actively facilitate joint investments into multiple African markets.
In working to better understand the need for such a fund the ADFD explains, ‘countries are struggling to cope with the recent financial crisis. Policy initiatives have focused on how to kick-start the economy through bail outs and stimulus packages, most of these policies have not addressed the condition of low and middle-sized business, and investment opportunities that can be created through joint ventures that involve both migrants and native investors. This omission does not auger well for the efforts to rejuvenate the economy as various groups in different countries struggle to cope with the impact of global economic crisis and challenges to national economies.’
And in understanding the Dutch context they expand, ‘In the case of the Netherlands, both natives and migrants are hard hit by the economic crisis, as many have lost their jobs or failed to access the necessary capital for new investment opportunities that exists both in the Netherlands and in their countries of origin. Also missing are initiatives that facilitate joint ventures between Dutch investors and African businesses, with a focus on the countries of origin. Moreover, unemployment levels within migrant communities persist due to the fact that many highly educated and professional migrants are unable to access the labour market. These professionals are less visible while the Dutch employers on the other hand seem not to be aware of their existence or make efforts to reach out to the already existing highly skilled migrants from Africa who live here in the Netherlands. Such initiatives could tap into investment opportunities that have not been explored. The added advantage of such a venture would include enabling Dutch investors to have a foothold in the countries of origin where most migrants in the Netherlands come from. They would have an added advantage in terms of insight knowledge of the context in Africa and the Netherlands, networks and their professional backgrounds, which have not been put to maximum use.’
Finally, ‘the African migrants with business could also learn from their Dutch counterparts, exchange ideas on how to access start-up capital or the necessary capital to enable them expand their business within the Netherlands and in Africa. Such an opportunity would provide them with means to apply new ideas for trade and investment between Africa d the Netherlands, thereby contributing the economic growth in the Netherlands at this point in time when companies are struggling to cope with the impact of economic crisis. ADFD therefore seeks to facilitate a platform in, which the African and Dutch investors could know one another, exchange ideas and experienced and explore business opportunities, which they could jointly undertake in the Netherlands and in Africa. The aim with this initiative is to harness the African Diaspora potentials for development both in the countries of origin and in the Netherlands where many have established themselves. The initiative will target Africans with small businesses, small and medium sixed Dutch business with prospects for developing joint ventures and exploring business investment opportunities in Africa.’
Needless to say there is an incredible opportunity here and plenty of ideas for the makings of an interesting event. As VC4Africa we look forward to supporting these efforts!
About zia505The world is changing right before my eyes. Sometimes I don't know how I will ever keep up. There are so many ideas floating around on this internet. If only I had the means to collect them....
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