• Diaspora makes case for improved remittance

By Elizabeth Uwandu

It is no longer news that Nigeria’s diaspora, estimated at about 15 million worldwide, plays crucial role in driving growth and progress in the country. However, despite this figure only few make remittances and or have investments in the country.

Insecurity

Worried by this trend, the UK Department for International Development’s Policy Development Facility Phase II, PDF ll commissioned Dalberg Advisors to develop a report in 2017 themed, “Nigeria Diaspora Studies: Opportunities for increasing the development impact of Nigeria’s diaspora on behalf of the Office of the Vice President, OVP, Nigerian Investment Promotion Commission, NIPC, and the Ministry of Foreign Affairs, MFA.”

It was, therefore, a gathering of Nigerians in diaspora and some key stakeholders of various industries; a panel discussion on “Optimising Nigeria Diaspora remittances for development”, that had panelists such as Mr Bayo Adeyemi, Marketing Head City Bank. Representing Chairman of City Bank; Mr Onyekachi Wambo -Executive Director, ED Afford UK. African Foundation for development; Obinali Egele – Founder, Diasfunds; Mr Oladipo Joseph – Economic Advisory Council Member from the Vice Presidents office ; Mr Adrian’s Emmanuel – Director NIPC and Mrs. O M Abdulrazaq – Representing the minister of foreign affairs, recently in Lagos to discuss the summary of the above topic and also proffer solutions that will increase investments opportunities of Nigerians abroad.

Meanwhile, Minister of Foreign Affairs, Mr Geoffrey Onyeama, represented by Mrs Folake Abdulrasaq thanked UK aid PDF 11 and Dalberg for hosting the dialogue.

The Minister who observed that the economic impact of diaspora investments and entrepreneurship in the country were enormous pledged to set mechanisms that would enable diaspora remittances seemless and attractive.

Onyeama said, “it is pertinent to note that diaspora investments and entrepreneurship are often hailed as drivers of economic development and positive change in the world and Nigeria is no exception. There is evidence to support that 70% FDI of China is from Chinese diaspora. The Indian diaspora in America have also played a role in building India IT industry.

“It is worthy of note that most countries of the world desire to engage small or large about one percent of the total budget they spend on their citizens abroad. This commendable investment is crucial to Nigeria government in maintaining relationship with diaspora, in view of promoting a better partnership for the overall benefit of the country.

“To us in the Ministry of Foreign Affairs, we are looking into the situation contextually with a view to developing techniques and models that will enhance the positive impact of remittances to the development of Nigeria.”

However parts of the report done by UK Department of International Development and Dalberg highlighted interests of Nigeria diaspora investments in the country; the challenges and ways forward that Nigeria economy will grow through inputs from those abroad.

Interests of Nigeria diaspora

According to the summary of study by Dalberg, the key points were that while only 31% of respondents currently invest in Nigeria, a vast majority of those who do not (86%) are interested in investing in the future. First-generation, UK-based, and male respondents were more likely to invest in Nigeria than their counterparts in other countries; they are also more interested in investing in potentially riskier geographic areas, such as the North East and North West.

Real estate continues to be the most popular category for current and future investment with UK-based respondents showing a particular interest in investing in securities compared to their US counterparts.

Respondents indicate a 13 per cent increase in their future interest in investing in franchises compared to current behaviours. However, overall interest in micro, small and medium-sized enterprises (MSMEs); social enterprises; and export-oriented businesses remained higher.

Strong future interest in geographies beyond Lagos may support broader development efforts focused on Nigeria’s least developed regions. However, the conditions for investment will likely include further macroeconomic recovery, addressing the security situation, and infrastructure development.

Challenges of Nigeria diaspora – Key takeaways:

Overall, the most frequently cited barrier to investing in Nigeria is lack of sufficient available capital. This presents some interesting opportunities for crowdfunding or targeted, high-volume investment vehicles such as savings bonds issued by the Federal Government.

US-based respondents were less likely to invest than their UK-based counterparts and appear to have less awareness of investment opportunities in Nigeria.

Anecdotally, this may not be surprising, but it is interesting given that overall, the US remits more than the UK. Difficulty in identifying trustworthy investment opportunities was a major concern both among individuals who do not currently invest and individuals who do.

The study found that three overarching needs or conditions determined an individual’s investing or remitting behaviour, and these are knowledge and awareness; ability, and willingness. In each case, several barriers can prevent these needs or conditions from being met and make it less likely that the individual will invest or remit. For instance, knowledge and awareness of investment opportunities in Nigeria tend to be inhibited by limited availability of reliable information sources and because members of the diaspora have poor access to available resources.

US-based respondents appear to lag behind their UK counterparts in their awareness of investment opportunities in Nigeria—which suggests a lack of exposure to appropriate information in the US Individual ability to invest,

Another constraint is that availability of capital, time, and other resources. The sample showed that lack of sufficient capital to invest was the most frequently cited barrier to investing in Nigeria. Again, perceptions of mistrust and uncertainty also limit individuals’ willingness to engage members of the diaspora who currently invest and those who do not both cited difficulty in identifying trustworthy investment opportunities as a major concern.

Summary of identified solutions and key recommendations

Dalberg identified two primary levers for encouraging diaspora engagement in Nigeria to improve the overall enabling environment for investment. Private sector and third-party arbiters may be better placed to execute on investment and deal promotion with the diaspora, due to prevailing attitudes of mistrust with respect to the government.

The Federal Government should encourage the private sector to develop and promote opportunities that are grounded in an understanding of the diaspora’s interests and motivations. Investment promotion strategies can be tailored based on identifiable groups within the diaspora and their specific ambitions and goals. It can play an important role in driving efforts related to improving the overall enabling environment, which requires a coordinated, systems-level approach. The government, in collaboration with other partners, can address barriers to engagement at the ecosystem level to make it easier and more compelling for the diaspora to engage in Nigeria.

Recommended solutions included:

  • Establishing a certification programme for investment opportunities and businesses in Nigeria that incorporates quality-assured reporting requirements.

Aggregating deal flow and pipeline opportunities in easy-to-access and well-known platforms among the diaspora.

Promoting crowdfunding platforms that enable individual investors to participate in deals with smaller capital requirements and reduce the risk of investing.

Streamlining the investment process and strengthening an integrated, online platform to enable remote project / investment management.

Developing “how-to” guides for foreign investors and professional directories of local experts and investors in the diaspora.

Developing open-source, peer review channels that allow local partners and service providers in Nigeria to be publicly rated.

Developing reporting platforms to crack down on corruption, improve transparency, and demonstrate commitment to fighting corruption at all levels of government.

Effective outreach and engagement with the diaspora remains a key challenge. As demonstrated by this study and previous research attempts, reaching the diaspora is difficult due to fragmentation within the diaspora community and lack of centralised outreach channels.

Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.