COMMENT Diaspora remittances and industrial development in Africa

LAST year, Africans in the diaspora sent almost $100 billion home to friends and relatives. These remittances went on education, health and social security –areas that African governments have a rather ambivalent attitude towards.

For others, the money they received went on ostentatious living. There is no harm in such spending as long as it is done within limits.

Most of remittances spending – apart from on education, health and social welfare – goes on consumer goods, which are a not even manufactured in Africa. They come mainly from China and, to a certain extent, the Gulf States, especially Dubai where the products are imported.

There should now be a rethink of how remittances are spent in Africa. This was raised recently at an African Development Bank forum at which AfDB President Akinwumi Adesina said that “the development of Africa must be a priority for all Africans in the diaspora”.

to “create the conditions for those living and working overseas to contribute meaningfully to national development or, even better, not to leave in the first place”.

Adesina hit the nail on the head when he called on governments to create a more conducive climate for their citizens to prosper at home. The majority of those who have left Africa in the last 20 to 30 years have done so because of political or economic pressure.

So, the idea of giving Africans in the diaspora the vote appears to be a nonstarter. This is because governments know that most of their citizens abroad would invariably vote them out of power. There would be no vote-rigging to sway the outcome.

Nevertheless, the pressure most be maintained on these self-seeking politicians. They must not be allowed to have their cake and eat it, too.

In the meantime, Africans in the diaspora should focus on investing heavily in their countries, where there is an acute

How does AfCFTA deal with traders who grease the palms of customs officers at land borders?

“The African diaspora has become the largest financier of Africa. And it is not debt; it is 100 per cent gifts or grants, a new form of concessional financing that is the key for livelihood security for millions of Africans,” he noted.

This all well and good. But what clout do members of the African diaspora have in bringing political change to their home countries? Even though they are bankrolling the various governments – that is, doing the job they should be doing to aid their citizens – those abroad are denied the vote.

This was not lost on Adesina who called on African governments to give members of their diaspora the right to vote in elections. He urged these governments

Desmond Davies

Trade Area (AfCFTA). African countries therefore need to increase their production. Current figures indicate that intra-Africa trade is just 15 per cent of the continent’s total trade, while for Asia, it is 80 per cent. Slow growth of Africa’s economy – at an average of 4.6 per cent as opposed to 7.4 per cent in Asia – is another hindrance to a successful AfCFTA.

As it plods ahead, the need for investment from the African diaspora is crucial, if the continent wants to make free trade a roaring success. It is clear that if Africa cannot produce things that it needs, foreign goods will keep flooding the market.

That is why the AfCFTA Rules of Origin are there to “ensure that goods entering a particular country from another member state within the AfCFTA have actually been made or produced with sufficient local content to qualify for preferential tariff treatment”.

If these checks are not in place. it would be difficult for state parties to protect their local production and competitive domestic industries against competition from non-member countries, AfCFTA noted. But how does this deal with traders who grease the palms of customs officers at land borders?

need for funds for infrastructural and industrial development. Figures show that the continent has massive infrastructure development shortfalls: it needs annual financing of between $130 billion and $170 billion, but there is a gap of between $68 billion and $108 billion every year.

Adesina wants African governments to maximise remittances: “Because the flow of remittances to Africa is high, rising, and stable, it offers huge opportunities to serve as collateral to secure financing for African economies. African countries should securitise remittances to promote investments, especially for infrastructure on the continent.”

Industrial development is germane to the success of the African Continental Free

It will be all down to governments creating the enabling environment that will encourage Africans in the diaspora to invest in their countries. They would need to ensure that locally produced goods are cheaper than imports from, say, China, that has been receiving the brunt of criticism from African traders.

We saw this recently in Nairobi where local traders protested against a Chinese shop selling the same China-made products at half the price being asked by Kenyan stores. The Chinese know how to source their products better then Kenyans – and they use economies of scale to get very good deals.

So, African governments need to make their countries competitive by enacting watertight business laws that will protect investors – both African and foreign.