Africa: how the diaspora can finance local development

Published on 20/03/2023 | La rédaction

The Senegalese diaspora transfers US$2,562 million in remittances annually, representing 10.5% of the country's Gross Domestic Product.

Remittances, investments and expertise from Africa's 160 million strong diaspora are vital to the continent's future growth.

This was the conclusion reached by the African Development Bank at a December 2022 forum in Abidjan, Côte d'Ivoire.

Increasingly, African mayors are expressing their desire to turn to the diaspora to finance local development.

This article aims to explain how diaspora investment can contribute to the financing of community development in Senegal.

In the context of decentralization and the territorialization of public policies, migrants and the private sector could play a key role in local authorities affected by migration. Indeed, local authorities are on the front line of managing the impacts of migration, both positive and negative.

Senegal's local authorities have in common that they are confronted with two major phenomena that structure and destructure economic dynamics. These are climate change and globalization in a context of permanent mobility linked to migration.

Including territorial dynamics in our development objectives means considering these spatial and human entities as the bearers of new, more adapted economies.

Migrants' funds as alternatives

According to the Economic Commission for Africa, migrants' remittances to the continent reached 41 billion dollars in 2021. This represents more than double the official development assistance granted to Africa.

It is a question of finding appropriate financing in a context where migrant remittances, when properly supervised, constitute solid alternatives.

In Senegal, according to a report published by Afford (2021), the diaspora is 642,654 people strong, or 3.7% of the population. While the majority of Senegalese emigrate within the African continent, 47.6% of them live in European Union countries.

The Senegalese diaspora is also responsible for US$2,562 million in remittances per year, representing 10.5% of the country's Gross Domestic Product (GDP), according to the same report. This is considerable! Thanks to these remittances, the diaspora plays a leading role in raising the standard of living and the living environment of the families back home. It thus contributes to the efforts undertaken by governments to fight poverty and promote the economic inclusion of populations, including the most vulnerable.

Migrant associations are active in addressing the adverse effects of climate change by financing and investing in infrastructure, means of production and agricultural tools. They also contribute to the financing and development of income-generating activities, the adoption of non-agricultural activities, and the diversification of agricultural activities.

Thus, if properly supervised, migrant remittances can make it possible to find appropriate financing and constitute solid alternatives for strengthening the financial resources of local authorities. Indeed, each year, a minimum allocation of 12 million CFA francs (about US$19,000) is paid to each of the 557 local authorities. The Decentralization Endowment Fund, which is very weak for better territorialization of sustainable development objectives, is being restructured. This is an ambitious reform that aims to refocus resources on the real objectives of the fund.

Non-financial transfers

Diaspora associations and individual migrants contribute continuously to the dynamism of the economy through monetary and non-monetary transfers. In reality, migrants transfer more than money. They bring back a commitment to development, partnership networks, means of production, and tools and machinery to respond to the adverse effects of climate uncertainty.

In addition, migrants may invest in real estate in cities like Dakar or in villages. The benefits of these investments are intended to finance alternatives to the effects of aridity and climate uncertainty.

Emergency aid to populations is thus financed by more stable sources that are less subject to the impacts of climate change on the natural capital and economic activities of rural areas. At the same time, these financial flows help to connect the local economy to the national and global system.

Housing is a preferred sector for investment by Senegalese migrants. This appropriation of land and property has multiple effects on society and the urban fabric. In the face of climate risks, it is necessary to take into account climate-related opportunities and uncertainties.

The improvement of linkages between emigrants' investments and the priorities of the framework (local authorities, non-governmental organizations, development projects, etc.) should be done by effectively taking into account the potential of emigration.

Better channeling of investments

In other words, the development plans of local authorities should be more sensitive to these two determining parameters of territorial development. Migrants and associations of the diaspora should be able to take advantage of support mechanisms and platforms to better channel their investments.

With the installation of the offices of reception, orientation and follow-up of Senegalese abroad at the level of the regional development agencies, several opportunities are offered to migrants who want to invest in their territories.

These offices will contribute to efforts to implement a Senegalese migration policy adapted to national and international developments and oriented towards a development logic. The support projects for returning migrants have achieved notable successes and have placed great emphasis on the proper dissemination of information both in Senegal and in the country of origin of returning migrants.

In the future, the focus will be on providing information about opportunities for Senegalese with skills that can be invested in Senegal (promoting the expertise of the diaspora). It should also include those wishing to be accompanied in the implementation of their investment projects in Senegal.

For example, it would be interesting if those in charge of the various professional sectors operating in Senegal could state precisely what their expectations are with regard to returning migrants as well as the employment and investment opportunities they could take on. In other words, it is a matter of making information "practical" for returnees so that they can quickly be in a position to invest and even produce.

The Senegalese government recognizes the contribution of migrants to the extent that the expertise of the diaspora is included in the Emerging Senegal Plan, the country's development reference framework, which integrates a flexible and optimized use of the technical and scientific resources of the diaspora.

The place of the diaspora in national economic and social development also finds, in the implementation of Act III of decentralization, a tremendous opportunity. Indeed, the networks of the Senegalese diaspora could constitute in the medium and long term levers of sustainable development with the advent of territorial poles such as they are envisaged by the Act III of decentralization.The Conversation

Cheikh Tidiane Wade, Professor of Geography, Assane Seck University of Ziguinchor

This article is republished from The Conversation under a Creative Commons license. Read theoriginal article.


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