Diaspora-Driven Development
Religion & Liberty Online

Diaspora-Driven Development

The African diaspora—nearly 140 million Africans live abroad—is such a major source of foreign income that it now outstrips foreign aid sent by Western donors. The money these expatriates send back home is collectively worth far more than the development donations sent by Western financial institutions, says Adams Bodomo:

africa-money-bankingThe exact amount of these remittances is unknown because not all of it is sent through official banking channels. But the official volume to the continent has gradually increased over the years, from $11 billion in 2000 to $60 billion in 2012, according to the World Bank. As a proportion of gross domestic product (GDP), remittances in Africa range from next-to-nothing to almost 5%.

Worldwide remittances to developing countries were $351 billion in 2011, far exceeding the $129 billion in official development assistance (ODA), according to the World Bank.

The remittances paid by Africans living abroad also rival official aid to the continent. Total diaspora contributions to Africa in 2010 stood at $51.8 billion compared to the roughly $43 billion in ODA, according to the latest figures from the World Bank.

Bodomo offers several compelling reasons why remittances are a better source of development than foreign aid:

The funds are less likely to be misspent – “Of course, sometimes families mis-spend their remittances, but this waste is nothing compared to the misappropriations and legendary inefficiencies in the foreign aid industry.”

They focus on building the family – “They are gifts of love to family members meant to bring about the development of the family—and hence the nation.”

The distribution of resources is more efficient – “Africans living abroad send money home on a regular basis directly to family or friends, who can judge their needs better than the government. These monies go directly towards paying school fees, building houses and growing businesses.”

Unfortunately, about $7 billion a year never makes it into the relatives’ accounts because of high bank fees. Rather than lobbying governments to increase foreign aid to Africa we need creative entrepreneurs who can find a free market solution to the exorbitant transaction costs.

Hopefully, the continent will someday reach the level of development where sons and daughters do not have to leave their countries to support their families. But until those of us in the West should do what we can to make it easier for Africans abroad to take care of their families at home.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).