As 2013 draws to a close, Developed Africa looks back over our 10 most popular posts of the year.
The original version of this article was published by Pambazuka News.
Ever since The Economist declared that Africa was 'rising' in 2011 there has been a great amount of attention given to this new conversation about the continent. While in some ways the 'Africa rising' concept is a welcome reappraisal of Africa, it has been criticised for its vagueness and focus on tired cliché rather than detailed evidence. Financial growth in African countries has been strong for the last ten years. As a McKinsey report stated, "real GDP rose by 4.9 percent a year from 2000 through 2008, more than twice its pace in the 1980s and ’90s." This strong growth has continued while recession hit much of the rest of the globe and is even more impressive given the context of conflict in selected states lowering the overall average.
African countries are still dependent on various forms of external income. Foreign direct investment in 2011 amounted to $42.7 billion according to the UN. Aid programmes contribute $44 billion to African countries according to a UN policy brief from 2010. The importance of diaspora contributions is often overlooked.
Diaspora remittances to Africa represent an enormous sum - around £60 billion in 2012 from 30 million migrants - which represents huge potential and the overwhelming willingness of the diaspora to contribute. It is a large pot currently focused on short-term change but which would be better targeted at commercial opportunities, partnerships and structured investments aimed at promoting growth and sustaining change. It is clear that the intentions of African migrants are excellent; it is also clear that such intentions could be better channeled. Remittances are the first step in harnessing the potential of the diaspora.
The African Union has recognised the need to more clearly monitor money flows from the diaspora. Earlier this year, two workshops were organised in cooperation with the World Bank to attempt to work up some tools, policies and deliverables related to diaspora giving. Clearly, there is a need to improve this process. Even the basics of quantifying the size of the diaspora itself is difficult - the International Monetary Fund highlights that many different countries use different definitions of the word. From this point onwards, the picture of the diaspora and its contributions to Africa is blurred.
While the sums involved are vast, there is little in the way of specific data - the African Union still relies on data sets from non-African organisations - to judge the actual impacts of diaspora based interventions. It is possible that this money is changing people's lives and communities for the better; it is also possible much of the money is being wasted. The real problem, at the moment, is that there is almost no way of knowing which is happening.
The reality is that diaspora backed interventions are probably very welcome but are likely to be poorly managed. As in the world of traditional aid, measuring impact properly is key to delivering better projects and achieving lasting improvements. With financial flows, this can be a simple process - most people are aware of a cost/benefit analysis, for example - and there is no doubt that a framework for diaspora investments would go a long way to better usage. Other benefits that the diaspora give back to their countries of origin are less definite in value: ideas, experience, knowledge, expertise. These 'social remittances' are powerful and incredibly useful - if those too can be channeled into more specific schemes they become more measurable and more focused.
A long-standing critique of traditional aid is that it fails to properly target the most useful areas of development because it does not always hold the best interests of the recipients at heart and that it does not possess the understanding of the unique, local conditions in which programmes are operating. The increase in donor influence over specific projects greatly diminishes the possibility of long lasting positive outcomes. The power of diaspora backed projects is that they can exist on an intra-familial or intra-community basis so it is clear what the motives behind them are and they are able to overcome the information gap which can exist between local communities and multinational organisations. According to IFAD, diaspora investments in agriculture a four times larger than the official development funds; if this power could be harnessed intellectually as well as financially then local projects would have a higher chance of working.The ODI especially, believes that localised aid is, and would be, a far more effective use of the funds and resources, and would most certainly involve much more local knowledge of the particular project and area.
In a recent article, a research fellow for the ODI argued that not only is localising aid work better for the project and the local area, but that it strengthens aid systems, producing optimum results. In particular several areas are highlighted that would be enhanced from localising aid, including the national economy and a strengthened national government due to better control over project management. The difficulty of such schemes is that at present they are not tracked or analysed to a professional standard, so while they may have the best interests of the right stakeholders at heart, they may lack the professionalism to deliver a project most effectively. The lack of formality in this sector, then, is both a strength and a weakness.
Several schemes have been established to amplify the impact of diaspora cash-flows such as the improved structures of sub-Saharan African financial sectors and the increased money lending capacities in such areas. Of course, there is still a huge amount of potential to be unlocked.
There are some clear areas that policymakers in both the developed and developing worlds can help to improve the effectiveness of diaspora contributions. Domestic bank charges account for around 12% of remittances to Africa currently, which clearly limits the scope for contributions of any sort. The complex and off-putting visa demands of, for example, countries in the European Union represent an enormous stumbling block for well-functioning diaspora schemes. Policymakers have recognised these issues but change will not occur overnight. It is crucial that the diaspora and related diaspora organisations seek to improve relevant structural issues themselves. If the diaspora improves organically, those policymakers seeking to complement this growth will have a stronger case to make.
Globally, transparency has become a major issue for policymakers and businesses alike in the last ten years. This is a movement that is built on data - how to measure it, how to manipulate it, how to test it. It embraces governments, civil society organisations and the commercial sector by unifying these different groups under the simple ideal that better data equals better results. Because transparent schemes let the public scrutinise the associated data there is less chance that the needs of local stakeholders can go ignored - those stakeholders are now able to check and prove or disprove claims of assistance. This sort of process is one that would greatly benefit diaspora investments - rather than simply claiming to hold the interests of local stakeholders closer to heart than traditional aid or business models, they will be able to show it.
In 2004, a paper by the Migration Policy Institute called for organisations to focus on combating the information deficit surrounding diaspora funds to help nascent development and investment projects to be more effective and transparent. Developed Africa believes that opening up the commercial potential of Africa is also best served by combating this deficit. There are millions of opportunities in the continent for investment and other support; the main issue for those on the outside is a lack of knowledge about what is available and, crucially, what returns they can expect.
If members of the Africa’s diasporas know everything they need to know about where these opportunities are, what they are seeking to achieve and what support they are seeking, they will be empowered to become involved in development. Diaspora organisations are ideally suited to drive such projects forward as they have better local understanding and have a clear commitment to seeking sustainable change. Developed Africa offers a platform for this.