This necessitates a joint partnership rooted in mutual respect between the US and Africa. The Biden-Harris administration has shown its commitment to fostering relations between the two continents, as outlined in the US Strategy Towards Sub-Saharan Africa that was unveiled in August 2021.
In December 2022, I attended the first US-Africa Leaders Summit hosted by the White House since 2014 in Washington, DC. Africans, diasporans, and American government officials shared a platform to strengthen relationships for the betterment of our planet and to amplify the work of the African diaspora.
During the summit’s Africa and Diaspora Young Leaders Forum, under the theme ‘Amplifying Voices: Building Partnerships That Last’, leaders stressed the need for a new sub-Saharan Africa strategy rooted in partnership. This new approach recognises that we cannot effectively address our shared priorities unless we work together. Such a partnership underscores the immense role of the African diaspora and how young people will be instrumental in shaping and strengthening that partnership.
As a diasporan originally from Eritrea, I am inspired to see African and US government representatives recognise the critical role the diaspora plays in the development of Africa, which we have been dedicated to at the African Diaspora Network for the past 12 years.
Leveraging the African Diaspora to boost Africa’s development
As we consider modern Africa, discussions often revolve around the critical role of foreign direct relief, development, and investment. Accordingly, much of our mainstream culture’s attention focuses on the actions of foreign aid organisations, governments of the Global North offering assistance to the Global South and regional or national initiatives within the diverse community that is Africa today.
We must shift this paradigm to understand the significance of mutual partnership for development rather than an uneven and unsustainable relationship where African countries continue to be the recipients of foreign aid. According to the United Nations World Population Prospects (2017), Africa will be home to 2.2 billion people by 2050. This will require targeted new enterprise growth in areas that can enhance food supply, healthcare services, and educational solutions within local communities. This presents a fantastic opportunity for the diaspora to explore business development on the continent.
We need to look beyond remittances and develop a platform where those in the diaspora can invest in African countries other than their home country.
Diasporans continue to drive the economic growth of Africa and the US. The Migration Policy Institute (MPI) reports that approximately 2 million immigrants from sub-Saharan Africa lived in the US in 2018. According to the New American Economy, African immigrants in the US earned $55.1bn in 2015, contributing significantly to the American economy with $40.3bn in spending power and $14.8bn in tax payments.
The World Bank estimates Africans in the diaspora save about $53bn per year and, in 2020, recorded remittances reached over $80bn sent to and within Africa. These figures reflect the magnitude by which Africans in the diaspora are participating in the continent’s economic development. The latent potential of the African diaspora community to mobilise greater human and capital assets in support of their home communities in Africa is also evident.
As part of the 2022 US Africa Leaders Summit, African Diaspora Network and the US Department of State co-hosted a high-level working lunch sponsored by the Bill & Melinda Gates Foundation themed Beyond Remittances. The goal was to discuss the African Diaspora’s contributions to Africa’s growth and development beyond remittances. I had the pleasure of moderating the session, which convened government leaders, African ministers of economy and finance, private sector leaders, and diaspora leaders. The panel featured robust discourse on innovative means for harnessing remittances to boost economic development and Covid-19 recovery on the African continent.
We need to look beyond remittances and develop a platform where those in the diaspora can invest in African countries other than their home country. A Guinean living in the US should be able to invest in other African countries.
We also need to reduce the high cost of remitting money to the continent while providing the right tax incentives to the diaspora. The World Bank reports that sub-Saharan Africa continues to be the costliest region, where sending $200 cost about 8.2% in the fourth quarter of 2020. This is three times more than the Sustainable Development Goal target for remittance costs of 3%.
Reducing the burden of sending remittances can maximise the critical flow of financing for development. Policymakers must ensure that remittance service providers can partner with correspondent banks without challenges. Moreover, remittance channels, such as money transfer operators (MTOs), national banks, and telecommunications companies can also serve as avenues to mobilise diaspora investments – through diaspora bonds – and bond financing – through securitisation of future flows of remittances.
Future ready Africa
Now is the time to have strategic conversations to solidify gains and the relationship between the US and Africa.
The conversation on the role of diaspora remittances in the future of Africa will continue from 22-24 March 2023 at the upcoming 8th African Diaspora Investment Symposium (ADIS) in Silicon Valley, hosted by the African Diaspora Network. ADIS is a gathering of philanthropists, investors, and entrepreneurs in Silicon Valley that inspires and equips participants to be active contributors to the development of Africa and the communities in which the diaspora lives.