9 November 2011

Africa: Ideas for Africa - Tapping Into the Diaspora

Photo: Graeme Williams/MediaClubSouthAfrica
The diaspora fund aims to improve Africa's infrastructure needs.

Solome Lemma had been working on African development and aid programs for years when her mother pointed her to a new approach.

Through work, Lemma was familiar with a group, the Nia Foundation, in her native Ethiopia. She learned that the director of the group was traveling to California, where Lemma's family moved when she was 12, and Lemma suggested that her mother meet with the woman. Her mother, Teblet Lemma, said, "OK, I'll cook lunch and I'll invite my friends."

The Nia Foundation director gave a presentation to the luncheon guests, and they donated more than $1,000. "It made me realize Africans [in the United States] are ready to engage, actively and strategically. It's no longer just about remittances," Lemma said.

So Lemma is cutting back to part time at the Global Fund for Children, where she has worked for more than five years, to focus on a new endeavor. She and a friend are starting an organization called Africans in the Diaspora -- registering it as a U.S. nonprofit group with a goal of investing donations from members of the diaspora in nonprofits and businesses on the continent to reap "social and economic returns."

"It is an intellectual and financial maturation of the African diaspora," Lemma said. "I think 20 years ago, my parents would have been a lot more concerned about their immediate needs and immediate needs of their family and community" back in Ethiopia.

"Africans are engaged as beneficiaries and recipients of aid but not always seen as resources at the philanthropic table. So we started to explore the possibility of pooling African skills, talents and resources."

Having Africans choose how to use the money they collect could raise confidence among members of the diaspora that it will be well spent. "Africans understand Africa -- intimately, personally as well as professionally," Lemma said. Lemma said she does not want to divert money from the remittances that expatriates send back home to Africa -- $40 billion in 2010, according to a report by the World Bank and the African Development Fund. "People will always send remittances. It's much easier, and also there is a sense of responsibility, to giving back to your family and your community," she said, emphasizing that her group is not competing for those funds but trying to unleash additional capital "for strategic investments in Africa."

Tapping into the economic power of the African diaspora has become important to the aid and development community. The World Bank-African Development Fund report on remittances recommends that African countries consider issuing diaspora bonds and selling them to expatriates, who together save tens of billions of dollars a year. "It is plausible that a fraction of these savings could be attracted as investment in Africa if African countries designed proper instruments and incentives," the report says.

Lemma cautioned that her organization is still in development. "But I think there is great opportunity for Africans to channel resources strategically to emerging businesses, especially businesses that are at the middle stage, not small startups or huge institutions, and also to social enterprises as well to civil society organizations," she said. "We have an opportunity to tackle all levels of change in Africa. We can speak with our resources."

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