What is the economic importance of the African Diaspora to Africa? Well, the answer is “a lot”. A large number of African diasporas contribute directly and indirectly to the elevation of Africa’s economy and this has been the case for as far back as we can remember. Claim Your List Of 10 African Books To Read.
These African migrants, who are sometimes seen as losses to their home countries, are in fact the real agents of change, facilitating economic growth and development in different African communities.
This article pinpoints ways African diasporans participate in the growth of the African economy.
Remittances to Africa
Remittances are certainly, one significant way the diasporans support their home base relations in different countries in Africa. The percentage of remittances received in each country grows practically every year. The following is a clip from a recent world bank report:
“Remittance inflows to Sub-Saharan Africa returned to growth in 2021, increasing by 6.2 percent to $45 billion. Nigeria, the region’s largest recipient, is experiencing a moderate rebound in remittance flows, in part due to the increasing influence of policies intended to channel inflows through the banking system.”
You can read more about the article “Remittance Flows Register Robust 7.3 Percent Growth in 2021” at Worldbank.org.
Every year, most African families with a relation overseas receive remittances, which lucidly contributes to countries’ GDP growth as it hikes the consumption level, which generally has a multiplier effect.
With the inflow of these remittances to rural households in Africa, there’s every inclination for the recipient family to spend the money on locally produced goods, building houses, and starting up a venture, thereby accelerating the country’s economic activities.
In addition, these remittances are sometimes saved, thus, increasing the funds the banks lend as loans to entrepreneurs giving room to financial development. In essence, the constant stream of remittances ignites the flow of capital in the African economy.
African diasporans not only infuse economic growth and development in Africa through the streams of remittances they send, but they also serve as catalysts for bilateral trade, which was originally thought to be facilitated only by the government. Given the African diasporans’ exposure and resources, inciting trade relations between their home countries and residing countries has become relatively easy.
These African diasporans have a particular preference for their locally produced goods which incepted the phenomenon of “nostalgic trade,” showing the distinctive preference the vast majority of Africans in the diaspora have for African products. The diasporans tend to export these local goods to their resident’s countries, giving African goods more exposure and recognition.
However, African diasporans incite bilateral trade by connecting producers and distributors of consumer goods in their countries of origin and settlement to easily exchange goods and services between the two countries. Over the years, China and Africans settling in the country have been trading partners, commuting exchange of goods between the two countries. This, of course, brought a significant increase in Africa’s economy and will in the future.
Considering the growing importance of the African diaspora in America, Joe Biden’s administration made a declaration in 2021, according to the New Africa Daily report to foster trade in the African continent through the diasporans.
That said, African diasporans’ contribution to facilitating bilateral trade increases the African economy, and as African governments become more cognizant of this, they support the creation of a trade forum that attracts diasporan investors.
More so, African diasporans help to facilitate trade relations between the countries of origin and settlement consequent to their access to information about the market conditions of the countries of ancestry and residence. When they obtain information concerning the market conditions, the African diasporans help alleviate the bilateral trade hurdles, allowing consumers to purchase goods from both countries at a cheaper rate.
African diasporans equally help mitigate unemployment issues in Africa by establishing enterprises that engage in production processes. With these enterprises’ availability, competent African youths with the required skills get jobs, thereby participating in economic activities and lessening crimes in various African societies.
African diasporans also facilitate the capital markets through investments; they have information that can help identify the investment opportunities in different parts of Africa, which helps attract non-diasporans investors. These investments have by far contributed to the availability of infrastructure, health care facilities, and educational programs, leading to increased productivity in the African continent.
In conclusion, having identified areas African diasporans contribute to economic growth and development in Africa; it’s safe to say that the African diaspora can be the true catalysts of change in the African economy.
The contributions they make through investments lead to financial development and improvement in infrastructures and GDP growth.
In the end, it’s all about connection and networking when it comes to the economic importance of the African diaspora to their home countries.
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