For emerging and developing economies, diasporas have long proven a valuable source of financial support. According to the United Nations, each year around 200 million migrant workers send remittances to their friends and family back home which, by and large, are used to support day-to-day living expenses. These funds are often the recipient country’s biggest form of external finance. According to the World Bank, in 2022 low- and middle-income countries received a total of $647bn in remittances from abroad, exceeding both inbound direct investment and official development assistance.  

This evidence has inspired a growing number of investment promotion agencies (IPAs) in emerging and developing countries to set up programmes to better capitalise on their diasporas’ potential to spur local economic development. While channelling foreign workers’ funds into greenfield projects is one of the overarching goals, these programmes also look to leverage diasporas’ knowledge, skills and connections, which can also help their home countries diversify and expand their economies. Indeed, these efforts are aided by the fact that many in the diaspora have a strong desire to contribute to the long-term development of their country. 

Among those IPAs with the most active diaspora programmes are Invest India, the Ghana Investment Promotion Centre (GIPC), the Bangladesh Investment Development Authority (BIDA) and Enterprise Armenia. In fDi’s inaugural IPA Roundtable, those leading these programmes share their strategies, success stories and lessons for other IPAs looking to tap into diaspora dollars, networks and expertise.

Q: What are you doing to engage with the diaspora?

ML: We have operated a diaspora investment desk since 2020, which locates, educates and mobilises the diaspora to invest in Ghana. A significant chunk of its work is in assisting diaspora entrepreneurs who are looking to return home to establish businesses, either fully diaspora-owned businesses or joint ventures with locals. It also promotes investment into already existing businesses by diaspora venture capital organisations and individuals that remain overseas. 

MY: BIDA organises international investment roadshows in partnership with the Bangladesh Securities and Exchange Commission in locations with significant diaspora presence such as New York, Qatar, Tokyo and London. We also work with business chambers established by non-resident Bangladeshis and want the estimated 2.4 million Bangladeshis estimated to be living permanently abroad to encourage their overseas networks to consider opportunities in Bangladesh. In addition, we have a co-operation agreement with US-based venture capital firm Anchorless Bangladesh, which connects with the diaspora to unlock its potential as investors, and seeks its recommendations about what services or policy interventions it needs to start investing.

AV: At Enterprise Armenia we engage with the diaspora through close co-operation with the [government’s] diplomatic missions abroad, and via existing diaspora organisations. We have also developed our own network of representatives within the diaspora who are well-recognised in local business circles. These individuals promote Armenia’s investment opportunities, facilitate connections and provide assistance on business opportunities and market access. This network, which is continuously expanding, currently consists of 15 representatives in 11 countries including Canada, the US, Spain, Italy and the UAE. Separately, we are exploring the possibility of using crowdfunding which we believe has potential as a viable alternative to traditional investment channels for the diaspora.

NR: Invest India has been engaging with the diaspora for around nine years, and a few years ago we established the People of Indian Origin desk. This enables the diaspora to seek help from the government and discuss things such as potential investment, visas, technology entrepreneurship and funding.

Q: How successful has this been? 

ML: Businesses that GIPC has supported in their establishment include the Ayi Mensah Park housing development, which is a partnership between a US firm and a diaspora-led company, and real estate firm Golden Coast Developers [led by a Ghanaian banker returning from the US]. Another is the Britannia and Ghinger Medical Centre [established by a Ghanaian doctor who had worked in the UK and Middle East]. For these projects we facilitated all administrative procedures, permits and licences. The Britannia and Ghinger Medical Centre also accessed GIPC’s immigrant quota services which enabled it to bring in the experts needed to run a successful medical centre at a fraction of the cost and time that would have been required otherwise. We also provided a platform for Golden Coast Developers to meet government and private sector stakeholders, which helped the company hit the ground running.

AV: Notable diaspora projects that Enterprise Armenia has facilitated include the Crystal Lake resort in Sevan and a winemaking project by Khachen Wines. I’d also like to note that during the pandemic when travel restrictions were in place, our diaspora representatives continued their work on the ground, ensuring we could continue to reach and connect with potential investors.

MY: BIDA is getting a positive response from the diaspora in Japan and the UK in particular, with a lot of interest in IT and agricultural processing. They are also bridging us with their non-diaspora networks. One noteworthy project has come via a member of our diaspora in Germany. He connected us with Solidaridad, an international organisation building socially responsible supply chains, with which we’ve now signed a memorandum of understanding to work together to increase Bangladesh’s share of the global seafood market.

NR: India’s diaspora is not just looking at remittances, but also investment. For example, in September I met with more than 100 diaspora community members in the US to discuss investment opportunities in India. Some of them asked if we wanted to open a [diaspora] office within their office premises, to allow us to leverage their facilities and build a stronger bond. They are looking at how Invest India can help make their investments into India less risky, and ensure they focus on the most important sectors. 

Q: What is best practice for IPAs looking to attract diaspora investment? 

ML: Approximately 20% of remittance flows to Africa are [already] used for investment purposes, including family businesses, small and medium-sized enterprises and property, as reported by the UN’s International Organization for Migration. Diasporas are often inclined to make investments at the local level, where they still have family ties and are familiar with the local context. Also, diaspora engagement is more of a process than a one-time event. Therefore it is best to establish a dedicated desk or department to focus on building relationships, providing information and facilitating investment opportunities.

MY: The first step is to understand diaspora needs, interests and investment preferences through research and surveys. BIDA also fast-tracks investment services for diaspora investors and we have put our regulatory services online so they can start a business in Bangladesh from the country where they are living. Also, if they come to us with a specific project for which they would like some incentives, we take this request and advocate for them with the relevant ministry.

AV: A core focus of our efforts is to target and reach regions where we see significant potential to attract investments into Armenia. While it might seem that an all-encompassing approach is productive, IPAs still should identify key diaspora communities and hubs where there is a substantial interest in engaging in business activities with their home countries.

This roundtable has been edited for clarity and brevity.

This article first appeared in the December 2023/January 2024 print edition of fDi Intelligence

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