How remittances from Africa’s diaspora can help revive economies

Remittances from the African diaspora have proven to be a vital source of funding for the continent, surpassing Western aid in 2019, according to a World Bank report. With the COVID-19 pandemic impacting economies worldwide, Joy Wanziru Machungu, CEO of African Market Europe, discussed how these remittances can play a crucial role in reviving African economies in an interview with CNBC Africa. Machungu emphasized the importance of channeling remittances towards development rather than just consumption. Countries like Kenya and Ghana have taken steps to engage their diaspora communities in investing back into their homelands. Kenya, for example, has encouraged diaspora members to open savings accounts that are directed towards development initiatives within the country. Similarly, Ghana has a diaspora body within the government that supports diaspora investments. Highlighting the significance of remittances, Machungu pointed out that in 2019, remittances to Africa surpassed Western aid. However, she underscored the need for African governments to recognize the diaspora as valuable partners in leveraging these funds for economic growth. Some countries, like Ghana, are already incorporating diaspora representatives into government structures to oversee the utilization of remittances for development projects. Machungu also addressed the issue of taxation for African diaspora investors. She advocated for fair treatment, suggesting that diaspora investors should not face double taxation when investing in their home countries. She urged governments to provide incentives, similar to those given to Western companies, to attract diaspora investors back to Africa in various sectors. In relation to incentivizing diaspora investments, Machungu shared an example from Germany where the government is providing free funds to diaspora members to support COVID-19 affected businesses in Africa. By engaging the diaspora in such initiatives, over two million jobs have been created, focusing on low-hanging fruit projects like agriculture and livestock farming. Looking ahead, Machungu encouraged diaspora members to actively participate in the development of their countries by leveraging their skills and resources. She highlighted the upcoming African Diaspora Symposium in Nairobi, Kenya, as a platform for diaspora engagement. The event aims to bring together diaspora communities globally to collaborate with governments on advancing economic development initiatives. The symposium, set to be a hybrid event with both physical and virtual participation, presents an opportunity for diaspora members to contribute to the growth and prosperity of their homelands. As African countries seek to recover from the economic impact of the pandemic, harnessing the potential of remittances from the diaspora emerges as a promising strategy for driving sustainable development and prosperity across the continent.