The Black Man’s Burden: The Diaspora's Urgent Mandate to Awaken Africa's Sleeping Giants
Part III: How the African Diaspora can unlock African economic growth and success - putting remittances to work
Let’s get down to business. The New African Diaspora (whom we will refer to as the African Diaspora or Diaspora from now on) has more options than it seems to know what to do with. As we will see, the energy and resources are there in abundant supply, but a clear policy framework for converting resources acquired abroad into sustainable development at home in Africa is missing. Whatever this framework ends up looking like, it needs to centered around the three pillars of economic success, where global trade (gt) and foreign direct investment (fdi) integrated with technological adoption (t) leads to growth (G).
The follow-up on this framework is not just political, but also commercial in nature. Currently speaking, a lot of engagement on the front of the African Diaspora is state-led. Whether it relates tourism campaigns, relaxing visa requirements for African non-nationals, and the general acknowledgement of the Diaspora and their importance to the growth and wellbeing of the continent, African governments are making efforts.
We can’t say that they aren’t, nonetheless, it isn’t feasible, nor is it wise, to wait around for governments anywhere to initiate substantive change or action. Furthermore, even if they wanted to, most African governments already have their hands full on the domestic front. African nations are busy fighting terrorism, climate change, and poverty - the political, intellectual and technical bandwidth necessary to get things off the ground right now is stretched.
Change and activity has to spring at the grassroot level, from the bottom up, by the tens of millions of African Diaspora found all over the planet. The Diaspora has the technology, expertise and networks to make it happen, let’s examine how:
Exercise more of the leverage tied to Diaspora remittances.
The $100 billion sent by the African Diaspora back home each year in remittances is 2x the amount given to the continent in international aid. And with each passing year, as more Africans from the cities and villages continue to migrate within and outside of the continent, the annual sum of remittances will only continue to grow. Indeed, $40 billion was sent in remittances in 2011. The figure was as small as $20 billion in 2001. I predict that the figure will grow to $200 billion by the time 2040 rolls along, and judging by the trends, potentially sooner.
Based on Diaspora remittances spread across a population of 40 million, if you took the Diaspora as a country then it would be the 8th largest in the whole of Africa. Ahead of African nations like Angola, Tanzania and Ghana. In the case of Sub-Saharan Africa, $53 billion worth of remittances earns the region more foreign currency than that of its gold, copper and rhodium exports combined.
The sheer importance of Diaspora remittances to the survival and stability of Africa cannot be understated. It’s for this reason that the Diaspora should consider using such funds to leverage more accountability from governments and national institutions. A burden of performance of sorts should be tied to the receipt of all of this cash. Make it count for something and value it.
Monetize Diaspora remittances.
This can be done in two ways: by incorporating fractional reserve banking into mobile money platforms and infrastructure, and by venturing into the wild world of cryptocurrency.
The first approach would arguably be the easiest from the standpoints of technicalities and user familiarity. Fractional reserve banking refers to the practice of banks taking a portion of your deposit and lending it out to others, typically with interest. The recipient of the loan your bank deposit is funding will then have their account credited - or paid into - this debt financed cash now sitting in the borrowers account will be lent out, and the cycle will repeat itself over and over again.
Mobile money providers across Africa should integrate this core banking practice into their payment platforms and business models.
Africa leads the world when it comes to mobile money. According to the Global System for Mobile Communications Association (GSMA), Sub Saharan Africa alone has nearly 250 million active mobile money account users spending $912 billion annually. This number will only continue to grow moving forward, and there may come a time where the number of Africans holding mobile money accounts will outnumber those with traditional bank accounts
Right now though, the most that mobile payment providers can do to monetize such monies is charge payment fees. Even in the case of the world’s largest mobile payments system provider, Safaricom, their overdraft, money-lending program (known as fuliza) has been co-opted by the traditional banking system.
This has to change, a significant portion of that $912 billion spent by means of mobile money across different parts of Africa probably has no contact with banks whatsoever. It’s 2024 - this is what modern banking and money management has come to be for Africans in a continent (where the median age is approximately 19).
In a world where this $912 billion is opened up to reserve banking, trillions of dollars are injected into the continent’s credit ecosystem. Furthermore, because mobile banking is used a lot more often on a daily basis by Africans, mobile payment providers have data and knowledge of overall consumer and individual spending patterns and behaviours in a way that traditional banks can only envy. Arguably leaving them better positioned to efficiently finance and support African businesses and consumers.
The African Diaspora can help make this happen by incorporating fintech platforms which speak to this gargantuan-sized gap in the market, as some are already doing. Remittances can also be tied to lobbying efforts on behalf of bringing fractional banking to mobile money.
In the next article of this series, we expand into how the African Diaspora can utilize cryptocurrency and blockchain technology and infrastructure to better engage with the continent. We will also explore how the Diaspora can use the game of politics to influence policy on the ground.