Diaspora capital drives potential growth in Africa and the Caribbean

In 2023, diaspora communities in Sub-Saharan Africa and the Caribbean contributed significant remittances, estimated at $54 billion and $18.2 billion respectively. A study conducted in 2024 emphasized that diaspora capital has become increasingly vital as a source of development finance, especially in the context of a global economic slowdown and a post-Covid-19 environment. Many migrants and diaspora members aspire to invest back in their home countries but often lack accessible channels to do so. David Mullings, the founder of Blue Mahoe Capital, points out that creating sustainable investment opportunities is essential for encouraging these individuals to contribute to local economies. Traditionally, investment discussions have focused heavily on international aid or foreign investments, neglecting the potential of diaspora contributions. It is important to tap into this economic force, which remains underutilized yet has the potential to spark significant local development. Mullings has engaged with diaspora investors to fund projects, such as Seed Jamaica, a fintech platform aiming to provide micro-lending opportunities for local workers. These projects strive to create housing for essential personnel like teachers and nurses, thereby directly benefiting local communities. However, harnessing diaspora financing presents notable challenges. Many diaspora members harbor distrust towards local investments due to their past experiences, as they often left their home countries seeking better opportunities. While they might not experience ongoing economic issues directly, they tend to care deeply about the conditions in their countries of origin. Educating them about the security of their investments is crucial, as their confidence is needed for effective collaborations. Another significant barrier is financial literacy. Many entrepreneurs in the Caribbean face difficulties related to banking infrastructure, affecting their ability to establish local entities and pay employees. Mullings emphasizes that investors often look towards Silicon Valley for inspiration, overlooking the potential for South-South cooperation between African and Caribbean communities. Learning from each other’s successes and failures can provide valuable insights and strategies relevant to region-specific investment landscapes. Moreover, he stresses the need to communicate compellingly about the problems local entrepreneurs are solving to attract diaspora investments.