Remittance chiefs seek investment in agriculture

Leading figures from the financial services industry have launched the Diaspora Investment in Agriculture (DIA) initiative.Abdirashid Duale, CEO of Dahabshiil Transfer Services Ltd

DIA calls on international businesses to invest in sustainable agriculture to foster economic sufficiency of developing countries. The initiative follows the International Fund for Agricultural Development’s (IFAD) annual Financing Facility for Remittances (FFR) meeting in November 2012, which brought together thought-leaders in remittance and financial inclusion, including: Henri Dommel, Director of the United Nations Capital Development Fund; Kai Schmitz, Senior Financial Sector Specialist from the World Bank; Abdirashid Duale, CEO of Dahabshiil Transfer Services Ltd; and Pedro De Vasconcelos, Coordinator of the Financing Facility for Remittances. They believe the agricultural community has a vital role to play in helping create a stronger culture of innovation and entrepreneurship in developing countries.

 

Engagement in sustainable development

In recognition of the important role played by the diaspora in fuelling economic growth and its vast potential for enhancing the resilience of fragile communities, the United States Department of State and IFAD will partner with key stakeholders in the international remittance industry to leverage the contributions of diaspora communities and encourage their engagement in sustained economic development – through investment in agriculture, particularly in rural areas. The first of these partnerships is with Dahabshiil, Africa’s largest international payments firm.

Pedro De Vasconcelos said, “Migrant investors are not only well informed about the opportunities existing in their communities of origin, they are willing to invest in fragile markets when others won’t. Agricultural investment is essential to achieving rural growth, job creation, the provision of basic necessities and the creation of a stable foundation upon which broader economic growth can be realised.”

The initiative seeks to expand on the vital short-term role of remittance finance to help maximize the potential long-term impact of the diasporas as drivers of development. Achieving long-term economic growth, reducing poverty and enhancing food security often cannot be achieved in developing countries without significant investment in the agricultural sector.  Remittance companies play a vital role in enabling migrant investors, diaspora organisations, and actors on the ground to build the capacity necessary to undertake cross-border investments and gain access to markets for traditional products.  Globally, money sent home by migrants constitutes the second largest financial inflow to developing countries, exceeding international aid. Remittance income is especially important for communities in more remote regions of Africa, and helps to bolster the funding of humanitarian organisations operating in those locations.

Abdirashid Duale has called for businesses to follow Dahabshiil’s lead in improving access to remittances in rural areas and developing productive rural investment channels for migrants and community- based organisations. He cited their work in the Horn of Africa working alongside other organisations to drive investment in education, health, infrastructure by supporting small businesses in their start-ups and maintenance, creating jobs and improving health and education facilities as an example of the success that can be achieved through a collaborative approach. 

Abdirashid Duale said, “It is clear that the expansion of agriculture, industry and fiscal products in developing countries, funded in part by diaspora communities – with Dahabshiil’s help – will advance the interests of international entrepreneurs, business leaders and policymakers. Global diasporas must be encouraged to invest in sustainable agricultural projects with real potential for impacting the lives of underprivileged rural people in their homelands.”

 

Viable projects and partnerships

The DIA initiative works with migrant entrepreneurs, diaspora organisations, and other partners to implement projects that stimulate the development of the agricultural sector in their home countries. In particular, the initiative will identify and co-finance viable projects and models focused on food security, diaspora investment and agricultural value chains.

Over the last 45 years, the number of people living outside their home country has almost tripled from 76mn to 215mn. Whether through their remittances, investments, tourism, trade, philanthropy, knowledge transfers or the cross-border relationships they foster, the diaspora play a developmental role of vital importance to their countries of origin.

With over US$350bn to be sent home by migrant workers to their families in developing countries this year, the impact of remittances on fuelling development is being increasingly realised. Organisations like Dahabshiil have identified and implemented successful models that amplify the impact of remittance flows – and aim to cultivate it through continued investment in new technologies and innovations. The integration of mobile telecoms and money transfer services is set to eliminate many of the regional challenges currently faced by the latter and greatly improve access to finance in some of the developing world’s poorest communities.

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