African diaspora to boost investment

Foreign investments to African markets are expected to go up this year as the US finalises plans to fund entrepreneurs.

The US hopes to use the second African Diaspora Marketplace (ADM) to boost funding from the diaspora. The ADM is an initiative that encourages economic growth and employment by supporting US-based diaspora entrepreneurs with ideas for start-ups and established businesses in Africa.

The first African Diaspora Marketplace was held in 2010 and focused on grants towards agribusiness, renewable energy, and information and communications technology.

The number of grants awarded this year will be determined by the grant pool and programme need. The grant per entrepreneur is expected to be about $50,000 with an additional supplement of $25,000 to $50,000 in technical assistance.

The countries that qualify for consideration include Kenya, Uganda Tanzania, Rwanda, Ethiopia, Angola, Benin, Botswana, Cote D’Ivoire, Democratic Republic of Congo, Ghana and South Africa. The total of 733 proposals included representatives from each eligible country but only 14 investors qualified.

“All 14 grantees in seven countries have now firmly established their businesses and been at the forefront of innovative business enterprises,” said Western Union in an email to The EastAfrican.

The application deadline has been extended to February 15. Ecobank Group, USAID and the Western Union Foundation support the initiative.

Nigeria handed in the highest number of applications in 2010 — of the 60 finalists, it had 22 representatives, followed by Kenya, Ghana and Sierra Leone that had five each while Uganda, Rwanda and Tanzania had three, two and one respectively.

Businesses established through ADM in 2010 include: Tek Cook stoves (Uganda) that promotes efficient solar cooking stoves; Uza Mazao (Kenya), a technology-based service connecting buyers with farmers selling local produce; and, Earthwise Ferries – Lake Victoria, a high speed ferry system that sources local partners for sunflower biofuel and paperless ticketing.

“ADM will strengthen and help satisfy demand for locally-produced products and services by leveraging diaspora capital and resources,” Western Union regional vice president for North, Central and West Africa Aida Diarra said.

Experts said the investments from diaspora come with new technology that adds value to African products making them competitive in the international market. The initiative also hopes to encourage people in the diaspora to come back home and manage the businesses they will establish.

Many have been educated in world-leading academic institutions and gone on to gain top-class experience in relevant industries.

“In the longer term, ADM will strengthen the links between the diaspora and their home countries, providing them with an opportunity to apply the expertise and experience gained abroad to driving development back home,” said Western Union.

Aside from repatriating to the continent, members of the diaspora are also contributing to the African growth story through direct investment in the shape of remittance to family and friends.

According to the World Bank, annual remittance flows to the continent are in excess of $40 billion and are growing at 10-15 per cent year on year. In addition, there is an estimated $35 billion of annual savings held by the African diaspora.