Mobilising investment from the Caribbean diaspora
We regard as vitally important a just released study by the World Bank on mobilising investment from the Caribbean diaspora, given that most of our regional countries are beset by sluggish economic growth, indebtedness and where, in many cases, remittances are the main source of foreign exchange.
The study, entitled 'Diaspora Investing: The Business and Investment Interests of the Caribbean abroad', and based on data collected from over 850 self-identified members of the diaspora, is aimed at identifying the characteristics and investment interests of our nationals overseas.
If the Caribbean is to mobilise more investment from its diaspora, then it is necessary to improve our understanding of what are the motivations and interests of investors. The findings of the study are instructive for policymakers and private sector financial and investment institutions.
It is also valuable because we have never been entirely clear on how much of the remittances are used for consumption or for investment. Obviously, both consumption and investment are important, but the truism that if you give a man a fish you feed him for a day, but teach him to fish and he does not need charity is pertinent.
The larger the share of remittances that is put into investment, the more the beneficiary economy will increase its productive capacity and efficiency and its production of goods and services. In addition, more investment from the diaspora will boost employment, foreign exchange and tax revenue.
Caribbean nationals abroad have a binding commitment to helping their homeland, as shown by the fact that 85 per cent give back through financial help or other support in kind. Approximately 50 per cent send remittances, some of which go to support institutions and organisations such as schools and churches. Some 70 per cent are formal or informally affiliated to organisations in their home countries.
More remarkable is the untapped potential for investment as evidenced by the finding that nine out of 10 would like to be even more engaged in the future. They are potential investors and this could be a large pool of investment because it is estimated that there are as many Caribbean people living and working overseas as are resident in the region.
The problem with tapping the investment potential is the disappointingly significant gap between engagement and expressed interest. The interest is very high with an estimated 85 per cent of diaspora members expressing a strong interest in investing in a business in their homeland.
But the reality is that at present only 13 per cent of respondents have actually done so. These potential investors are interested not only in traditional sectors such as farming and small hotels but are eyeing prospects in alternative energy and technology-driven businesses.
The impediments are two-fold: First, the need for more and better information, which is a challenge for both government and private sector. Second, facilitating investment in the Caribbean by reducing bureaucratic impediments to diaspora investment, which is a clear challenge to the governments of the region, though it is not beyond their capacity to do so.
We are aware that some state and private institutions are making credible efforts to mobilise investment from the diaspora, but we are exhorting them to do more and better.