Financing for Development Office
9 November 2006
Ad-hoc expert group meeting on “Strengthening the
business sector and entrepreneurship in developing
countries: the potential of diasporas”
(New York, 5 October 2006)
Introduction
1. In its resolution 60/188 of 22 December 2005, the General Assembly requested
the Financing for Development Office to continue to organize workshops, multistakeholder consultations and panel discussions to examine issues related to the
mobilization of resources for financing development and poverty eradication. In
response to this mandate, the Financing for Development Office engaged The
Indus Entrepreneurs (TiE) to organize an ad hoc multi-stakeholder expert group
meeting on “Strengthening the role of the business sector and entrepreneurship in
developing countries: the potential of diasporas”.
2. The meeting was held on 5 October 2006 at UN Headquarters in New York. The
participants comprised practitioners and experts from the private sector,
multilateral organizations (UN DESA, World Bank, Regional Development
Banks, UNCTAD etc), governments and academia. On the following day, 6
October 2006, some of the participants briefed UN delegates in an open plenary
session on the findings and outcomes of the discussions held during the previous
day and encourage feedback from member states. The program of the meeting,
including the names of the participants, is attached to the report (see annex).
Background information on the meeting and the powerpoint presentations can be
found at the following web address: http://www.un.org/esa/ffd/MSC-TIE.htm.
3. This report broadly follows the structure of the agenda. After welcoming remarks
by Mr. Oscar de Rojas, Director, Financing for Development Office and Mr.
Parag Saxena, President, Tri-State Chapter of TiE, the floor was given to Mr.
Jomo Kwame Sundaram, UN Assistant-Secretary-General for Economic
Development for opening remarks. This was followed by the four substantive
sessions: ‘overview and setting the stage’, ‘strengthening linkages and facilitating
trade, skills and knowledge transfer’, channeling finance’ and ‘enabling policies
and institutions’.
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Opening Remarks by Mr. Jomo Kwame Sundaram, UN AssistantSecretary-General for Economic Development
4. Mr. Jomo began by thanking the Financing for Development Office and The
Indus Entrepreneurs for collaborating to organize this ad hoc expert meeting. He
noted the increased focus in recent years on issues related to the flow of
remittances to developing countries and noted the counter-cyclical features of
these flows and their potential to contribute to consumption-smoothing and
poverty alleviation in the country of origin. At the same time, Mr. Jomo
emphasized that the potential contribution of diasporas to their home countries
goes well beyond remittances and includes the wide range of issues, relating to
strengthening entrepreneurship and business, that are to be discussed in this
meeting.
5. While citing examples of the entrepreneurial contributions of diasporas, Mr. Jomo
underlined the wide diversity in experiences and that the underlying drivers
behind the success stories are quite complex and not always clear.
The
successful cases that he mentioned included the contributions made by US-based
graduates of the elite Indian Institutes of Technology to developing the hightechnology sector back home, the role of the Lebanese diaspora in helping with
the reconstruction of Beirut, and the noticeable numbers of highly-qualified
professionals who are returning to the Republic of Ireland and attracting
businesses there. On the other hand, however, there are diaspora communities
that have not been so economic successful nor made significant contributions
back home. There is therefore a need, according to Mr. Jomo, to recognize the
diversity of diasporas and their varying experiences and circumstances in both
host and home countries, as well as to understand the configuration of abilities,
financial flows and other factors that influence their contribution.
6. Other issues mentioned by Mr. Jomo included the importance of institutional
arrangements and appropriate norms to support diasporas entrepreneurship, the
need to widen and mainstream the role of diasporas in strengthening the business
sector (over and above a few high value-added sectors such as technology and
pharmacy) and the overriding need for better information and analysis on the
underlying drivers and impact of diaspora activities. On the latter point, he
pointed to the importance of case studies that would add to the knowledge that is
being accumulated by business schools, economists, sociologists and
anthropologists working in this field.
Session I: Overview and setting the stage
7. This session was moderated by Mr. Rajat Gupta, Senior Partner Worldwide,
McKinsey and Co. The presenters were Mr. Devesh Kapur, Professor and
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Director, Center for Advanced Study of India, University of Pennsylvania; Mr.
Yevgeny Kuznetsov, Senior Economist, World Bank; and Mr. Chukwu-Emeka
Chikezie, Executive Director, African Foundation for Development.
8. In his introductory remarks, Mr. Gupta stressed that the private sector has become
central to economic and social development and, within this context, diaspora
communities have an important role to play. While the state continues to play a
crucial role in areas such as health and education, the challenge lies in
establishing and developing an interaction between the public and private sectors.
This will ensure that public services can be improved through the adoption of
private sector best practices and, at a broader level, provide an enabling
environment for businesses. Referring to the case of India, Mr. Gupta argued that
the input of the private sector, and especially the diaspora, will be essential in
enabling the government to overcome the immense challenges involved in
providing public goods and services.
Presentations
9. Mr. Devesh Kapur analyzed some key issues behind the contribution of diasporas
and their potential benefits for the business sector in their home countries. For a
start, he argued that, unlike other foreign investors, the investment decisions of
diasporas focus not just on the rate of return but also broader non-pecuniary and
emotional factors related to their ties to the homeland. Such factors may also play
a role in diasporas’ apparent greater willingness to take risks and in their ability to
informally enforce contracts. An additional point made by Mr. Kapur was that the
role and significance of diasporas appears to vary according to the economic
sector and the informational content of their activities. To elaborate, their
potential contribution seems to be greater where a flow of ideas and market
knowledge carry a premium, which is usually the case in higher-value-added
segments of the economy. Moreover, Mr Kapur added that diaspora communities
can themselves be diverse and may be involved in different types of economic
activities, not all of which are of high value to the home country. In this respect,
he pointed out that their contribution to the homeland can be influenced by their
reasons for leaving it and also by their integration and status in the host cost
country. Mr. Kapur also stressed the importance of having conditions an
dpolicies in the home country that are conducive to business activities.
10. Focusing on highly-skilled diaspora groups, Mr. Kuznetsov stressed the
importance of global search networks that could harness and channel their
contribution to the homeland. As an example, he cited the venture capital industry
in Taiwan, which has been dominated by large players and venture capital funds
from Silicon Valley. With respect to public policy, Mr. Kuznetsov emphasized the
need to support and target the development of ideas that, combined with
institutionalized search networks, can be implemented in a series of strategic
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pilots. The latter should be small but scalable; set up outside of, but in cooperation
with government; and they should be simple enough to make it easier to deal with
the usual multitude of problems. Areas where such initiatives could be
implemented include educational institutions and seed capital funds, but the
problem is often as to who should initiate the pilots. Mr. Kuznetsov pointed out
that diaspora members are often by their very nature inclined to go against the
grain, which increases both the challenge and the opportunity to achieve a feedthrough effect to institutional development in the home country.
11. Mr. Chikezie’s presentation drew on the experience of his organization in
working with the African diaspora based in the United Kingdom. In his
experience, diaspora entrepreneurs have a broader time horizon than other foreign
investors, tending to enter a country earlier and to stay there longer. However, the
African diaspora have faced significant obstacles relating to inadequate access to
capital and challenging conditions in the home country. Moreover, Mr. Chikezie
pointed out that African diasporas are often not very well networked, which lends
additional urgency to the need to establish the necessary information and support
structures. AFFORD is one agency that has begun to help African entrepreneurs
network more effectively, but more effort, resources and support are required in
this area. In his comments, Mr. Chikezie also stressed that the contribution of
highly skilled diaspora individuals who are not directly engaged in entrepreneurial
activities, but possess a range of skills relevant to business development and
management, need to be tapped. Underpinning the policy recommendations made
by Mr. Chikezie was the need for a multidisciplinary approach on behalf of host
country governments to international development, necessitating the cooperation
of various government portfolios including international development, trade and
labor.
Discussion
12. The ensuing discussion included the following points:
 There was discussion concerning the extent to which there can be some
standard prescription regarding policies aimed at making optimal use of
diasporas’ potential for strengthening the business sector in their home
country. On the one hand, it was argued that a set of basic preconditions
could feasibly be formulated that would help facilitate the realization of
initiatives, especially in the area of institutional development; though these
standard preconditions should be defined as mildly as possible. On the
other hand, some participants argued that individual countries’ differences
are far too significant for any standard program of policy measures to be
drawn up. As an alternative, it was suggested that making success stories
public would be more useful way to generate cross-fertilization of ideas.
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 Some participants emphasized that the very conditions in the home
country that make people emigrate are often also a major obstacle for the
home country to drawing any measurable benefits from a diaspora
community. An environment characterized by undue political and
economic regulations or, in many cases, repressions provides the rationale
for people to move abroad, while at the same time making the home
country unattractive when it comes to investing or developing private
enterprises.
 There was some discussion of differing educational and skill
characteristics of diaspora groups. It was pointed out that entrepreneurs
are not necessarily among the educated elite of a diaspora, and that this
needs to be taken into account by policymakers when allocating resources
and designing programs. At the same time, the potential importance of
high-skilled networks, as a mechanism to match up what in many cases
represents a nation’s education and business elite abroad with private and
public sector needs at home, was emphasized.
 Participants agreed that the contribution of diasporas goes far beyond
remittances and that their role in transferring knowledge and skills and
facilitating trade and investment can be even more value adding. However,
it was also noted that the relative value of each of these contributions may
differ according to the development stage of a country. Especially for
countries in more advanced stages of development, the provision of
funding may be a less contribution from diaspora communities compared
to the identification of opportunities, the sharing of information and the
design of appropriate business models.
Session II:Strengthening linkages and facilitating trade, skills
and knowledge transfer
13. This session was moderated by Mr. Barry Herman, Senior Fellow, New School of
Social Research. The presenters were Ms. Jennifer Brinkerhoff, Associate
Professor of Public Information and International Affairs, George Washington
University; Ms. Wanja Michuki, Chief Executive Officer, Highland Tea
Company; Ms. T.A. Banjoko, Head, Africa Recruit; Ms. Molly Pollack,
Executive Director, Chile Global; and Mr. Richard Tan, Chief Executive Officer,
Pacific Millennium Corporation.
14. In his comments, Mr. Herman mentioned the interesting diversity among the
panelists in the session including representatives of organizations involving the
Chilean and African diasporas; two different types of diaspora entrepreneurs, one
heading an established conglomerate and the other managing a relatively new and
successful tea company; and a noted academic expert in this field. He stressed that
their different experiences and perspectives should provide interesting lessons.
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Mr. Herman also referred to the need for policy makers to provide incentives to
diasporas to undertake business transactions in their country of origin, including
devising tools to share the risks involved in undertaking such activities.
Presentations
15. Ms. Brinkerhoff identified skills transfer as a significant contribution that
diasporas can make. She stated that, where knowledge exchange is concerned,
diaspora members can act as important interlocutors between the technology and
its originating context and the homeland recipients and culture. Ms. Brinkerhoff
cited the development of India’s information technology sector as a success story
in this respect and also pointed out that diaspora identity-based professional
associations are becoming increasingly active in intellectual/scientific diaspora
networks. She cited a number of actions that interested parties in both public and
private sector could undertake to strengthen the potential of diasporas to
contribute to skills transfer. These include creating country-specific databases of
diaspora identity-based professional associations; providing technical and
networking support to these associations vis-à-vis government actors and private
sector counterparts; identifying the skill priorities of developing countries and
establishing links to appropriate professional networks; and seeking to engage
relevant diaspora members with priority skills to consult on sector development.
She also stressed the importance of the internet in creating knowledge and skills
networks and providing business development services. On the last point,
Ms.Brinkerhoff cited the example of successful diaspora-driven internet venture
called “Thamel.com”, that has successfully provided business development
services for poorer segments of the population in Nepal.
16. Ms. Michuki made her speech in the context of her experience as the US-based
co-founder and owner of a company that imports, manufactures and wholesales
Kenyan specialty teas in the United States. She pointed out that diaspora
entrepreneurs can engage local businesses and organizations through sourcing
inputs and services from local companies, providing networks and access to
capital for local companies to supply products to external markets such as the
United States, and facilitating skills and knowledge transfer to add value locally.
In order to enhance the ability of African diasporas in these areas, Ms. Michuki
recommended establishing state-sponsored business plan competitions tailored to
create sustainable enterprises formed in partnership with members of the diaspora;
creating marketing divisions within the trade missions of overseas embassies that
would help establish of trade and networking links between the diaspora and
entrepreneurs in home countries; and ensuring the participatory inclusion of
Diaspora members in trade assistance programs. Over and above this, she
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emphasized that the starting point for tapping into the potential of a diaspora is to
properly identify and target it.
17. Ms. Banjoko stressed that the diaspora is Africa’s greatest offshore asset, with
almost 4 million African’s living outside the continent. She shared the experience
of her company ‘Africa Recruit’, which acts as a platform for debate with the
African diaspora and key stakeholders on how to add value to capacity building in
Africa, with skills, labor, human resources and investment as the main drivers.
Africa Recruit has formulated and implemented practical programs that capitalize
on the diaspora’s social and financial capital in order to enhance the continent’s
human resource development. Its key areas of focus include harnessing
remittances and investment flows, facilitating and enabling diaspora structures in
both sending and host countries, providing business support centers for diasporas,
developing key skills and competencies in Africa, facilitating skills and
knowledge transfer through its website and database, and promoting a business
conducive regulatory framework. Africa Recruit also uses information technology
and other modern communication techniques to provide information about job
opportunities in Africa to African professionals in the diaspora. Ms. Banjoko
concluded with a series of recommendations for governments, business and
diasporas that are contained in her powerpoint presentation that can be
downloaded at the following web address: http://www.un.org/esa/ffd/MSCTIE.htm.
18. Ms. Pollack stressed that highly skilled Chilean expatriates constitute a valuable
human resource that can make large contributions to their home country and help
address key development issues. This is especially so in areas such as
technological innovation and human capital development where, despite advances
in its economy, Chile faces weaknesses. Ms. Pollack described her company,
Chile Global, as an active international network of Chilean business owners and
high level executives interested in contributing to the success of the Chilean
economy through creating and promoting a mechanism of technology transfer and
knowledge exchange. Its members are influential individuals with an active role
in industries central to Chile’s development who contribute by supporting
businesses, leveraging contacts and expertise, and promoting entrepreneurship.
The specific objectives of the network are to support the development of, firstly,
highly skilled human capital and, secondly, enabling public policies relating to
innovation. In concluding, Ms. Pollack provided a number of lessons for diaspora
network development. Among the points she made was that the value generated
by a network must be apparent to all stakeholders and the operational model must
be flexible and adaptable to different interests. She also pointed out that it is
important to have a credible champion institution (which was Fundacion Chile in
this case) that has strong connections in public and private sectors. The other
reasons for Chile Global’s success, according to Ms. Pollack, include its limited
but highly qualified and focused membership, regular communication and contact
throughout the network, and strong government support arising from the fact that
its objectives are in line with key development priorities.
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19. In order to encourage their contribution to their country of origin, Mr. Tan called
for diasporas to be recognized legally. He also suggested that contacts should be
maintained between countries of origin and the diaspora community through
community programs, activities and associations. Mr. Tan referred to Taiwan,
Special Province of China, which has focused on maintaining close ties with a
highly skilled group of emigrants in order to reap the benefits of technology
transfer. Referring to the role of expatriates in supporting the semiconductor
sector, he mentioned that Taiwan has given less attention to attracting investments
from its diaspora than on making use of their skills acquired abroad, both through
networking and through return migration. Diaspora investment combined with
government support has helped nurture industrial clusters, provide venture capital,
and, as a result, spin off highly successful global privately managed firms in the
semiconductor sector. Mr. Tan also pointed to the need to explore further avenues
of strengthening diaspora business networks.
Discussion
20. The brief discussion that followed included the below points:
 There was mention of the incentives and policies required to attract
diaspora enterprises to operate in the country of origin. In this context, it
was pointed out that they would face a similar set of risks as foreign
companies and investors, especially with regard to the regulatory
environment. More thought therefore needs to be given as to how these
risks could be effectively mitigated.
 The complexities involved in setting up effective networks and institutions
were also explored. It was agreed that such entities are difficult to set up
without having strong relationships in place between diasporas and the
country of origin. It was also suggested that success stories in this area
should be studied carefully and consideration given to how they can be
scaled up and applied in other contexts and countries.
Session III:Channeling finance
21. The session was moderated by Mr. Arun Kashyap, Private Sector Development
Adviser at UNDP. The presenters were Ms. Lenora Suki, Associate Director,
Center on Globalization and Sustainable Development, The Earth Institute at
Columbia University; Mr. Kai Schmitz, Executive Vice President and Chief
Operations Officer, Microfinance International Corporation; Ms. Marsha Wulff,
Founder and Principal, Wulff Capital; and Mr. Suni Munshani, Chief Executive
Officer, Novitaz.
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22. In his comments, Mr. Kashyap noted that the universe of financing initiatives to
encourage business formation and growth is broad and goes well beyond
remittances. It includes equity financing, bond financing and various existing or
potential tools to finance start-ups and small businesses. He observed an
interesting similarity with another issue that has also been tackled by the UN,
relating to building inclusive financial sectors, which is also a dependent on a
breadth of tools and institutions.
Presentations
23. Ms. Suki referred to her work on remittances and covered a range of financing
instruments that could help leverage diaspora funds. These include, firstly,
collective investments targeted at developing necessary infrastructure such as
roads or hospitals in a home country or town. Such investments tend to be driven
by broader social and charitable goals rather purely private sector interests.
Another instrument mentioned by Ms. Suki was equity finance, which has been
most visible in the development of the high-technology sectors in India and
China. Financing start-ups has also been an important channel of diaspora capital
in several countries (Serbia, Honduras, Dominican Republic, Armenia etc). There
is evidence that expatriates are willing to accept lower rates of return when
investing in home countries start-ups but an important condition for their
participation is an enabling investment climate. With regard to bond finance, Ms.
Suki pointed out that this has enabled the authorities to raise money from
diasporas, at rates that are often lower than market rates (for instance, Solidarity
Bonds for the Reconstruction of Central Beirut). Ms. Suki also described new
mechanisms of channeling finance, including through groups of high net worth
people who could pledge a pool of securities; creating such a pool of diaspora
capital would deserve further analysis. Other promising methods include the
securitization of remittances and other payments and syndicated loans. These
tools can provide for financial institutions, who will intermediate these capital
flows and on-lend to SMEs.
24. Mr. Schmitz described the work undertaken by Microfinance International
Corporation (MFIC) in Latin America. MFIC aims to expand affordable and
professional financial services to markets where such services have previously
been unavailable, or are overpriced and disconnected from mainstream banking.
In this context, it provides a range of services to enable diaspora communities to
channel money to microenterprises and SMEs in their country of origin. For
example, MFIC has developed a remittance platform that is customized to the
needs of microfinance institutions (MFIs): reliable, easy to use and available at
very low cost. At the same time, Mr. Schmitz stressed that MFIC ensures that the
investments made are viable through business centers that ensure that ensure
thorough credit assessment of local borrowers and due diligence. However, Mr.
Schmitz pointed out that the lack of business opportunities, in some countries, and
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the absence of strong enough ties between diasporas and the homeland, in a
number of instances, can present challenges.
25. Ms. Wulff presented a diaspora-linked model for commercialization of healthrelated products and referred to this as ‘collaborative commercialization’.
According to the model of traditional product commercialization, an idea is
developed and refined in a developed country and donated and/or sold to
emerging markets. Building on diaspora capacities and on communication
technology, she suggested an alternative model where an emerging market
company discovers a product and then collaborates with major developed country
firms to refine product for global markets, market co-branded products, ramp up
manufacturing and distribute globally. The diaspora can not only provide a
bridge between the local and overseas company but also finance the process at
critical staged through the use of venture capital. Ms. Wulff called for the setting
up of a Collaborative Commercialization Entity that would administer the product
commercialization program and interface with relevant networks in the public and
private sectors, including the diaspora. To get started, the project would need to
be sponsored by bilateral and multilateral agencies and/or private foundations.
26. Mr. Munshani spoke about channeling finance through diasporic linkages to build
knowledge infrastructure and fund innovation. He pointed out that the diaspora
had played an important role in inducing US businesses to set up operations in
India as part of outsourcing. However, he argued that India may not continue to
benefit from this trend unless there is better institutional support in the key areas
of education and innovation. The Indian diaspora has taken the lead to establish
educational institutions to increase the output of qualified professionals. However,
these private efforts can only be a catalyst and augment, rather than replace,
government efforts. Unless capacity is sufficiently increased in the education
sector, labor shortages will continue to increase wages and induce companies to
set up bases elsewhere. With respect to financing innovation, Mr. Munshani
pointed out that at least forty diaspora initiatives are underway in India to identify
entrepreneurs and finance their projects (in the amount of approximately $50
million per project). Here too, the government needs to reduce regulatory and
bureaucratic obstacles if it is to continue to attract increasing amounts of early
stage private equity.
Discussion
27. The ensuing discussion included the following points:
 It was pointed out that, due to the fact that diasporas vary significantly,
“one size fits all” recommendations made not be made with regards to
channeling finance. However, a sharing of knowledge would be valuable
and, in this sense, a participant proposed setting up an information portal
on the internet that outlines various case studies.
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 There was some discussion on the role of policy in supporting diaspora
financing initiatives. A participant pointed out that policies should focus
on providing the enabling conditions favorable to local and overseas
investment. In addition, they should also focus on inducing innovation
through supporting research and education and providing a favorable
regulatory environment.
 It was noted that venture capital initiatives are effective in creating jobs
but are still limited in number and size. Fixed income finance – i.e. bond
finance – is another as yet relatively untapped source of financing that
could be of great use in channeling expatriate capital towards education
and housing.
 Venture capital remains very limited (2% of total equity) but is highly
efficient (9% of job creation). Fixed income is another important source of
financing (for education, for mortgage). (Saxena).
 The efforts being undertaken in certain countries, such as the Dominican
Republic, regarding migration were highlighted. These efforts have been
made in collaboration with institutions such as UNDP. It was emphasized
that the discussions in this meeting were complementary to these on-going
initiatives.
 A participant called for greater research into how remittances could
effectively be channeled into productive investment and business support.
Session IV: Enabling policies and institutions
26. The session was moderated by Mr. Manuel Montes, Chief, Policy Analysis and
Development Branch, United Nations Financing for Development Office. The
participants were Ms. Nienke Stam of the IntEnt Foundation in the Netherlands;
Ms. Natasha Iskander, Assistant Professor of Public Policy, Wagner School of
Public Policy, New York University; Ms. Lisa Curtis, Private Sector Adviser, UK
Department for International Development (DFID); and Ms. Liesl Riddle,
Assistant Professor of International Business and International Affairs, George
Washington University.
27. Mr. Montes opened the session by outlining a range of issues relating to enabling
policies and institutional frameworks to develop the potential of diaspora
entrepreneurs. These included legal recognition of diasporas; maintaining
informational links between diaspora groups and their home countries;
introducing, where relevant, a diaspora dimension to donor programs; generating
discussion in countries of origin regarding the benefits of diaspora participation;
defining and building capacity in the necessary institutions to facilitate diaspora
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entreprenership; and scaling up activities through mobilizing migrants that have
shown a tendency to invest in their country of origin.
Presentations
28. Ms. Stam described the work of IntEnt which aims to enable entrepreneurial
migrants, residing in the Netherlands, to channel their social, intellectual and
financial capital into businesses in their country of origin. The program has
targeted selected countries in Africa, Asia and the Caribbean. While partially
funded by the Government of the Netherlands, the organization is run as a
business with migrant entrepreneurs paying a fee to participate in the program.
The program entails a number of steps, including the selection of clients based on
their business idea and entrepreneurial characteristics; providing training and
advice to enable clients to undertake market research and draw up business plans;
assisting entrepreneurs obtain bank loans; and providing business advisory
services during the start-up phase. Ms. Stam pointed out that close to 200
businesses have been started as a result of the IntEnt program and that on average
IntEnt entrepreneurs have been more successful in sustaining their businesses than
starters that have not been similarly supported. She went on to outline some of the
key lessons learnt from the program which included the fact that migrants
entrepreneurs take longer on average than locals to start up businesses due to
aspects related to international migration, financial obstacles and sometimes the
absence of local networks (IntEnt has tried to overcome the latter obstacle by
setting up local business clubs of migrant entrepreneurs). Ms. Stam concluded
with a number of policy suggestions including calling on governments to
encourage circular migration through more flexible visa policies. At the same
time, she reiterated that entrepreneurship development and support programs
cannot be run by government organizations since they lack market awareness.
29. Ms. Iskander emphasized that the focus should be on how the process of policy
development can generate institutions supportive of business sector growth based
on migration. She also called for a shift in thinking from terms such as
“diasporas” to a broader analysis of labor markets and fields of entrepreneurship
that have become transnational due to large scale migration. These transnational
fields are still unmapped and compatible institutions relevant to finance,
infrastructure, knowledge and politics need to be created or developed. In order to
better understand these transnational fields, and reap the knowledge necessary to
build these institutions, Ms. Iskander outlined the necessity of going through a
process of “interpretive engagement”. This comprises collaborative policy
discussions between various stakeholders and Ms. Iskander pointed to La Banque
Populaire Maricaine as an example of a financial institution that has developed
through such a process. This is the Moroccan state bank that has successfully
served emigrants since 1969 through tailor-made transfer, savings and investment
products. In order to ensure that products were kept in line with the changing
needs of emigrants, there were repeated cycles of interpretive engagement in
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1969, the 1980s and the 1990s. For example, in 1969, as part of ‘Operation
Moroccan Workers Abroad’, bank staff were sent abroad to be engaged in active
discussion with emigrants. In the 1990s, the discussion evolved to the issue of
how to keep the descendents of the initial clients interested. Thus, according to
Ms. Iskander, the focus should be on building institutions that lay the groundwork
for sustained economic activity and knowledge generation in transnational spaces.
30. Ms. Curtis mentioned that DFID works with the diaspora at both supra-national
and at country levels. In order to enhance the effectiveness of emigrants as a
source of funds, DFID has a number of initiatives aimed at removing policy, legal
and funding barriers to remittance flows through lowering costs, improving
transparency, expanding choices and access to financial services, and increasing
the impact on development. She pointed out that, in Sierra Leone, emigrants were
interested in a productive use of their remittances, such as the founding of a
business that would make their families independent. At the individual country
level, Ms. Curtis stressed that the diaspora have an important role to play as
investors and as potential returnees. Referring to her experience in Sierra Leone,
she argued that diaspora investors differ from traditional investors in that they
have a broader array of objectives (including social and personal goals), are better
informed through social networks, know how to access information and navigate
official processes, are early risk-takers and have a longer investment horizon.
Nevertheless, Ms. Curtis cautioned that some of the advantages possessed by
diaspora investors – for example, with respect to having better access to
information – can themselves be the results of a poor investment climate that the
authorities in the country need to address. Moreover, donors have to make a
careful decisions regarding how and when to support diaspora investors and
should focus on backing those who would generate employment. Ms. Curtis also
referred to the work DFID has been doing, in countries like Sierra Leone, to
enable the participation of diaspora groups in public-private dialogues on policy
reforms.
31. Ms. Riddle emphasized that homeland Export and Investment Promotion
Organizations (EPOs/IPAs) could play an important role in promoting,
harnessing, and facilitating diaspora interest in homeland investment or the
purchase of homeland goods and services. The existing common objective of
these organizations is to build bridges between foreign entrepreneurs/firms and
entrepreneurs/firms in their home countries and, to provide a bridge between
diaspora investors and their countries of origin, Ms. Riddle argued that these
organizations will need to modify their traditional approaches. For instance,
successful diaspora marketing efforts would require appealing to not just their
pecuniary motivations but also their altruistic desires. In terms of knowledge
provision, these organizations must discern what specifics the diaspora lacks
about the homeland economy that impede their economic involvement and
determine ways to transmit that knowledge. Similarly, the networking needs of
well-connected, first-generation diaspora buyers and investors may be less intense
than those of foreign investors and, to effectively meet these, EPOs/IPAs may
13
need to leverage existing contacts and serve as networking conduits. Ms. Riddle
also pointed out that EPOs/IPAs may need to broaden their advocacy services for
transnational entrepreneurs to include representing their interests to national
governments, foreign governments and multilateral agencies.
Discussion
32. The ensuing discussion included the following points:
a. There was some discussion of the concept of “interpretive engagement”
and related regulatory and legal issues. Some participants perceived this to
be the same as client management and felt that thinking in terms of
‘diasporas’ remained relevant. In response, it was pointed out that the
issues relevant to diasporas need to be discussed at a broader level, in
terms of transnational industrial policies and labor markets. Another
participant pointed out that the activities undertaken by La Banque
Populaire Maricaine in the 1960s may not be possible today due to
regulatory and policy changes. Similarly, it was pointed that in many cases
migrants are illegal in their host country which makes their mobilization a
more complicated issue.
b. It was argued by a participant that the role of development organizations
in diaspora-related activities needs to be better defined. At the same time,
it was argued that developing country governments also need to be better
engaged on this issue and that the UN can play an important role in
promoting this.
c. Other issues brought to the fore in the discussion included the need to go
beyond the elite when engaging with the diaspora, the importance of
scaling up the numerous initiatives that already exist, and the increasing
ability of emigrants in a number of countries to influence the political
process.
Closing Session: Conclusions and the way forward
33. Mr. Manuel Montes, Chief, Policy Analysis and Development Branch, United
Nations Financing for Development Office moderated this session. Mr. Krishnan
Sharma, Economic Affairs Officer, United Nations Financing for Development
Office, requested participants for feedback on the meeting and any suggestions for
possible ways forward. The thoughts expressed included the following:
a. Some participants stressed that the fact that this issue is to be presented to
the Second Committee, on the following day, is itself an important step.
14
Having member governments of the United Nations take actions based on
some of the findings and recommendations of the meeting would represent
an important next step.
b. The need for an ‘action-based’ program of further research was widely
emphasized. It was generally agreed that there is an overriding need for
better information and analysis on the underlying drivers and impact of
diaspora activities. For example, there is insufficient information on the
impact of diasporas across skill and occupation levels. In addition, more
systematic analyses would be helpful in listing and distinguishing between
the different types of diaspora networks (especially across skill levels), the
roles that they can play and the conditions for their success. At the same
time, it was emphasized that the research undertaken would need to be
‘action-based’. In other words, it would need to be practically-oriented and
generate concrete measures to help diaspora groups, policy makers or
supporting agencies strengthen their capacity to engage in what is a
relatively new area of public policy and activity. Such research can be
undertaken through interacting with diaspora groups and evaluating the
impact of their activities on business and development. Sponsors need to
be identified who can fund such a program and make it accessible to a
wide range of stakeholders.
c. A number of participants also called for the setting up of mechanisms that
would allow for better exchange of experiences and ideas among different
diaspora groupings. In this respect, the desirability of having an
information portal that pulls together interesting case studies, experiences
and lessons was reiterated. Such a portal could also assist the research
program referred to above by pulling together various experiences and by
highlighting the findings. Building on this point, there was also a call for
further cross-regional dialogues to allow for cross-fertilization of
experiences and ideas.
34. The meeting was concluded by Mr. Alexandre Trepelkov, Chief, Multistakeholder and Outreach Branch, United Nations Financing for Development
Office, who thanked all the participants for attending and conveyed his
appreciation to TiE for its support.
15
Annex
Program for ad hoc expert meeting on “Strengthening the business sector and
entrepreneurship in developing countries: the potential of diasporas”
Date: 5 October 2006
Venue: United Nations, Conference Room 8
9.30 a.m. – 9.45 am. Welcome: Mr. Oscar de Rojas, Director, Financing for
Development Office, United Nations Department of Economic and Social Affairs
and Mr. Parag Saxena, President, Tri-State Chapter of The Indus Entrepreneurs
9.45 a.m. – 10 am.
Opening Remarks: Mr. Jomo Kwame Sundaram, Assistant
Secretary-General for Economic Development, United Nations
10 a.m. – 11.30 am.
Session I: Overview and setting the stage
Moderator: Mr. Rajat Gupta, Senior Partner Worldwide, McKinsey and Co
Speakers:
i)
Mr. Devesh Kapur, Professor and Director, Center for Advanced Study
of India, University of Pennsylvania
ii)
Mr. Yevgeny Kuznetsov, Senior Economist, World Bank
iii)
Mr. Chukwu-Emeka Chikezie, Executive Director, African Foundation
for Development, AFFORD
11.30 a.m. – 1p.m. Session II: Strengthening linkages and facilitating trade, skills and
knowledge transfer
Moderator: Mr. Barry Herman, Senior Fellow, New School of Social Research
Speakers:
i)
Ms. Jennifer Brinkerhoff, Associate Professor of Public Information and
International Affairs, George Washington University;
ii)
Ms. Wanja Michuki, Chief Executive Officer, Highland Tea Company;
iii)
Ms. T.A. Banjoko, Head, Africa Recruit
iv)
Ms. Molly Pollack, Executive Director, Chile Global
v)
Mr. Richard Tan, Chief Executive Officer, Pacific Millennium
Corporation
1.00 p.m. – 2.30 p.m.
Luncheon. Luncheon speaker: Mr. Parag Saxena
2.30 p.m. – 4.00 p.m.
Session III: Channeling finance
16
Moderator: Mr. Arun Kashyap, Private Sector Development Adviser, United
Nations Development Programme
Speakers:
i)
Mr. Kai Schmitz, Executive Vice President and Chief Operations Officer,
Microfinance International Corporation
ii)
Mr. Suni Munshani, Chief Executive Officer, Novitaz
iii)
Ms. Marsha Wulff, Founder and Principal, Wulff Capital
iv)
Ms. Lenora Suki, Associate Director, Center on Globalization and
Sustainable Development, The Earth Institute at Columbia University
4.00 p.m. – 5.30 p.m.
Session IV: Enabling policies and institutions
Moderator: Mr. Manuel Montes, Chief, Policy Analysis and Development
Branch, Financing for Development Office, Department of Economic and Social
Affairs, United Nations
Speakers:
i)
Ms. Nienke Stam, IntEnt
ii)
Ms. Natasha Iskander, Assistant Professor of Public Policy, Wagner
School of Public Policy, New York University
iii)
Ms. Lisa Curtis, Private Sector Adviser, UK Department for
International Development (DFID)
iv)
Ms. Liesl Riddle, Assistant Professor of International Business and
International Affairs, George Washington University
5.30 p.m – 6.00 p.m. Conclusions and Next Steps
17