The U.S. Should Continue to Support Diaspora Investment Projects
Maintaining ties and supporting family back home has long been a focus of diaspora communities located in the United States. A diaspora community is one that continues to sustain a strong sense of collective identity, in spite of often extremely large physical and social distances that separate the diaspora community from their country, religion or cultural origin. Unsurprisingly, the United States is home to a large number of diaspora communities, making them potentially formidable agents for executing an important foreign policy goal of the United States: helping enable resilient, democratic societies to realize their potential as an essential component of sustaining development progress on a global scale.
Historically, diaspora communities contributed to the development of their home countries by sending remittances. Remittances sent to developing countries actually vastly exceeds the amount of official development assistance the United States provides; indeed, many developing economies rely heavily on remittances. For example, the World Bank estimated that official migrant financial remittances sent to sub-Saharan Africa in 2015 totaled $40 billion. There are some downsides associated with sending remittances, however, such as a lack of oversight over their eventual use and the significant fees associated with transmitting those funds.
International bodies, like the United Nations, and U.S. government agencies, like the U.S. Agency for International Development (USAID), recognize the potential to achieve sustainable development by leveraging diaspora communities. In 2011, the U.S. Department of State launched a public-private partnership called the “International Diaspora Engagement Alliance” (IdEA) as a platform to harness the energy and resources of diaspora communities to promote sustainable development in their countries of origin. According to the State Department, diaspora communities have significant diplomatic and developmental influence when they act as informal ambassadors for the United States. The United Nations highlighted the positive contribution of migrants for inclusive growth and sustainable development in its 2030 Agenda for Sustainable Development.
In January 2015, USAID, in partnership with the Calvert Foundation, launched the Indian Diaspora Investment Initiative. This Initiative allows US-based retail investors, including Indian-Americans, to fund the growth of social enterprises in India. In general terms, people purchase Community Investment Notes and the Calvert Foundation makes loans to Indian financial institutions and funds. These institutions in turn can make loans to social enterprises focused on areas like healthcare, education, etc.
By partnering with non-governmental organizations, USAID (by way of example) has expanded the reach and influence of the Initiative program. In light of the other large diaspora communities in the United States, USAID should prioritize creating similar programs for these communities. These programs not only present an opportunity for diaspora communities to support positive and sustainable development in their home countries, they can also facilitate a dialogue between the United States and the country of focus for diaspora investments that presents further opportunities for positive engagement, financial returns for the investing parties, and social impact.