Skip to content

The Diaspora Exerts a Mixed Influence on African Economies

But with better governance, deregulation and greater stability, the hundreds of millions of Africans toiling abroad could fuel a development boom of truly epic proportions. So large and important is Africa’s diaspora that the African Union officially declared it the continent’s “sixth region” after East, West, North, Central and South. The clearest impact of Africans abroad comes in the form of the personal remittances they send to the continent, which dwarf foreign direct investment. In 2019, Africa received $82.7bn in personal remittances, nearly double foreign direct investment (FDI) flows of $46bn. Remittances to Nigeria alone were $23.8bn compared to $3bn in FDI. Egypt saw remittances worth $26bn. Those are just the formal, countable remittances. These payments provide a financial crutch to millions of households. This is why smaller, poorer and more fragile economies are so dependent on them.  Africa’s top remittance recipients as a proportion of their economies are South Sudan, Lesotho and The Gambia with 35%, 21% and 15% of GDP respectively coming from remittances, according to World Bank statistics. Between 2004 and 2017, remittances as a share of GDP grew from 1% to 7.5% in Ghana. Across sub-Saharan Africa, where farming supports at least 50% of livelihoods, remittances supplement agricultural incomes. They diversify income sources in African households and allow recipients to invest in health and education, lowering their exposure to food insecurity and poverty. If remittances are a mixed bag, other diaspora impacts are overwhelmingly positive. Those who can be lured back to Africa return with world-class education and professional experience. As ambassadors for Africa in developed countries, the diaspora has a role to play in combating climate change, deepening trade ties, boosting investment in the continent, promoting regional security and advocating for democracy.