Mobilising Ethiopian Diaspora Capital and Knowledge Networks for Economic Growth and Transformation

By Makonnen Tesfaye, London, UK
Tigrai Online, August 16, 2015

Introduction and Summary of Presentation

A year after the ground breaking Festival Tigrai Diaspora Event, it is great to witness the just successfully concluded Oromo Diaspora Event and the currently ongoing Ethiopian Diaspora Event in Addis Ababa.  The planned Amhara Diaspora Event scheduled for next year is going to register yet another milestone in the effort to mobilise the Ethiopian Diaspora for economic development and transformation.  The context and timing of the presentation fits the diaspora events that have been taking place in recent years.  The purpose is to facilitate consultation and solicit feedback and comments from the Ethiopian Diaspora with a view to firming up policy recommendations on the development of Government Diaspora policy. The presentation is based on the preliminary findings of a major Ethiopian Diaspora Study undertaken by the United Nations Conference on Trade and Development at the behest of the Federal Government of Ethiopia. The final report will be presented and discussed at multi-agency, multi-stakeholder conference to be organised by the FGOE in Addis Ababa at the end of the year before its official publication. The presentation makes use of the Study, but represents the view of none other than the author’s.

Over the last decade the policy discourse on the link between migration and development in general and the role of the Diaspora in economic development in particular has received increased interest from host and origin countries, while also figuring high on international policy agenda. Governments on both ends of the migration pole, international development agencies and the Diaspora members themselves increasingly recognise the importance of the Diaspora’s engagement with their countries of origin and are looking for ways to develop and foster this engagement. Indeed, in the case of Ethiopia, the Diaspora policy imperative is not so much whether the Diaspora can beneficially contribute to Ethiopia’s development, economic growth, or poverty reduction, but what optimal policy options and institutions can best maximise these relationships. The negative association of emigration with development has given way to a new paradigm where, instead of substituting migration with development, the focus now lies on finding ways to make migration contributes to development.  Thus, the emphasis is on the importance of transforming Ethiopian brain drain and brain waste to brain gain and brain circulation, but that the positive link between the Diaspora and development is not automatic because market forces alone will not establish the desired connection between migration and development without supporting productive infrastructure - economic, social as well as scientific and technological institutions.  What are also required are enabling political institutions, a stable macroeconomic and conducive financial environment, basic and essential infrastructure, efficient markets, a vibrant and competitive private sector, robust public-private partnerships, strategic co-ordination by development-orientated state and a stable and peaceful external environment.

The exodus of Ethiopians, in particular highly skilled emigrants to the global North and in recent years to the global South, or brain drain limits the country’s quest for rapid and sustainable economic development and associated objectives of reducing poverty and creating employment opportunities.  Ethiopian policy makers see their Diaspora as an asset, mitigating the negative effects of the emigration of skilled and talented migrants, and are increasingly proactive in engaging with their nationals abroad. The Ethiopian Government’s Diaspora policy overarching aims are to protect the welfare and rights of nationals and the Diaspora abroad; enable their economic participation at home; and facilitate their socio-economic and political integration in their host countries.

The Ethiopian Diaspora currently estimated to exceed 2.5 million (IOM Ethiopia, 2013), is poised to make critical contributions to the on-going economic development of the country in a number of sectors: knowledge and technology transfer, investment and trade, which are crucial for building productive capacities in Ethiopia.

• Remittances flows to Ethiopia in 2010 were £3.2 billion (World Bank Ethiopian Remittances Survey, 2010), which far exceeded all foreign direct investment flows, or all official development assistance.
• By 2013, over 3000 diaspora members have invested over $1 billion mainly in the expanding real estate and hotel and tourism sectors, and Diaspora investment is overwhelmingly concentrated in Addis Ababa, 91% of it (Ethiopian Investment Agency, November 2013).
• With combined gross annual income estimates ranging from $10 billion to £39.6 billion and combined annual savings ranging from $1.9 billion to $7.6 in 2009, the Ethiopian Diaspora has the potential to invest significantly more in the country (Author’s calculation based on World Bank methodology and Ethiopian Diaspora stock estimates ranging from 0.5 to 2.5 million).
• The Diasporas can support export trade as importers and promoters of Ethiopian goods and services as well as the Ethiopian tourism sector in destination countries. For example, the average Ethiopian Diaspora member in the USA purchases Ethiopian “nostalgic” and “ethnic” goods to the value exceeding $1000 per year (UNCTAD LDCs Report, 2012). 
• Diaspora business and knowledge networks have the potential to facilitate and broker foreign direct investment and the transfer of technologies to the home country.
• By 2014, the Ethiopian Diaspora purchased Diaspora Bond worth $22 million (compared to $312 million Bond purchased within Ethiopia), which is far low when compared to the potential income and purchasing power of the Diaspora. It is vitally important to significantly increase Diaspora development finance and knowledge networks contributions to Ethiopia economic development effort and for this to happen the Government and all stakeholders need to substantially raise their engagement and marketing strategies to much higher levels.

These stylised diaspora economic data, not to mention the social and political imperatives, provide the rationale for a strategic diaspora policy and institutional response to unlock Ethiopian Diaspora knowledge and capital for the purpose of accelerating and sustaining economic growth, combating poverty and creating productive employment for the rapidly rising working-age population (UNCTAD LDCs Report, 2013).

Challenges, Prospects and the Way Forward

• The pertinent question for Ethiopian Diaspora policy is how to turn brain drain and brain waste to brain gain and brain circulation for the country. The launch of the Ethiopian Diaspora Policy in June 2013 is a major milestone in the development of diaspora policy instruments over the last ten years.  Prior to the launch, the Government’s policies consisted of an array of discrete policy instruments, such as the introduction of the Ethiopia Origin Identity Card and economic and investment-related incentives. The Diaspora policy was widely consulted at home and abroad and for the first time provided a fairly coherent policy framework, an institutional arrangement and a broad strategy for engaging with the Ethiopian diaspora. The general objectives of the Ethiopian Diaspora Policy are: “Building up strong relationship between Diaspora with their origin country Ethiopia, encouraging and facilitating conducive environment for participation of Diaspora on on-going peace and democratisation building process to benefit their country and to preserve their rights and interests abroad” (Ethiopia Diaspora Policy, FMOFA, 2013).
• It needs to be emphasised  the crucial importance of developing an up to date and comprehensive database of the Ethiopian Diaspora, in particular diaspora knowledge and business networks in order to develop evidence-based Diaspora policies and initiatives.
• It is important to underscore that the Ethiopian Government could do more by removing potential barriers and obstacles and creating further opportunities for the Diaspora to participate in economic development; mapping out and profiling the Diaspora population; building sustainable partnerships; facilitating their involvement in the country; consolidating the Diaspora’s sense of attachment to their home country; and further developing actionable strategies and enabling institutions. Many empirical studies and the diaspora literature attest to the fact that diaspora policies work best when the diaspora are engaged with as full partners, that is, when diaspora engagement is a two-way process, meaningful and sustained.
• It needs to be emphasised the critical importance of developing an effective strategic delivery infrastructure for diaspora services. Beyond sign-posting services, an efficient, effective and sustainable diaspora policy requires the development of a multi-agency, multi-disciplinary service infrastructure that deals with diaspora issues holistically and  seamlessly across federal agencies, regional government offices and public-private partnerships. 
• The Paper underlines and recommends the need to develop and implement an actionable diaspora strategic plan. Given the Diaspora Policy Framework, the next milestone is a further elaboration of the policy by developing a strategic action plan with realistic, achievable and time-bound targets, milestones and outcomes and associated monitoring, reporting and evaluation arrangements. The strategic action plan needs to dovetail into and synergised with diaspora action plans of the regional states and other stakeholder organisations. Furthermore, diaspora policy needs to be sufficiently integrated into overarching national development strategies and plans (e.g. GTP II, national education and training strategies).
• The Paper notes that Diaspora policy implementation is primarily decentralised through Regional State Diaspora Offices. The assessment is that the regional states abilities to implement comprehensive diaspora strategies are seriously handicapped due to mainly capacity issues that involve technical, personnel and financial resource limitations.  It is vitally important that capacity issues at regional level are addressed and that federal, multilateral and international expertise and resources are mobilised with a view to building their ability to deliver the policy effectively.
• The Paper emphasises the crucial importance of the development of an effective and credible diaspora communication strategy. The Government has made significant progress in reaching out to and engaging with the Ethiopian Diaspora by diversifying, scaling up its engagement activities and improving its communication media (e.g. Diaspora Portal, community outreach work by embassy and consular community liaison personnel and high level government official campaigns abroad). However, significant communication challenges persist. Given the current diaspora political landscape, it is vitally important to further develop and scale up the Government’s diaspora communication and engagement strategy.
• The Paper underscores and recommends the need to address the “trust deficit” and “confidence gap” with the Diaspora through sustained partnership working and by enhancing transparency and accountability, for example, by widely consulting on the terms of reference for the proposed Diaspora Advisory Council. Furthermore, there should be strong, credible and independent Diaspora “voice” and “presence” on the National Diaspora Council.
• The Paper underscores that a major policy challenge for the Ethiopian diaspora policy is harnessing diaspora development finance. The Diaspora can contribute as remittances senders, FDI enablers, direct investors, purchasers of bonds, trade facilitators and advocates, importers of Ethiopian goods and services, international tourists and business networks for transferring technologies.  Given its size, income and savings the Ethiopian Diaspora has the potential to do all these.  Furthermore, a national diaspora policy for mobilising diaspora resources for development needs to take advantage of multi-lateral, regional and international agencies initiatives that promote diaspora investment and entrepreneurship with a view to creating synergy, building capacities and maximising joint funding of diaspora programmes.
• The Paper highlights the potential role of the Ethiopian knowledge networks in the country’s development efforts. Given the size of the Ethiopian skilled emigrant population and with over 100 Internet-based Ethiopian Diaspora networks globally, harnessing Ethiopian Diaspora knowledge and knowledge networks can potentially contribute to the accumulation of human capital and technological capabilities in the home country. There have been many Diaspora initiatives in the country over the last fifteen years that have provided project specific services across the country in partnership with home institutions, in particular in the health and education sectors. However, the Paper underscores that many diaspora initiatives are individually driven, uncoordinated and unsustainable, which limited their impact beyond specific project objectives. Furthermore, the capacities of federal and regional agencies as well as private and public sector institutions to manage diaspora related initiatives are severely constrained, which further reduce the potential value and impact of Diaspora initiatives.
• In conclusion, the effort to date to mobilise the Ethiopian Diaspora for economic development has registered significant results and demonstrates the commitment of the Government and the willingness of Diaspora members, but a lot more needs to be done at  strategic and policy levels and on implementation and co-ordinating structures. Furthermore, it is vitally important to reach out to the “silent majority” Diaspora as well as strengthening the currently engaged diaspora members.

Finally, comments, feedback and questions are welcome and appreciated.

Please read the whole presentation by clicking here there is more graphs, charts and other statistical tables in support of the presentation.