Malian diaspora is keen to invest in the development of small and medium sized businesses (SMEs), especially to develop the agriculture sector, if they can access the right training, information and financial products, according to a new report funded by the European Union, commissioned by the UN’s International Fund for Agricultural Development (IFAD) and developed by Red Mangrove Development Advisors, and Adept, the Africa-Europe Diaspora Development Platform.
The study was presented today at an event held in Paris, organized by CEFOM, one of the most important actors in the France-Mali cooperation, to raise awareness of such investments among French development aid actors and diaspora leaders, and highlight new forms of diaspora engagement for peacekeeping and development in these troubled times.
“Both collectively and individually, the Malian diaspora is increasingly investing in search of sustainable social development impacts and sound financial returns, but they need support in terms of financial education and reliable investment opportunities,” said Frédéric Ponsot, IFAD expert in remittances and diaspora investments.
As food systems are shaken to the core by the global food crisis, low-income countries like Mali realize that years of underinvestment in the development of their agriculture sector and rural areas are not only jeopardizing food security but their entire national security. High dependence on food imports is pushing people into hunger and poverty, while leading to serious social unrest, displacement, and political instability.
Investments in agriculture can prevent these effects as the primary sector is a proven engine to economic growth and development. In sub-Saharan Africa, growth in agriculture reduces poverty up to 11 times faster than growth in other sectors, according to IFAD.
“The EU remains Mali’s main partner on migration related issues. Supporting the Malian diaspora’s efforts toward the socio-economic development of the country continues to be our priority as these people living abroad make a significant contribution to Mali’s economy and overall development,” said Sarah Mokri, Program Manager for employment, diaspora and technical and vocational education and training of the European Delegation in Mali.
Thanks to the support of the European Union, by means of a 1-million EUR grant, IFAD is implementing the creation of pilot investment vehicles that provide secure ground and information to harness the potential and appetite of the Malian diaspora to invest in the agriculture sector of their country of origin.
“Everyone thinks about their own garden. But if you don’t have a certain level of education, you can’t think of why investing in another business would make sense”, said a member of the Malian diaspora.
Dedicated products and specific information supported by IFAD will help channel the overall investment potential of the diaspora, which is estimated to be EUR 9 million annually, with the support of Investisseurs et Partenaires (I&P) and FADEV. Both companies practice private equity in the country and own minority shares in companies with a high potential for social and environmental impact.
Through a European Union grant implemented by IFAD, FADEV is supporting YiriMali, an investment solution product offering Malian diaspora the possibility to finance micro- enterprises that relatives are managing back home. In parallel, I&P is supporting a group of Malian diaspora investors who have established Ciwara Capital, a company to invest and provide technical support to high-potential SMEs in Mali. Both activities are expected to generate not only investment but 90 stable jobs.
The study: Diaspora’s potential and role
There are four million Malians living abroad; Europe hosts 250,000 Malians, of which more than half live in France. The diaspora is a vital source of revenue for the country: last year, people from Mali living abroad transferred USD 973 million back to the country, equivalent to five per cent of Mali’s GDP.
In addition to sending remittances to their relatives, which are mostly geared toward making ends meet, members of the Malian diaspora have historically been involved in social and economic development through various diaspora organizations.
IFAD’s study Investment practices and preferences of the Malian diaspora in their country of origin, funded by the European Union, revealed the investment practices and preferences of the Malian diaspora based in Europe as well as their impact on Mali’s economic development. Research included 90 organizations and 210 individuals based in France, Spain and Italy, the European countries with the largest Malian communities.
The findings of the study recommend providing the diaspora with information on promising investment solutions and sectors, as well as specific training on investment and business creation, and developing attractive investment solutions and supervising and securing their investments from a regulatory point of view.
IFAD builds on its expertise accumulated thanks to the successful implementation of other projects to foster diaspora investment. In Somalia, a similar venture helped accelerate Somali diaspora investment in SMEs in their country of origin, and raised interest from the national financial sector to develop activities aiming at diaspora investment into the local economy. The project funded 14 companies, leveraged US$2.3 million and diaspora members invested US$1 million, generating spill-over benefits along the value chain and creating jobs.