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Diaspora investors play a vital role in growing the American economy and promoting economic development in emerging and frontier markets through trade, finance and start-up capital.
USAID works with a wide range of partners to support Diaspora efforts to create high-impact business and investment opportunities in their home countries that align with development objectives.
Diasporas in the U.S. from India, Mexico, Ghana and elsewhere are providing much needed capital to home economies through various financial instruments. Notable examples include Diaspora bonds that are typically issued by a country to finance infrastructure projects. Diaspora communities in the U.S. are also growing businesses in their ancestral home through remittance-backed lending.
Middle and low-income countries received an estimated $414 billion in remittances from Diasporas abroad in 2013. USAID and its partners are working with Diaspora communities to leverage remittance flows into education, improved food security and formal financial services.
Diaspora investors often have the local knowledge, motivation and resilience to shape burgeoning markets for long-term growth.
USAID partners with Diaspora investors in a number of ways:
- The International Diaspora Engagement Alliance (IdEA) is partnering with Calvert Foundation to launch the Diaspora Impact Investment Initiative that will build a portfolio of opportunities for U.S. diaspora to make impact investments in their countries of heritage.
- USAID’s Development Credit Authority (DCA) uses risk-sharing guarantees to mobilize private sector financing in developing countries to reach credit-worthy but underserved entrepreneurs such as members of the Ethiopian Diaspora interested in returning to their home country to start new businesses.
- Through the African Diaspora Marketplace, Latin America IdEA Marketplace and Caribbean IdEA competitions, USAID promotes sustainable economic growth by supporting diaspora-linked businesses abroad with funding, mentorship and technical assistance.
- USAID's Development Innovation Ventures (DIV) offers an opportunity for nearly any organization, including Diaspora and other private sector partners to help scale cost-effective, evidence-based, and promising new approaches to development issues.
- Through a Global Development Alliance (GDA), Diaspora investors may partner with other private sector organizations, including nonprofits, and USAID to leverage expertise and resources that achieve lasting development outcomes.
Examples of USAID's work with Diasporas:
- A 2008 multi-bank guarantee in Ethiopia enabled members of the Diaspora to access up to $12.84 million in financing to start businesses in Ethiopia. One such entrepreneur, Kelly Yohannes, used her $550,000 loan from an Ethiopian bank to build a hotel three hours north of the capital.
- The Caribbean IdEA Marketplace provided early stage funding for Mache.A, a social enterprise founded by a Haitian American that aims to create ‘virtual cooperatives’ in Haiti to grow farmer incomes and improve food security.
- USAID and Western Union created the Libya Diaspora Marketplace to provide matching funding and technical assistance to start-up and growing businesses that harness the knowledge and resources of U.S.-based diaspora.
- In the Philippines, the University of Michigan is testing ‘EduPay’, a service that channels individual remittances from the U.S. to pay school fees directly to local educational institutions with support from USAID’s DIV program.
Please contact us for more information.
Last updated: June 27, 2014