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Measuring diaspora’s contribution to a country’s development (part 2)


Measuring diaspora’s contribution to a country’s development

The following is an excerpt from a contribution that Leon Isaacs (co-founder) made to IOM’s publication “Contributions and Counting: Guidance on Measuring the Economic Impact of your Diaspora beyond Remittances“. The report discusses guidance for governments and national authorities interested in understanding the economic contributions of their Diaspora. Leon’s contributions will be presented as excerpts here. This is part 2 of 2.


  1. How does a government measure whether its diaspora investment approach is successful? (What is an existing successful diaspora investment initiative at the national level and why?)

Leon: As with any project, it is important that goals are established at the beginning of the programme and that monitoring and evaluation takes place during and at the conclusion of the programme.

Depending on which stage a programme is at there will be different measurements. The measures can include: the total amount invested over time; the number of different investments; the average amount; who and where are the investors; and, frequency of investments.  These are all financial targets and can be relatively easy to measure and may be the headline goals.

However, there are many other goals that can be harder to measure when it is talking about diaspora investment.  For example, these could include: a greater understanding of the diaspora and their propensity to invest; a detailed mapping of where the diaspora are. A deep understanding of the attitude of the diaspora to how they feel about investing with a particular government is important (especially where the diaspora migrated due to their discomfort with the government involved) as is understanding the communication networks with the diaspora. A strong understanding of how diasporas receive their information, who are the key influencers, what does the community structure look like in each host country/region are all vitally important.

Each of these measures could be important to a project so it is critical that SMART goals are set at the start of a project and are tracked throughout it. This will enable learnings to be obtained to improve future projects.


  1. Thinking beyond the benchmark, how does diaspora investment respond to market shocks (e.g. Covid-19)? More presently, how would the increased inflation rates and therefore interest rates affect diaspora investment flows?

Leon: The are good questions.  As is normal in diaspora investment, obtaining hard data to prove cases is difficult. However, based on many discussions with governments and diaspora groups a picture can be built and the answer is that much does depend on the country in question.

During COVID it is clear that the number one priority for diasporans was to support their families at home.  This meant that really the focus was on financial support for health and consumption purposes more than investment as such.  Those who were in countries which provided social support during the COVID crisis (for example, those in Western Europe or North America) were able to provide this more easily. Many diasporans are in essential professions and were able to maintain their jobs and continue earning in very trying conditions. There is also evidence that diasporans used their savings, where necessary, for these family support purposes, which means that the amount dedicated to actual investments was proportionately smaller than previously seen.

The increased inflationary environment that we are currently in presents challenges and opportunities.  The argument has been used in the past that one of the advantages for diasporans in investing in their home country is that they can earn a much higher return than they can in their host country due to the exceptionally low interest rate environment in the globe at that time.  With high inflation and higher interest rates much will depend on the personal circumstances of the individuals. The general sentiment is that people are very worried about the cost of living and that the amount of money to invest will be more limited that before. Should diasporans have funds to invest they may potentially look at higher interest rates in the host country as a reason to invest there. On the other hand, other factors, such as the strength of the UD dollar (and some other hard currencies) means that they could get more for their savings in their home country than they would before, which would act as an incentive.

I think that it is too early to tell what the outcome will be but it is likely that the amounts invested by diasporans may be lower in the short term until they have more confidence in their long-term financial security.  What is clear is that there is an even stronger need for strong, clear and well-constructed  diaspora investment programmes. Know-your-diaspora is more important than ever and developing initiatives that are appropriate for them and show that they are being listened to will ensure a stronger chance of success.


Photo by Etienne Martin on Unsplash


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