Published on March 13, 2014
Facilitating Diaspora Investments Back Home A New Development Finance Paradigm London, United Kingdom 2014
What are the facts? • What we know about Diaspora capital flows: – US$450B in remittance flows from West to Emerging Markets (10%-15% per year) - WB – US$40B in flows into Africa alone (P2P) – Conventional Wisdom: Subsistence Consumption
What do Remittances say? • Remittances outstrip any other form of flows – Size – Resilience • Do Remittance flows = Diaspora Investment Flows? • What do we know about remitters and our motivations…
GWU – Western Union Research • GWU-Western Union Afro Migrant Study: – About 1,000 members of US-based African Diaspora were surveyed – sponsored by WU – Research Objectives: • Profile? • Investment interest and activity? • Obstacles to investments? • Diaspora investment advantages? • Investment motivation?
GWU-WU Findings (1) • Profile? – Average stay in the US: 22.18 years – 72.2% plan to return “Back Home” – Average age of respondent: 46 years old – More than 50% have annual incomes in excess of US$100,000 – Average remittance in past 3 yrs: US$12,974 (std dev: US$22,873.)
GWU-WU Findings (2) • Demographics:
GWU-WU Findings (3) • Risk Tolerance
GWU-WU Findings (4) • Contact with “Back Home”
GWU-WU Findings (5) • Investment Interest (%)
GWU-WU Findings (6) • Investment Activities (%)
GWU-WU Findings (7) • Diaspora investment motivation summarized: • Financial • Emotional • Social-status • Political
Implications? • How to translate into a palatable proposition? • Need to: – Facilitate Access to Impactful Opportunities – Provide Reasonable Prospects for Returns – Provide Process Transparency – Address Voice Mechanism • Must do this in a single proposition…
Next Steps? • Diaspora and Other interested Investors • Registering at the average rate of 100 a month • Growing book of Opportunities • Private Equity Funds • Diaspora Bonds (gvts, corporations, n/profits) • Housing (investment, lending, buying) • Deals (co-investment and stand-alone)
Case Studies I – Diaspora Bonds • Sovereign Infrastructure Bonds issued • Pay coupons on semi-annual basis • Maturity between 5 – 12 years • Yields between 5%-15% (local currency) • Financing Roads, Water and Power • Countries: Kenya, Ghana, Ethiopia, Nigeria • Looking at Corporate Diaspora Bonds…
Case Study II – SMEs • Key challenge – Selection and Governance – Partner with experts: private equity funds – Filter per key criteria – HS Members vote and commit – Co-invest with PE funds – Industries: manufacturing, retails, real estate…
Case Study III – Real Estate • Work with Top Developers: Kenya, Ghana, Nigeria • HS members have 3 options: – Invest in mortgages – Invest in housing projects – Buy units directly from Builder • New Opportunity: Buying Cities (Renaissance) – Ghana and Kenya
RENAISSANCE PARTNERS INTERNATIONAL Innovation in Urban Planning
Investing in Cities on HS? • RPI will divide up each planned city into key investment opportunities: – Commercial Real Estate (Malls, Stations, Offices) – Residential Real Estate (Gated Communities, Lots) – Roads, Power, Public Services (Municipalities) • Investment instruments available per: – Bonds (5yr, 10yr) – Equity (Operating Company)
Conclusion • Homestrings – a repository of investment opportunities for Diaspora and other investors • Homestrings – a platform for vetted project promoters • Homestrings – first impact investment “shopping mall” for the Diaspora.
Contacts • Eric V. Guichard – Founder/CEO firstname.lastname@example.org • Address: www.homestrings.com
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