homestrings: diaspora investments back home
DESCRIPTION
Remittances outstrip any other form of flows – Size – Resilience Do Remittance flows = Diaspora Investment Flows?TRANSCRIPT
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…
Solution…
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.
