House of Commons - International Development

Select Committee on International Development Sixth Report

4 RESOURCE FLOWS: REMITTANCES AND THE ROLE OF THE DIASPORA

99. This chapter continues the task of identifying ways in which migration can be made more development-friendly. In this chapter our focus is on ways in which policy might shape and utilise the links which migration establishes between home and host societies, and along which resources flow. First we examine remittances, and secondly we look at the role of the diaspora.

Remittances for poverty reduction?

THE DEVELOPMENT POTENTIAL OF REMITTANCES

100. Migrant workers' remittances are an increasingly important source of finance for many developing countries.[251] By 2003 remittances sent by migrant workers to developing countries through official channels had risen to $93 billion from $20 billion in 1988, and just $2 billion in 1970 (see figure 6). Global remittance flows far exceed the flow of aid, and are second only to Foreign Direct Investment (FDI) as a source of external financing for developing countries.[252] In net terms, largely because they do not generate corresponding outflows from developing countries, remittances are the most significant financial transfer to developing countries; in 2001 they were ten times the value of net transfers from private sources, and double that from official sources.[253] For Bangladesh, the value of remittances in 1976 was $25 million; by 2002 this had risen to $2.6 billion.[254] For the Philippines, some $7 billion of official remittances at the start of this decade amounted to approximately nine percent of the country's GDP, nearly three times the value of FDI inflows, or nearly seven times the value of its aid receipts.[255] Roger Ballard of the Centre for Applied South Asian Studies at the University of Manchester suggested - optimistically equating remittances with aid - that migrant workers are now by far the largest suppliers of development aid to their communities of origin, and the Africa Foundation for Development argued that Africans, Asians and Latin Americans are, through their diasporas, their own biggest aid donors.[256]

101. Latin America and the Caribbean receives the most remittances ($30 bn.), followed by South Asia ($18 bn.), East Asia and the Pacific ($18 bn.), the Middle East and North Africa ($13 bn.), and Europe and Central Asia ($10 bn.). Sub-Saharan Africa, including the poorest countries in the world, receives the smallest amount of remittances ($4 bn.).[257] Unsurprisingly, the regions and countries which receive the greatest volume of remittances are those from which many migrants originate. Large countries are the main recipients of remittances in terms of absolute volumes, but small countries are most reliant on remittances[258] (see figure 7). An alternative measure of the importance of remittances is provided by Oxfam and by the British Bangladeshi International Development Group: in Mexico, remittances are as high as revenues from tourism; in Colombia, they amount to half the revenues from coffee; and in Bangladesh, their value is on a par with earnings from the garment industry.[259] Interestingly, and with implications for the sort of migration which would be most development-friendly, temporary, low-skilled and female migrants seem to remit more.[260]

102. Official estimates of the value of remittances fail to capture the full picture because many migrants transfer funds back home through a wide range of channels, from the informal to the formal: physically, through a friend or family-member; through a trader doing business in the home country; through a shopkeeper or travel agent with a counterpart in the home country; through an unlicensed independent remittance agency; through a licensed remittance agency; through a multinational such as Western Union; or, through a bank.[261] Migrants' reasons for preferring informal channels include considerations of cost, speed, ease of making and receiving the transfer, coverage within the home country, and greater confidence and trust in the service provided.[262] Indeed many migrant communities in the UK rely on their own remittance networks - the hawala system for south Asian migrants for instance - which are based on trust and shared culture.

103. Migrants' extensive use of unofficial remittance channels means that reliable estimates of the volume of these remittances cannot be made. In 2002 a United Nations study put the value of remittances flowing through informal money transfer systems at between $100 and $300 billion per year.[263] The evidence we have received includes similar estimates.[264] As far as the UK is concerned the picture is unclear.[265] Perhaps the most authoritative estimate comes from the World Bank which puts the value of remittances from the UK at $1.3 billion in 2001.[266] Such a figure tallies with recent research commissioned by DFID which estimates the total value of remittances from the UK at £1.4 billion, with £0.5 billion of this flowing through unofficial channels.[267] We recognise the difficulty of gathering reliable data on unofficial remittances, and applaud the Government for its efforts to gather information about remittance outflows from the UK. The Government should encourage other European governments to do the same.[268] In the absence of such information, evidence-based policy on remittances and on migration will remain an aspiration.

104. Remittances are in effect a share of the additional output created by the productivity gains which migration delivers.[269] Remittances can provide developing countries with large injections of resources, enabling them to narrow the trade gap, increase foreign currency reserves, service their debts, and make progress in reducing poverty and achieving sustainable development.[270] World Bank studies suggest that on average a ten percent increase in the share of international remittances in a country's GDP will lead to a 1.6 percent decline in the proportion of people living in poverty.[271] Remittances are a particularly valuable source of finance for developing countries because they tend to be more stable and predictable than other financial flows such as FDI and portfolio investments. In fact, remittances tend to be counter-cyclical, providing some buffer against economic shocks, because migrants send more money home when their families and communities are in need.[272] Remittances can also reach a broad section of the population; in El Salvador for instance perhaps 75 percent of households receive remittances.[273] In addition, as remittances are person-to-person transfers, there may be less loss in the transfer process (although see paragraphs 109—112), and they may be better targeted to the needs of recipient households than other resource flows including aid.[274]

105. At the household level, remittances can be a major source of income. In Bangladesh remittances account for more than half the income of families who receive them. In Senegal, the figure is reported to be ninety percent.[275] Particularly in rural areas, remittances may be the most important source of income for families who receive them.[276] In conflict or post-conflict situations remittances can be crucial to survival, sustenance, rehabilitation and reconstruction.[277] The importance of remittances in such contexts is something we saw for ourselves in Somaliland, and heard about from a Sierra Leonean migrant in Southwark: "Without remittances from abroad, families would actually suffer a great deal because they lost everything during the war and the money we remit from here helps to sustain them through difficult times. […] without the remittances, it is almost a zero life for most families in Sierra Leone."[278] Families without members working away and sending back remittances are likely to have much lower household incomes.[279] Remittances - as is the case with migration - are selective. Remittances go to the places where migrants come from, and as such tend to go to the better-off households, in the better-off communities, in the better-off countries.[280]

106. Migrants and their families have long been aware of the value of remittances.[281] Greater awareness on the part of governments and development agencies is welcome.[282] But if the potential of remittances is to be maximised, then more needs to be done to understand remittances and their use, to increase the flow of remittances and to make them work better for poverty reduction.

INCREASING THE FLOW OF REMITTANCES: INCENTIVES, TRANSACTIONS COSTS AND REGULATION

107. One way of making remittances work better for poverty reduction is to increase their volume. The flow of remittances is primarily a function of the numbers of migrants, the amount of money they earn, and their propensity to remit. But beyond this there may be ways of encouraging migrants to remit by providing incentives and attractive vehicles for investment. Over the course of the inquiry we heard about various schemes to encourage remittances. Perhaps the simplest approach is for the migrant-sending country to promote financial instruments targeted at its overseas migrant workers and to offer higher interest rates for foreign currency accounts. Such schemes have been tried by India, Pakistan and Bangladesh.[283] A second related set of approaches to encouraging remittances is through the use of special incentives and tax breaks, something which the Philippines and India have tried.[284] A third set of approaches involves bond issues. Either bonds might be promoted to migrants as attractive investment vehicles,[285] or bonds might be issued with future flows of migrants' remittances used as collateral. This approach, pioneered by the Banco de Brazil, seems to offer considerable potential.[286] Fourth, perhaps the best known approach is the "three plus one" matching funds scheme pioneered by the Zacatecas State Government in Mexico. In this scheme every dollar remitted by a Mexican migrant worker to their Home Town Association is matched with three more, one from the municipality, one from the state, and one from the federal government.[287] A final set of approaches is focussed more on the migrant-hosting state. The UK for example could encourage remittances through the provision of guarantees to back the issue of bonds by developing country governments,[288] by the use of tax incentives such as treating person-to-person remittances as charitable and therefore tax-deductible donations.[289] For their part, migrants' associations might wish to investigate acquiring charitable status, or, a charitable arm. As a charity, donations channelled through them would be tax-deductible.

108. DFID's Masood Ahmed sounded a note of caution: it might be problematic for developing countries to restrict investment incentives and tax breaks to their migrants; similarly, it might be problematic for developed countries to offer incentives or tax relief only to migrants sending money home.[290] And, in the enthusiasm to maximise the impact of remittances, we should not forget that the poorest countries and the poorest families seldom receive remittances. Money spent maximising the impact of remittances will likely have little impact on them; remittances are not a substitute for aid. Nevertheless efforts to encourage migrants to remit have considerable potential. As with temporary migration, so with remittances; there will be schemes which work for poverty reduction and schemes which do not. Along with other development agencies such as the World Bank, DFID needs to ensure that lessons are learnt and best practice is disseminated widely. DFID should also help its partner governments in developing countries to assess whether and how they might encourage their migrant workers to remit. The DFID-World Bank International Conference on Migrant Remittances provided an excellent start, bringing together as it did a wide range of stakeholders.[291] Such activity needs to be taken forward.

109. A large slice, 15 percent or more, of the value of remittances is taken in transfer costs and foreign exchange fees, with higher percentages charged for smaller amounts.[292] Given the volume of remittances - approaching $100 billion through formal channels, and perhaps three times that in total - reducing these transactions costs offers great potential for increasing the flow of remittances and in turn the resources available for consumption, investment and poverty reduction. Put simply, the transactions costs of remittances are high because the market for remittance services is not working efficiently. There is too little competition and a lack of information; remittance agencies can charge high fees without losing all of their customers. In sectors of the market where there is competition - such as between the UK and Somalia - fees are much lower.[293] If transactions costs are to be reduced, then the market for remittance services needs to work better so that service providers compete harder, to offer better and cheaper services, to more informed customers.

110. Many migrants are not able to open bank accounts because of their legal status, lack of identification or inability to meet the minimum deposit requirements.[294] Banks need to know their customers, particularly with heightened concerns about money-laundering and the financing of terrorism, but there may be some scope for making it easier for migrants to access the formal banking system. This would give migrants more choice, and - assuming that a competitive market will prevent banks charging exorbitant rates - would make for a more efficient remittance system.[295] Other initiatives can also play their part. In Mexico, the installation of cash machines has enabled city-dwellers to access funds deposited by family-members in the USA.[296]

111. Competition amongst service providers is the best way of reducing transactions costs; DFID notes that the costs of transferring small amounts of money are projected to fall from around 15 percent to five percent in the near future.[297] The remittance market offers great potential for those banks and transfer agencies which can offer attractive products at competitive prices.[298] For example the Banque de l'Habitat du Sénégal was able to capture a 26 percent share of the official remittances from France to Senegal - $24 million - by introducing a special service for migrants.[299] Other examples of remittance-aware banks are to be found particularly in the Americas.[300] Technology - cash machines and the internet - will foster competition, but in addition there is a need for greater transparency so that migrants can compare the prices charged by different remittance agencies, and regulation to ensure that the market is competitive.[301]

112. The UK Government, NGOs and the private sector can all play their part in driving down the costs of remittances. Competition will help, but the Government needs to encourage this process by raising awareness about remittances, disseminating good practice and ensuring that the market is transparent and well-regulated. Banks should not be allowed to crowd out their competitors by excluding them from access to banking services. In order to prevent the voice and interests of powerful players dominating, we recommend that the Government support the establishment of an Association of Independent Money Transfer Companies. We also recommend that the Government consider the merits of a code of practice to regulate banks' relationships with independent transfer companies.[302] Further, the Government might encourage an NGO or consumers' organisation to compile a price-comparison table - "Which remitter?" - showing the costs of transferring remittances to a range of developing countries through different firms.[303]

113. Since the terrorist attacks on September 11^th 2001 the informal remittance business has come under considerable scrutiny because of suspicions that it might be used for money-laundering and the financing of terrorism. For countries such as Somalia and Pakistan which are reliant on informally-channelled remittances the consequences can be severe.[304] Hawala and other informal funds transfer systems play a key role in facilitating remittances. Governments need to ensure that such systems are not abused by criminals, but should also ensure that regulatory solutions are proportionate to the risks and sensitive to the possible impacts on those who rely on remittances.[305] We are pleased that the UK Government - informed by DFID's analysis - appreciates the need to strike a balance between tackling the financing of terrorism, and ensuring the free-flow of remittances.[306] The UK Government was praised by our witnesses for its light-touch approach to regulating the UK remittance sector. It should persuade its EU partners to follow suit.[307]

MAKING REMITTANCES WORK FOR POVERTY REDUCTION

114. In addition to increasing the flow of remittances, another route to greater development benefits is to make given volumes of remittances work better for poverty reduction. Key to this approach is understanding what remittances are used for, and exploring how their impact might be broadened. Remittances are spent on a wide range of things including food, consumer goods such as bicycles and radios, medicine, education, marriage, houses, starting a business, land, agricultural inputs and livestock.[308] Such expenditures span the spectrum from "consumption" (e.g. the purchase of food) to "investment" (e.g. the purchase of a piece of agricultural machinery). If remittances are spent on consumption rather than invested so that they deliver long-term benefits, then their potential may be wasted. Given that remittances do seem to be spent largely on consumption this is a serious concern. However if remittances spent on extra food or medicine enable a family to survive a poor harvest or an outbreak of disease, then this clearly amounts to a sound investment in their future.[309]

115. There are clearly more and less productive ways of spending remittances, but we should be wary of using our ideas about what constitutes productive and unproductive expenditure as a template for assessing decisions made by poor households in desperate situations. Whilst interventions can be made to improve the situation in which people find themselves, and thus encourage more productive expenditure, the recipients of remittances are in a better position than we are to make rational decisions based on the risks and opportunities that they face.[310] And even when remittances are spent "unproductively", if they are spent on locally-produced goods and services, then they will likely generate jobs for local people.[311]

116. Remittances are not a panacea for poverty reduction.[312] Migration is itself selective, and remittances are sent back home by migrants to their families and communities of origin, rather than to "Pakistan", "the Philippines" or "Sri Lanka".[313] Remittances will not directly lead to broad-based poverty reduction. Rather they will benefit particular households and communities which receive remittances, and - unless they generate significant multiplier effects - may lead to heightened inequality between remittance-rich and remittance-poor households.[314] In the wrong circumstances remittances may foster dependency and paradoxically lead to under-development in a capital rich environment.[315] In such instances, the outcomes of remittance inflows might include: the displacement of local jobs and incomes; the inflation of local prices for land, housing and food; and the creation of a culture of economic dependency.[316] Remittances which provide a boost to the service sector and house building, can leave the more productive sectors of the local economy, particularly agriculture, in desperate straits. If income can be earned from house-building, from selling land to house-builders, or from sending family members away to work, then why bother investing time and resources in agriculture?[317] Or, to put it starkly, why cultivate grain, when you can cultivate visas?[318]

117. The challenge is to ensure that remittances set in train a virtuous cycle of development, rather than a vicious one of under-development. One approach is for governments - in developed and developing countries - to seek to channel remittances into more productive uses which might have an impact in terms of poverty reduction and the MDGs.[319] This is something which the Philippines' government has tried, encouraging investment in education.[320] Local governments and NGOs have a role too. Local authorities need to be able to respond to the opportunities which remittances provide.[321] NGOs and migrants' associations can help migrants and their families to pool their savings and to invest remittances in businesses that will create local employment.[322]

118. Governments can play a role in creating an environment in which remittances can be used productively, but they must be wary of interfering in what are essentially private transactions. Migrants remit in order to support their families, households and perhaps their communities of origin.[323] If migrants feel that their hard-earned funds are being captured by governments - even for the best of intentions - then the flow of remittances, and especially the flow of official remittances, will be reduced. Particularly given many migrants' distrust of their home governments, clumsy governmental interference would be most unwelcome.[324] Further, there is little reason to think that development professionals in capital cities or in London are in a better position than the recipients of remittances to make sensible decisions about their use.[325]

119. There may however be scope for voluntary schemes which enable those migrants who so choose to send remittances to particular projects and/or for particular purposes. Voluntary schemes have been tried; the Multilateral Investment Fund of the Inter-American Development Bank promotes and funds initiatives which allow migrants to invest resources in development projects in their homelands;[326] and, the IOM has a pilot project in Guatemala.[327] Whilst most migrants remit primarily to support their families, some migrants would welcome the opportunity to see their remittances have a wider impact.[328] The principle responsibility for establishing such schemes should probably lie with migrant communities in host societies, and their counterpart communities back home. As part of its continuing dialogue with diaspora organisations (see paragraphs 129—134), DFID should learn from the diaspora's existing practices, and explore: what enthusiasm there is for Government-involvement in establishing voluntary schemes to channel remittances towards poverty reduction; what ideas migrants have for the design of such schemes; and, how best DFID might help. In addition, the UK Government, along with the IOM or the World Bank, should ensure that lessons are learnt from existing voluntary schemes and that best practice is widely shared.

120. NGOs and private-sector organisations have a role to play too, employing their expertise so that migrants can remit more productively, and at the same time getting in at the ground floor of a good business opportunity. In the UK, Chequepoint and Opportunity International are pioneering innovative approaches to making remittances work better for poverty reduction. Chequepoint supports charitable projects in the countries in which it works and plans to enable migrants to earmark a portion of funds sent with Chequepoint to a specially-designated country fund, or even to a specific project in a particular place.[329] Opportunity International is developing partnerships with private sector financial institutions to combine its micro-finance expertise with their banking expertise and technological know-how.[330] In Ghana, Metcare is developing a scheme to channel remittances towards healthcare insurance.[331] The Government should encourage innovative public-private-NGO partnerships which aim to make remittances work better for poverty reduction, and do what it can to make them a success.

121. One of the conclusions of the DFID-World Bank International Conference on Remittances was that improving access to financial services is central to enhancing the development impact of remittances.[332] In the UK, this is about making it easier for migrants to open bank accounts. In developing countries it is about improving the financial infrastructure so that - by improving access, including the rural poor's access to financial services - remittances can be easily received, banked and circulated within the local economy, rather than simply received and spent.[333] This might be achieved through partnerships between banks, other financial institutions, micro-finance organisations, credit unions and post offices.[334] There is a potential synergy here: using banks and other financial institutions for remittances will introduce many people to financial services for the first time, and increase the demand for an efficient financial sector[335]; better financial services may encourage migrants to remit more. We were pleased to hear that there is a team within DFID's policy division looking at financial sector reform and banking systems, particularly in rural areas, and the linkages with remittance issues, and look forward to seeing the fruits of this team's work.[336]

122. Remittances work best in environments where they can be invested, where they can set in train a virtuous cycle of development, and where their impact can trickle down from remittance-receivers to the wider community. If remittances produce good returns - in terms of poverty reduction or narrower economic returns - then migrants are likely to remit more.[337] The best way of making remittances work for poverty reduction is to ensure that there is an investment climate and an infrastructure which enables their productive use. Key factors include: stable exchange rates, low inflation, the absence of excessive bureaucracy and corruption, reliable power supplies, decent roads and other communications.[338]

123. In evidence to us Roger Ballard suggested - whilst emphasising that such initiatives need to be based on a sound understanding of the local context and existing local initiatives - that DFID consider establishing "smart aid" programmes to unlock the potential of places where there are local obstacles to the productive use of remittances. Such assistance could kick-start the local economy by remedying specific deficiencies - irrigation and transport systems perhaps - in the local infrastructure.[339] Donors and the international community have a role to play in helping to remove international and structural obstacles to poor countries' development, and in supporting developing countries to improve their infrastructures and to create good business environments. The primary responsibility however lies with developing countries themselves, or if the government itself is an obstacle, with the political process. As Cecilia Tacoli of the International Institute for Environment and Development (IIED) put it: "Any expectation that migration [and remittances] can contribute to development in home areas has to go hand in hand with strengthening the institutions in home countries, making them accountable, representative, and capable of responding to the opportunities which are provided by remittances. So far, we have not seen much of that - especially in the poorest countries, which are the ones which need it the most."[340]

Diaspora communities and development

THE DIASPORA AND ITS MEMBERS AS AGENTS OF DEVELOPMENT

124. The diaspora refers to international migrants who, although dispersed from their homelands, remain in some way part of their community of origin. "The diaspora" is a shorthand: there are at least as many diasporas as there are nations, and great diversity exists within diasporas too. Migrants in the diaspora create the link between their home and host societies, building transnational networks on the basis of emotional and family ties, and in many cases a strong sense of commitment or responsibility.[341] With advances in information technology and transport services, migrants are now more than ever able to maintain connections with people back home.

125. Migrant organisations include ethnic, alumni, religious or professional associations, investment or political groups, groups focused on education or cultural activities, or Home Town Associations.[342] They play an important role both within host societies such as the UK, and in connecting host and home societies. Within host societies they can provide support and a place where experiences can be shared, can help migrants' voices to be heard and can ensure that their interests and rights are defended.[343] By helping migrants to find their place in host societies, migrants' organisations contribute to making migration a better experience for the migrants, as well as enabling migrants to contribute more both to their host societies and to their home societies. Internationally, the diaspora - its members, communities and organisations - links home and host societies, providing a network along which resources can flow. As such the diaspora can play a crucial role in making migration more development-friendly.[344]

126. Financial capital, including remittances (see paragraphs 100—123) is the first set of resources which flows through diaspora networks. Migrants' associations can help migrants to channel remittances, as well as other capital, into investments designed to benefit migrants' home communities.[345] Wary of governmental interference in what are essentially private transactions, Hilary Benn suggested that the principal responsibility for establishing voluntary schemes to channel remittances for poverty reduction lies with diaspora communities in the UK and other host societies.[346] Particularly in the Americas, Home Town Associations involve themselves in charitable work, providing goods for religious festivals and construction materials for their home town church, raising money to improve water and sewerage systems or to improve the provision of health and education services, and helping to organise relief efforts following natural disasters, as well as channelling remittances.[347] In addition to channelling financial resources, diaspora networks can also be the basis of business partnerships, trade, and flows of investment, with the Chinese and Indian diasporas providing perhaps the best examples here.[348] Business linkages can be created by returning migrants, or by migrants who do not return but maintain connections. Much the same applies to the skills, ideas, knowledge and experience which migrants may have acquired. Return, including temporary return, allows home countries to benefit from these resources, and has the potential to transform the "brain-drain" into a "brain-gain" for developing countries.[349]

127. Migration provides opportunities for learning and a stimulus to social innovation by exposing people to different cultures, ideas and values. As Joseph Chamie of the United Nations Population Division explained, "you export culture, you export ideas, you export democracy, you export many things which [cannot be easily valued in terms of] dollars and cents."[350] For instance, when migrants return, or when they tell family members back home about women's roles and rights in host societies, this can lead to changes in the ways in which women are treated. In calculating the costs and benefits of migration, and designing policies to make migration work better for poverty reduction, governments should not focus solely on factors which can be valued in monetary terms. Migration can lead to political, social and cultural change in the countries of origin - and indeed in host societies - as people become aware that other ways of life, and other ways of organising society and politics, are possible.[351]

128. The diaspora can play a more direct role in peace-building and democratisation too, mediating between competing groups or providing resources for reconciliation and reconstruction. Chukwu Emeka-Chikezie of the Africa Foundation for Development reminded us of the African diaspora's role in the anti-apartheid movement and the more recent engagement of the Ugandan and Nigerian diasporas with politics back home.[352] Sierra Leonean migrants in London told us of their active involvement in peace-building, lobbying the UK Government to intervene, and in reconstruction.[353] But remittances, resource transfers and international lobbying can also perpetuate conflict.[354] National diasporas include a diverse range of groups, with different political opinions. Diasporas' views are valuable and may help to deliver peace in their home countries, but it would be a mistake to assume that communities in exile are better able than people back home to represent their nations' interests.[355]

WORKING WITH THE DIASPORA AND DIASPORA ORGANISATIONS

129. Diaspora organisations have until recently been largely ignored by other players in international development, including NGOs and governmental authorities at local, national and international levels.[356] The potential contribution of diaspora organisations to making migration more development-friendly is slowly being appreciated, as governments and others begin to work with the diaspora to establish and reinforce the connections between migrants' host societies and homelands. The challenge for policy-makers in developed and developing countries is to create an environment conducive to enhancing the diaspora's contributions to development.[357]

130. At an international level, programmes supported by the IOM and the United Nations Development Programme (UNDP) are designed to encourage and improve links between the diaspora and migrants' countries of origin, drawing on the skills and experience of the diaspora. The UNDP's Transfer of Knowledge Through Expatriate Nationals includes the production of databases of skilled nationals overseas who may be willing to engage in particular development projects.[358] The IOM's Migration for Development In Africa (MIDA - see paragraph 86) plays a similar role, seeking to mobilise the skills of African nationals abroad for the benefit of Africa's development.[359]

131. Developing country governments themselves have begun to recognise the value of their diasporas. China's success with mobilising its diaspora, and encouraging investment and remittances, has led other countries including India to seek to emulate China's success.[360] African countries too are beginning to mobilise their diasporas, working both individually and through the African Union. South Africa has established the South African Network of Skills Abroad, linking skilled nationals abroad who want to contribute to their home country's economic and social development, with local experts and development projects.[361] AfricaRecruit - an initiative established by the Commonwealth Business Council, working with the New Partnership for Africa's Development (NEPAD) Secretariat, and supported by the African Union - provides a platform for debate with the African diaspora as to how best to ensure that Africa has the skills it needs, and a means of helping governments, employers and diaspora communities to work more closely together to match job opportunities with skilled nationals abroad.[362] Nevertheless few developing countries have well-developed strategies for engaging with their diasporas.

132. The UK Government committed itself in it's 1997 White Paper on international development to "build on the skills and talents of migrants and other ethnic minorities within the UK to promote the development of their countries of origin".[363] Progress with meeting this commitment has been slow. DFID consulted the Indian diaspora as part of the process for producing the new Country Assistance Plan, and has begun to establish a dialogue with the Nepali diaspora. As witnesses from DFID readily acknowledged, these are small steps.[364] A very welcome development which DFID failed to mention in its original submission is the "Connections for Development" initiative, a network of Black and Minority Ethnic (BME) voluntary and community organisations which aims to mobilise civil society for action on international development.[365] DFID supports this initiative with a Strategic Grant Agreement, providing £750,000 over three years. DFID's Civil Society Challenge Fund also aims to engage with a wide range of civil society organisations in developing and developed countries; this ought to include BME organisations, but as yet DFID is not able to easily identify whether such organisations are making use of this scheme.[366] We welcome the Government's recognition of the importance of working with Black and Minority Ethnic organisations, and look forward to seeing more rapid progress in this area.[367] AFFORD called for DFID to report regularly on its engagement with diaspora communities and particularly on what DFID is learning from the dialogue; we support this suggestion.[368]

133. The Government needs to be clear about what it seeks to add to diaspora-home country connections by its involvement, and ought to approach the dialogue as an opportunity to learn from the diasporas' great diversity.[369] But there is certainly scope for DFID and other Government Departments - the Home Office, the Treasury, the Foreign and Commonwealth Office and the Department for Trade and Industry - to work more with migrants' organisations and other BME organisations. This might be in relation to issues such as trafficking and smuggling, migrants' lives in the UK, return, remittances and peace-building in migrants' home countries.[370] There are a range of ways in which the Government and DFID might work more with the diaspora:

DFID might usefully include diaspora organisations more systematically in consultations on draft Country Assistance Plans, and in consultations on policy areas in relation to which migrants' organisations may have valuable insights;[371]
DFID and other Departments including the Treasury should explore with diaspora organisations the possibility of developing schemes to enable migrants, if they so wish, to channel remittances so that they have maximum impact on poverty;
DFID and relevant Departments should examine, alongside diaspora organisations, whether there are initiatives they could take to encourage the temporary return of migrants to their home countries;[372] and,
most simply, the Government should encourage initiatives to create migrant associations, promote and publicise their activities, and help them to work effectively.[373]

134. In this regard DFID should consider seriously the proposals made by PANOS (Paris) about how to share best practice and disseminate information about diaspora organisations and their role in development.[374]Specifically the Government should consider following the example of the Netherlands and instituting a competition to encourage migrants' organisations to come up with innovative ways to engage in development cooperation. Such an initiative could do much to encourage innovation, and to publicise and celebrate the role of the diaspora in development.[375] Diaspora organisations must not be seen as marginal players in international development; rather, the Government, DFID, the private sector and mainstream NGOs should work harder to involve them more fully.