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World Bank: Diaspora could play larger role in Caribbean
WASHINGTON DC—A new study by the Washington-based World Bank says the diaspora could play an even larger role in contributing to the Caribbean’s development with the “right incentives and policies.” The study titled Diaspora Investing: The Business and Investment Interests of the Caribbean abroad was conducted by infoDev, a global innovation programme at the World Bank.
The international financial institution said the assessment brought together knowledge and data gathered from more than 850 self-identified members of the Caribbean diaspora, and sheds light on their characteristics and investment interests.
It said the Caribbean diaspora was already “significantly engaged in the region,” with some 70 per cent being formal or informally affiliated to organisations in their home countries. The Word Bank said half of those surveyed send remittances and 85 per cent give back to the Caribbean either through financial help, or other support in kind. Moreover, it said nine out of ten would like to be even more engaged in the future, potentially as investors.
“With nearly one diaspora member living in North America or Europe for every resident still in the region, this ability to engage represents a significant untapped potential,” the World Bank said. “There is also a growing community of angel investors among the diaspora that are already actively involved both where they live and back home,” it said, adding that about 23 per cent of respondents have already invested in a start-up company of some sort in the Caribbean region.
Looking forward, the World Bank said investors have expressed strong interest in financing sectors, with high development potential for the region, such as green energy, mobile applications, education, and agribusiness. But the bank said challenges remain, stating that the gap between real engagement and expressed interest “remains significant”.
For instance, the World Bank said while 85 per cent of diaspora members would be interested in investing in a business back home, only 13 per cent of respondents currently do so. “The biggest barrier we found was visibility,” said Qahir Dhanani, author of the report.
“The money is out there, but there is a lack of awareness of investment opportunities, including what deals are there, what deals are high quality, and which entrepreneurs are receptive to angel investing,” he added.
The report also highlights bureaucracy, associated with making such investments, and weak legal enforcement as key barriers. The study found that the patchwork of regulations among different countries makes it difficult to unlock the latent demand for regionally-focused investments among the diaspora. “There should be a serious effort by policymakers and multinationals to create a uniform regulatory environment,” Dhanani said.
According to the World Bank, the study provides other recommendations for interventions that are designed for the Caribbean as a whole. It said chief among these is the creation of an online marketplace that connects diaspora investors with opportunities back home. “Such an approach would capitalise on the geographically dispersed nature of diaspora populations, the increasing use of the Internet for social networking and investing, and the nascent but growing crowd-funding sector,”the World Bank said.
“This low-cost and scalable platform would provide equal access to everybody, regardless of their country of origin,” it added. Other recommendations included targeted capacity building for both entrepreneurs and angel investors, and the strengthening of existing angel investing networks. "This report underscores the important role that the diaspora can play in the Caribbean’s economic development,” said Sophie Sirtaine, country director for the Caribbean in the World Bank Group.
“Increased engagement and investment by the diaspora will be a boost for entrepreneurs in the region, eventually leading to new, high-skilled jobs,” she added. The report, which was funded by the government of Canada, was developed as part of the Entrepreneurship Programme for Innovvation in the Caribbean (EPIC).
The World Bank said the seven-year programme aims to contribute to increased competitiveness, growth and job creation in the Caribbean region through the development of a robust and vibrant innovation and entrepreneurship ecosystem, with particular emphasis on supporting high-potential growth-oriented early-stage companies. It also noted that the Caribbean diaspora was “a sizeable, well-educated, and affluent demographic whose large majority is interested in investing in its countries of origin.
“Due to the common heritage and strong connections across the region, they overwhelmingly take a regional approach to the Caribbean, rather than a nationalistic one,” it added.
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