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Beyond Remittances: COVID-19, the African diaspora and homelands

Adeoti Dipeolu

PhD student, African Leadership Centre

15 July 2020

COVID-19 continues to redefine everyday life across the world, including continental Africa. Adeoti Dipeolu looks at how it is affecting the flow of money into many countries, the effect of the travel bans and what this shows about the relationship between the African diaspora and their homelands.

COVID-19 prevention and mitigation measures such as social distancing, lockdowns, and suspension of local and international travel are the new normal. This has implications for a variety of relationships and interactions, including those between the African diaspora and their homelands. It is no secret that members of the African diaspora are essential to the development stories of their homelands, and they are a core social support network.

Money sent by the diaspora to their home countries often surpasses the amount of foreign aid that some African countries receive. For instance, remittances to Nigeria in 2018 amounted to 6.1% of the annual GDP; seven times more than foreign aid the country received in 2017. It is not impossible that the flow and volume of remittances would be impacted by the COVID-19 pandemic.

Why? COVID-19 either triggers or worsens economic slow-downs in the Global North with implications for the earning power and disposable incomes of the African diaspora residing in these countries. Additionally, the travel-ban limits the ability of the African diaspora to make journeys and transfer capital to their homeland countries, at least in the short- to medium-term.

To this extent, COVID-19 provides a window for reflecting on the African diaspora and its financial relationship with its homelands, exploring continuities and changes, and expected paradoxes in the months, or even years, to come.

Reduced flow of remittances to Africa

Before COVID-19, the money sent as payments or gifts to developing nations was estimated to reach $574 billion in 2020 and $597 billion in 2021. With the advent of COVID-19, remittance flow to Africa has been adjusted downwards; it is estimated to drop by 23.1% to $37 billion, versus a pre-COVID-19 estimate of $48 billion in 2019.

Any significant drop in these has a direct impact on the socio-economic conditions of populations in most African countries, especially those who rely largely on remittance flows to cushion themselves from the effects of acute poverty. It also affects ongoing or planned economic investments and poverty alleviation initiatives by African diasporas.

It could also reshape the relationship between the African diaspora and government authorities and community leadership structures in their homelands, perhaps reducing the leverage which the African diaspora have on their homelands. – Adeoti Dipeolu

Beyond changes to the volume of remittances, COVID-19 encourages a transformation in the mechanics of remittances in the form of a move from cash-based transactions to technology-enabled formats such as mobile money. Many alternative platforms already exist, for example, Ping express, WorldRemit or even Paypal. However, these platforms are not preferred because of high exchange rates and fees.

COVID-19 offers a window for African governments, fin-tech companies and financial regulatory bodies (national and international) to address barriers to Africans’ use of the new technology-enabled formats by reviewing regulations, exchange rates margins, charges and fees.

Distance between diaspora and their homelands

COVID-19 also alters the ‘physical’ dynamics of the diaspora’s engagement with their homelands. Before the virus, many in the diaspora would travel back home frequently. In fact, besides holidaymakers or business travellers, the diaspora made up quite a large percentage of travellers to Africa.

For an African person, going home means seeing loved ones, renewing cultural and emotional connections, checking in on local investments or just getting away from the hustle of everyday life in western capitals.

 

 

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With the restrictions on international travel caused by the pandemic, the African diaspora are restricted to the use of technology to strengthen relations with their homelands, using platforms such as Skype, Zoom and WhatsApp. Video calls and online house parties have become the new norm. Interestingly, the diaspora is realising that video calls are also adaptable for monitoring investments and following socio-cultural events in homelands.

At this stage it remains unclear whether air travel will ever be the same again, and whether the expected changes to air travel will affect engagement between the African diaspora and homeland communities.

On the one hand, the loss of revenue for many airlines heightens the fear of exorbitant ticket prices. Given that airlines will need to change the processes of air-travel, including decreasing the number of passengers or available seats, there is a higher chance that travel may become more expensive.

And on the other hand, the introduction of new business models by airlines, including the streamlining of operations and flying routes, might mean flight frequencies to some African countries are either reduced or suspended. Both scenarios pose a problem to the African diaspora, decreasing the possibility of travel to their homeland countries and communities.

Opportunity for meaningful exchange

COVID-19 continues to impact the African diaspora themselves with many losing their jobs or working reduced hours, leaving them unable to meet their own needs. Could this pandemic even lead to a rethinking of the traditional nature of the diaspora-homeland relationship – is it time for home countries to begin investing in their diaspora? Especially if you consider the higher death rates amongst ethnic minorities in the Global North, many of whom could be the bread winners of their wider families.

While the prospect of African governments providing financial assistance to the diaspora seems unlikely, the COVID-19 pandemic generates the impetus for a new kind of relationship, a broadening and deepening of engagement. This could include knowledge transfer, technology exchange, investment advisory services, and cultural transfer services. The active role of African governments in facilitating the return of some of their stranded citizens during the COVID-19 pandemic could be the foundation of a new two-sided, and even a multi-sided relationship with the African diaspora.

Useful expertise in crises

Beyond remittances and travel, the professional expertise of the diaspora has often proved useful in crisis situations. During the Ebola crisis, for example, some Sierra Leonean doctors and other health professionals returned home as volunteers.

During the current pandemic, while doctors may not be flying home, they are being engaged virtually, such as Ethiopian doctors and health experts in the United States who are being kept engaged through a live radio show.

While this effort to tap into the expertise of the African diaspora is not without contention, as some argue that the diaspora is far removed from the realities of its homeland communities, COVID-19 has illustrated the potential for African countries to access the knowledge of their transnational citizens. This could be a key element in efforts to address the service gaps in homeland countries. It remains unclear if these relationships will be scaled up or sustained over the long-term, or whether they will be one-off engagements.

Future diaspora-homeland relationships

While the diaspora continues to engage with homeland countries and communities in many different ways, COVID-19 presents new opportunities and challenges.

 

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It is possible, and desirable, that the relationship transcends remittances by expanding and deepening into a two-sided or multi-sided exchange. It is also an opportunity to leverage technology, and to consider ways of minimising barriers to increased knowledge transfer (otherwise known as ‘brain gain’) and cheaper and more efficient means of transferring capital to homeland countries.

Ultimately, COVID-19 could strengthen or weaken the relationship and commitment of the African diaspora to homeland communities, with serious socio-economic implications for the ‘poorest’ of the poor. What is very clear is that COVID-19 will, and is already, changing the relationship between Africans in diaspora and their homeland countries.

 

This piece was first published as part of the African Leadership Centre's COVID-19 Op-Ed Series

In this story

Adeoti Dipeolu

PhD student


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