A lot of conversation has gone on regarding the diaspora and their engagement in the socio economic development of any nation. Over the years, we have seen the Asian Tigers rise by exploring the power of their diaspora to build.
Just recently, I participated in the Ghana Diaspora Home Coming Summit that was held from the 5th to the 8th of July 2017.
Let’s explore in the next few paragraph, an in-depth meaning of diaspora engagement.
The precise meaning of the term “diaspora” is highly contested among academics. This is because a “diaspora” can be a very diverse group.
Indeed, this term sometimes connotes a degree of homogeneity that is more imagined than real, and as such, the plural of the term, namely “diasporas,” is often used to emphasize the diversity of people who identify themselves as belonging to such a group.
Typically, a “diaspora” refers to a group of people who trace their ties, either through recent family history or more distant historical memory, to a certain country or region other than the one in which they are currently residing.
What distinguishes a diaspora from the local population of the area in which they live is not necessarily skin colour, language, or even nationality, but rather a shared sense of connection to and identification with a more-or-less distant place of origin (which might be a region, a country or a whole continent).
Often, though not necessarily, such a connection is accompanied by a desire to see that place develop.
Broadly speaking, there are three core elements to a diaspora:
A spatial dispersion to form “transnational communities”
A certain orientation to a real or imagined “homeland”
A distinct sense of identity from the “host” society.
There are many examples of diasporas around the world. So-called “old” diasporas were created by historical events such as the Atlantic slave trade, which displaced millions of Africans and led to their eventual resettlement in the Americas. Thus, African-Americans, Jamaicans, and other descendants of these forcibly displaced African populations form a significant part of the African diaspora today.
Going even further back in time, we have the Jewish diaspora. In fact, “diaspora” means “dispersed people” and the term was originally used exclusively in relation to Jewish people around the world.
A more recent example of a diaspora would be the Turkish diaspora in Germany, the Sri Lankan diaspora in Australia, and the Nepalese diaspora in India.
By their very definition, diasporas imply a transnational existence. As such, products and services aimed at diasporas must somehow cross borders. This offers potential entry points to new markets for enterprises, beyond the diasporas themselves.
The orientation of diasporas to real/imagined “homelands” means that their members often use products/services to affirm their identity. As such, the origin of products can often be very important for diaspora consumers. For instance, many African diasporas favour wearing brightly coloured Ghanaian kente cloth patterns as a way of identifying with their African roots.
Although diasporas have a distinct sense of identity, the boundaries between them and their host societies are often fluid, enabling wide-ranging interaction. Indeed, diasporas almost always live in close proximity to other groups who, through curiosity or other motivations, may find appeal in same products as they do. This is one way in which diasporas may act as “Trojan horses,” creating bridges for enterprises to access wider export markets.
Migrants and diasporas often tend to cluster in certain geographic locations, usually urban areas. In addition to giving particular neighborhoods distinctive characteristics, this clustering results in the economic specialization of those areas. For instance, many major cities have a “Chinatown” or a “Little Italy.” While such
areas usually initially serve members of the same diaspora, once established, they can often acquire a national or even international reputation and attract tourists and visitors from many different parts of the world. These are the sorts of linkages that connect diasporas with national and global markets.
The Significance of The Diaspora
Worldwide, it is estimated that the 30m-strong African diaspora sends up to $160 billion in remittances to Africa every year. The official figure for Sub-Saharan Africa is approximately $30 billion, according to the World Bank. However, as many Africans send money using informal channels, the true figure is estimated to be three to four times the official figure, with many estimates putting it at around $160 billion annually. At the same time, the World Bank estimates the annual savings of the African diaspora to be around $53 billion.
These figures serve as a proxy to estimate the purchasing power of the African diaspora, which could help spur African exports it had more opportunities to purchase more products from its various countries of origin.
It is difficult to place a precise figure on the number of diasporas worldwide, owing in part to the fluid nature of the concept and its dependence on the precise context of potential export markets. That said, however, there are an estimated 232 million international immigrants dispersed around the world.
In 2014, the World Bank estimated that immigrants sent a total of $427 billion in remittances to developing countries, up 3.3% from the previous year. This figure is broken down as follows:
$120 billion for East Asia and Pacific; $44 billion for Europe and Central Asia; $64 billion for Latin America and the Caribbean; $51 billion for the Middle East and North Africa; $116 billion for South Asia; and $32 billion for Sub-Saharan Africa
The eight roles of the diaspora in supporting SME exporters
Diasporas can potentially play a number of roles in supporting SME exporters from developing countries. A single member of a diaspora may play several roles simultaneously, or may also change through different roles over time, often with increased commitment as trust and emotional involvement with the country of origin deepen. The eight roles of the diaspora in supporting SME exporters are:
Consumer: Diasporas, should they have the inclination, often have the purchasing power to consume a comparatively large number of products from their country of origin. Usually, diasporas will choose to do so either because these products have some combination of unique utility value and an intrinsic benefit to do with identity affirmation.
Investor: Diasporas may have enough saved capital and business savvy to decide to invest in enterprises in their countries of origin. They may be motivated by the possibility of an attractive return on their investment, or by a certain social benefit related to their desire to help the development, job and wealth creation of their country of origin.
Entrepreneur: Diaspora entrepreneurs may see opportunities to provide other members of their diaspora with products from their country of origin through business partnerships with exporting SMEs from that country.
Skilled professional: Diasporas often have opportunities to acquire skills that SMEs from their country of origin find difficult to access. As such, a good relationship with their diaspora can allow SMEs to access these skills on an employment, consultancy, pro bono, or other basis that strengthens key aspects of their business performance and operations.
Connector: Diasporas may be well-placed to open doors for SME exporters from their country of origin by using their connections with potential key players in the export market, such as investors, business partners, or advisors.
Champion: In some cases, diasporas may be in a position to serve as “brand ambassadors” for products from their country of origin. For instance, diaspora opinion makers who have a strong (social or traditional) media presence can help an SME amplify its message and help to market and promote exports from their country of origin.
Advisor: Diasporas can provide advice across a range of topics of relevance for SME exporters. In particular, some members of a diaspora may have acquired the maturity and skills to act as advisors to SME
exporters from their country origin.
Coach/mentor: Sometimes, diaspora members who have acquired particular specialist or technical skills may take on the role of coaches or mentors for their counterparts living in their country of origin, whether in a formal business partnership role, or because of other motivations.
Although there is a range of ways to look at the motivation of a diaspora to partner with certain SMEs from its country of origin, a useful way to look at the issue is the “4Ps of diaspora motivation.”
Pecuniary: Diasporas may be motivated by purely personal financial gain. While they may be content to support an enterprise’s ambition to tap new markets, they will often expect a commercial return on their investment.
Public: Diasporas may be motivated by public-spiritedness to assist in the well-being and development of their country of origin. The mere fact that a certain project will result in developmental gains (additional jobs, tax revenue, etc.) is sometimes enough to motivate some diasporas to invest considerable amounts of their time, efforts and contacts in support of a project.
Private: Rather than seeking public goods, diasporas may be motivated to assisted their own private kin group, either in the form of immediate and extended family members or fellow members of an ethnic group or specific community.
Professional: Diasporas may seek intrinsic rewards that enable them to broaden their professional experience and networks while simultaneously giving something back to their country of origin.
Seventeen years ago, Joe left Nigeria at the age of 18 to pursue further studies in the United States of America. Although he initially gained a Master’s degree in engineering, Joe has since started working in management and is now a project finance specialist responsible for raising several hundred millions of dollars for large infrastructure projects for his employer, a major American company.
Joe’s personal hobby is cooking. He’s particularly passionate about adapting traditional African cuisine to the demands of modern lifestyles, and has gained a deep knowledge of African spices and condiments through this passion. Although he visits his family in Nigeria at least every other year, Joe has never worked nor done business in Nigeria. He wanted to get more involved, though he was unsure where to start.
One day, Joe was contacted by a project aiming to link mentors living in the United States with SMEs in Nigeria. Being quite interested in the idea, he volunteered his skills and was paired with an enterprise keen to export spices to the USA through the Africa Growth and Opportunities Act (AGOA). Through this mentoring exercise, Joe and the spices enterprise owner developed a trusting relationship, and Joe provided the SME with some useful insights on tackling the US market. Joe also introduced the business owner to a few useful contacts. In fact, with his links in the field of project financing, he was even able to identify a potential source of financing for the SME.
His involvement in this project emboldened Joe, and today he has not only invested in the SME which he helped mentor, he has also begun an innovative spice distribution business, importing a variety of African spices to North America.
How To Benefit From The Diaspora
While the general concept of benefiting from diasporas may appear simple and attractive on the surface, SMEs must undertake further research to fully realize their potential. For instance, to what extent are potential diaspora consumers concentrated in specifically addressable markets? Is it possible to service a critical mass of diaspora consumers both efficiently and cost-effectively? What are the specific demographic characteristics of the target diasporas? Do these characteristics suggest a likely sufficient level of demand for the product in question? What is the juxtaposition of the diasporas with other potentially attractive consumer groups to enable market expansion over time? How exclusive is the product and what other alternatives may be available to diaspora consumers?
In a business context, meanwhile, it is necessary for SMEs to think of outreach to diasporas in the context of relationship building. This is a two-way process in which this trust, and the mutual rewards expected to flow from it, must be based upon each party’s actual needs and interests. The best way to elicit and communicate this is through clear, transparent dialogue accompanied by careful listening.
Indeed, it is important for exporting SMEs interested in engaging with the diaspora to remember that, while it may be a great resource to build networks and/or obtain local market intelligence, they also have a lot to offer the diaspora as well. As such it is important for both parties to be clear about their offers and needs in order to approach each other with a sense of purpose and achieve the desired “win/win” outcomes.
Before engaging with the diaspora, it is important that interested SMEs reflect critically upon their own businesses in order to determine whether, and how, such an engagement could benefit them. Some of the most critical questions which SMEs need to ask themselves include:
- What are my business objectives? Is the SME involved in a niche business, or does it have ambitions to conquer global markets?
- What do I have to offer? While engaging with the diaspora could certainly be beneficial to the SME, the SME should reflect on what it has to offer of interest to its potential diaspora partners, bearing mind that their motivations may extend beyond purely commercial gain.
- Where am I going with my business? How is the SME structured as an organization? Could there be a possibility to recruit business partners from the diaspora?
- What do I need? What, concretely, is the SME hoping to gain from engaging with the diaspora?
The ITC’s Target Map framework is a useful tool to consider the best way of determining business prospects in relation to diasporas and their potential roles.
In the Export Ready stage, conducting a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis aimed at understanding an SME’s business position might identify certain skills deficits within that SME which could be filled with the help of some skilled professional diaspora members.
In the Market Scan stage, identifying a suitable target market for an SME might benefit from the local information provided by the diaspora, which is largely made up of individuals able to bridge cultural divides between the SME’s country (the diaspora’s country of origin) and its target market (the country where the diaspora is currently based).
In the Market Zoom stage, insights from diasporas could help an SME understand the importance of its product’s provenance (the country of origin) to its market appeal as well as the distribution channels which might be viable for it to reach diasporas.
At the Market Entry stage, questions as to whether diasporas could serve as a foothold into wider consumer markets may arise.
Thus, the value proposition of an SME once it reaches the Target Market Map stage could integrate deep insights into diasporas as consumers while leveraging other characteristics and attributes of diasporas for business gain.
It is important to remember that from the viewpoint of an exporting SME, diasporas represent a key resource pool from which it can draw. At the same time, however, there are other resources available as well. The intention here is not to suggest that diasporas necessarily replace any other opportunities and resources available to an exporting SME, but rather to show that they can be used in a complementary way to further improve such an SME’s chances of success.
You are the head of an SME from a developing country. Your enterprise has never yet exported, but you are thinking of doing so. However, when you assess your business’s export readiness, you identify a weakness in internal marketing skills that are sure to jeopardize your SME’s potential to access key markets in the near future.
Interestingly, though, your country has significant concentrations of diasporas living in accessible locations abroad, and there is growing evidence that second-generation diaspora members, while fully integrated into their birth societies as well-educated professionals, retain a strong sense of identification with the country of their parent’s birth (your country). At the same time, you have identified some diaspora consumers in key target markets, and it seems that they are mostly concentrated in certain particular neighborhoods of major cities.