EUDiF
Blog • Middle East
February 21, 2023
Expert voice: Leon Isaacs on supporting governments to attract diaspora investment

Halfway through our partnership with the General Authority for Investment and Free Zones in Egypt (GAFI) and ANIMA Investment Network, EUDiF’s Hala Tarabay spoke to the lead expert, Leon Isaacs, about his experience in supporting governments to attract diaspora investment. In this interview, he shares his insights on the benchmark of good practices he has produced for EUDiF, his advice to diaspora investors in the present volatile market conditions, and much more…


Hala Tarabay: At EUDiF, we believe the impact of diaspora goes beyond remittances, but this is often difficult to measure. However, investment is one area which can be measurable and arguably brings both financial and non-financial contributions. DMA Global has done a lot of work with governments on investment and diaspora engagement. How does this new benchmark help us understand different approaches to diaspora investment?

Leon Isaacs: Migrants are a tremendous source of value to their country of origin in many ways, not just financially, but in other areas such as skills transfer, mentoring and so on. Trying to measure their impact in tangible terms is particularly important because a clear understanding of the true value to a country across a broad breadth of areas can lead to coherent and impactful policies. However, actually obtaining data on the true financial contribution of a diaspora is notoriously difficult. Whilst some progress has been made in measuring remittances, this is still a long way from being accurate in all but a handful of countries. When one looks at diaspora investment there is even less information currently available to show its size and impact at a national level. However, there are tools and techniques that can be used to help to begin to quantify this vital area for national development.

Whilst each country is different, in the areas of diaspora investment there are many aspects that are similar between countries and across regions. At DMA Global, we believe that having a more standardised structure to understanding different ways to increase diaspora investment will enable countries to understand which stage of development they are at in this area. This will then enable them to choose from a suite of tools and potential options that they could pursue which, in turn, have a stronger chance of success because they have been tried before. When this is combined with peer-to-peer learning sessions, countries can gain a greater sense of clarity and more confidence that the plans they develop will succeed. This approach also allows for national-level benchmarking to be created which can help generate targets and hence the opportunity to monitor and evaluate projects.

What are the steps you follow to support a government institution understand its investment objectives and design appropriate diaspora investment tools and offers?

Normally, the investment objectives are determined by governments from the very beginning, traditionally articulated by the finance ministry. However, these can sometimes be too aspirational, not taking account of the availability of resources or the wishes of the diaspora. They also tend to be high-level so it is important to help the institution in question to understand the current state of diaspora investment in the country.

Initially this is done by completing a stocktaking exercise through a coordinated data collection using tools such as mapping, desk-based research, surveys, focus groups, consultations and meetings in four key areas:

  • The financial environment, policies and actions for investment
  • Diaspora profile
  • Diaspora engagement
  • The type of support available from the diaspora

Gaps are then identified which will need to be addressed. Next comes analysis of peer countries to help inspire and develop suitable solutions.

Throughout the process it is critically important that a ‘whole of government’ approach is taken so that there is absolute buy-in and shared ownership of the projects across government. I would emphasise that this is very much an iterative process where discussions are continually held with all key stakeholders, so that the final solution is one that has been developed by the government institution responsible in a collaborative manner. The benchmark report we produced has examples of how governments have successfully implemented these steps.

How does a government measure whether its diaspora investment approach is successful?

As with any initiative, it is important that goals are established at the beginning of the programme and that monitoring and evaluation takes place during and at the conclusion of the programme.  There will be different measurements depending on the stage of the investment programme. Measures can include: the total amount invested over time; the number of different investments; the average amount; who and where are the investors; and frequency of investments.  These are all financial targets, can be relatively easy to measure, and may be the headline goals.

However, there are many other goals that can be harder to measure when talking about diaspora investment. For example: a greater understanding of the diaspora and their propensity to invest; or a detailed mapping of where the diaspora are. To achieve these, a deep understanding of the attitude of the diaspora to investing with a particular government is important (especially if the diaspora migrated due to discomfort with the administration). As is a strong understanding of how diasporas receive their information, who are the key influencers, and the community structure in each host country/region.

Each of these measures could be important to a project, so it is critical that SMART (Specific, Measurable, Achievable, Relevant, Time-bound) goals are set at the start of a project and are tracked throughout it. This will enable learnings to be obtained and used to improve future projects.

Thinking beyond the benchmark, how does diaspora investment respond to market shocks such as Covid-19? More immediately, how could the increased inflation rates and therefore interest rates affect diaspora investment flows?

These are good questions.  As is normal in diaspora investment, obtaining hard data to prove cases is difficult. However, based on many discussions with governments and diaspora groups a picture can be built, and the answer is that much depends on the country in question.

During the COVID-19 pandemic, it is clear that the number one priority for diasporans was to support their families at home. This meant that really the focus was on financial support for health and consumption purposes more than investment as such. Those who were in countries which provided social support during the COVID-19 crisis (for example, those in Western Europe or North America) were able to provide this more easily. Many diasporans are in essential professions and were able to maintain their jobs and continue earning in very trying conditions. There is also evidence that diasporans used their savings, where necessary, for these family support purposes, which means that the amount dedicated to actual investments was proportionately smaller than previously seen.

The increased inflationary environment that we are currently in presents challenges and opportunities. The argument has been used in the past that one of the advantages for diasporans in investing in their home country is that they can earn a much higher return than they can in their host country due to the exceptionally low interest rate environment in the globe at that time. With high inflation and higher interest rates much will depend on the personal circumstances of the individuals. The general sentiment is that people are very worried about the cost of living and that the amount of money to invest will be more limited than before. Should diasporans have funds to invest, they may potentially look at higher interest rates in the host country as a reason to invest there. On the other hand, factors such as the strength of the USD dollar (and some other hard currencies) mean that they could get more for their savings in their home country than they would before, which would act as an incentive.

I think that it is too early to tell what the outcome will be, but it is likely that the amounts invested by diasporans may be lower in the short term until they have more confidence in their long-term financial security. What is clear is that there is an even stronger need for robust, clear and well-constructed diaspora investment programmes. Knowing your diaspora is more important than ever and developing initiatives that are appropriate for them and show that they are listened to will ensure a stronger chance of success.


Mr. Leon Isaacs
Founder and Chief Executive Officer – DMA Global

Leon Isaacs is Founder and Chief Executive Officer of DMA Global (DMAG), the specialist international development company that he founded in 2007. He is a seasoned expert and business leader in the payments and international development fields with a particular expertise in migrant remittances and diaspora investment. He has over 30 years of hands-on experience.

Previously, Leon was Managing Director of the International Association of Money Transfer Networks, where he interacted with numerous regulators and stakeholders to represent the industry.  He was a member of the UK Government’s Remittances Task Force, between 2005 and 2010.  He is an observer to the G20 Consultative Committee of the Private-Public Sector Partnership on Remittances.  Leon has spoken at, and chaired, numerous international conferences on remittances, diaspora investment and financial inclusion including at the World Bank, the United Nations and the G8. 

Prior to establishing DMAG he was involved with two successful start-up remittance businesses.

Leon, is an economist by training and is currently based in France, you can connect with him on LinkedIn here.

For full details of the GAFI x ANIMA action that Leon is a part of, see our CDL action info-sheet.

Cover photo by Jack Krier on Unsplash

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