Maseru, Aug. 18 — Lesotho could grow the contribution of diaspora remittances to the national economy from the current estimate of 21 percent of Gross Domestic Product to about 30 percent by mobilising savings that Basotho holds abroad.
Speaking during the validation workshop for the National Diaspora Remittances Investment Framework, Chief of Section and Subregional Officer for North Africa at the United Nations Economic Commission for Africa, Mr. Khaled Hussein, said diaspora remittances are already a major pillar of Lesotho’s economy, but their potential to finance national development has not been fully used.
He said an additional estimated 10.5 percent of GDP could be captured if diaspora savings held abroad are brought into productive investment.
According to Mr. Hussein, the focus should shift from seeing remittances mainly as money for household consumption to treating them as a stable source of capital for national development.
“Remittances are not only money sent home for consumption, they can become a source of financing for development,” he said.
Mr. Hussein said African countries are facing growing financing challenges because global crisis such as pandemics, debt problems and interest rate changes continue to affect access to traditional sources of finance.
He said this makes diaspora capital especially important because remittance flows have remained strong even during times of economic uncertainty.
He added that Africa has an estimated 140 million to 200 million people living outside the continent, and that represents a large pool of financial resources that could help meet the continent’s development financing needs.
He explained that about 75 percent of remittances are usually used for consumption, including healthcare and other household needs, while about 25 percent goes to investments such as small businesses, agriculture, housing and financial assets.
Mr. Hussein said if more of that money is directed to productive investment, countries can reduce their reliance on external borrowing while also strengthening domestic economic development.
He said UNECA is working with the government of Lesotho and the International Organization for Migration to connect the dots between existing investment maps and strategies developed by different stakeholders. The goal of the collaboration, he said, is to put in place a comprehensive diaspora investment framework that can create ways for Basotho living abroad to invest their resources in productive sectors of the economy.
Mr. Hussein said the framework should make sure that diaspora savings are channelled into opportunities that create jobs, grow businesses and support long-term economic growth.
He stressed that good planning and the right investment mechanisms will be needed to keep remittance inflows stable and to ensure that diaspora resources make a real contribution to national development.
The proposed approach therefore seeks to change the relationship between Lesotho and its diaspora from one that focuses mainly on people sending and receiving money to a broader investment partnership that can help drive the country’s economic transformation.
ENDS/TS/tl
