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Study Examines Business Motives for African Diaspora

Riddle examined why entrepreneurs invest back home in a recent study.

What motivates members of the African diaspora to invest back home? That is the heart of what Liesl Riddle, research fellow at The George Washington University Center for International Business Education and Research (GW-CIBER), wanted to know about why entrepreneurs invest in their country of origin. The survey of participants in the African Diaspora Marketplace (ADM) found that diaspora investment motivations are complex, reflecting financial as well as personal drivers, including the sense that they can prevail over common barriers to business success.

The ADM is an entrepreneurial business program, supported jointly by USAID and Western Union, which seeks to boost economic opportunity in Sub-Saharan Africa through sustainable start-up and established enterprises by U.S.-based African diaspora.  Earlier this year, more than 700 participants from 19 countries submitted business proposals for grants to match their own funds to support the execution of their business plans.  Fourteen businesses in seven Sub-Saharan African countries were awarded matching grants of up to $100,000.

The survey found that diaspora investment motivation is driven by a variety of factors, including expectations of financial, emotional, social-status and political gains as well as family concerns.   While more than half of ADM participants maintained that they invest in their country of origin to create jobs and income for themselves (62%) and acquire personal financial independence (65%), approximately three fourths claimed that their country-of-origin investments would generate a feeling of accomplishment (83%), will help them feel better about themselves (79%), enhance their self pride (76%), and fulfill a sense of personal duty (72%).

“ADM participants invest from the heart out of care and concern for their families and country of origin. They want to make a difference. This is a great development opportunity for Africa:  to match innovative entrepreneurial ideas and talent with much-needed funding to bring their visions to life, ” said Riddle, associate professor in the Department of International Business.

Entrepreneurs responding to the online survey described bureaucratic, financial capital and infrastructure barriers to investment.

While direct investment was the primary investment interest of the diaspora entrepreneurs, the survey’s respondents also expressed interest in investing in mutual funds consisting of firms based in their country of origin, purchasing government bonds issued by their country and contributing to funds that would lend to small and medium enterprises in their country of origin.

The African Diaspora Marketplace was financed jointly by USAID and Western Union, with contributions from Western Union Agents Ecobank Transnational Incorporated (ETI) in Africa and Irv Barr Management in the United States.

Please follow this link to read the full report:

http://business.gwu.edu/CIBER/research/1011.htm.

Posted by gwsb on November 12, 2010 | Filed under: GWSB News.


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