156 • Leveraging Migration for Africa: Remittances, Skills, and Investments
2001 indicate that more than half of Ghanaian and 23 percent of Ivorian returnees reported returning with more than $5,000 in savings (Black and Castaldo 2009). Both studies indicate that many return migrants invest in business activity and that work experience and the maintenance of communication with friends and family while abroad facilitates the opening a business upon return. Cassini (2005) concludes that the most successful Ghana-based businesses of Ghanaian migrants were owned by migrants who visited home frequently and developed social networks.
INVESTMENTS IN CAPITAL MARKETS Diaspora members can act as catalysts for the development of financial and capital markets in their countries of origin by diversifying the investor base (many countries’ capital markets are dominated by investments from government and large companies), introducing new financial products, and providing a reliable source of funding. Diaspora connections with markets in destination and origin countries are important. This subsection presents some estimates of the savings of the African diaspora and describes two vehicles—diaspora bonds and diaspora investment funds—for encouraging diaspora investments in Africa.
Wealth and savings of the African diaspora in host countries Ketkar and Dora (2009) use the New Immigration Survey data on the United States to understand the wealth and asset diversification behavior of recent immigrants from Asia, Sub-Saharan Africa, Latin America, and the Middle East and North Africa. They find that the region of origin is not a significant determinant of savings levels once length of stay, educational attainment, and number of children are taken into account. African immigrants in the United States tend to have lower levels of savings than immigrants from Asia and Latin America, largely because they have been in the country for a shorter period of time and have lower levels of education. Ratha and Mohapatra (2011) estimate the annual savings of the African diaspora to be about $52 billion. About $30 billion of this amount— equivalent to 3.2 percent of Sub-Saharan Africa’s GDP—is saved by African migrants in Sub-Saharan African (table 4.1).9 These estimates are based on assumptions that members of the African diaspora with tertiary education earn the average income of their host countries, that migrants without tertiary education earn a third of the average household incomes