Unlocking the Potential of the African Diaspora
For the last two and a half years, Pangea has been focusing on the diaspora providing both training and business intelligence for diaspora investors and engaging the diaspora in the startups Pangea has invested in.The need to involve the diaspora in investing and supporting startup and SMEs is a continuous discussion that even shaped the conversations at the recent 2019 AfriLabs Gathering in Addis Ababa, Ethiopia. At Pangea, we view this opportunity as having immense value that could spring board African startups and with good reason. First, data shows that just in 2018, remittances from the diaspora reached US $48 billion not including informal money transfers and the figure has been increasing annually. Additionally, almost a third of the diaspora community are middle class with significant disposable income and possess a wide spectrum of knowledge and skills useful to the continent. So, there is a strong case for the need to build potential partnerships between the diaspora and the startup ecosystem. Thus, how we can leverage on this?
To answer this, we interviewed Jonas Tesfu, our CEO and an African diasporan and the Executive Director for AfriLabs, Anna Ekeledo to better understand how we can leverage and build collaborations between the diaspora and the startup and SME ecosystem.
Curated Conversation with Jonas Tesfu
What are the opportunities in Africa that diaspora Africans could take advantage of?
The diaspora is active, there are about 30 million Africans in the diaspora and remittances have reached $48 billion USD and growing every year. These remittances go into family support and is not only important but is also a lifeline for many families in Africa. However, as a multinational player, I think, the diaspora has huge opportunities to also invest and reallocate part of these remittances towards supporting SMEs and startups hence creating long term value for their home countries. It is a matter of figuring out how to best activate the diaspora as a support system so more companies can succeed and more jobs can be created.
In 2018, Africa received $48 billion USD in remittances, how can these funds be channeled better to support innovation in Africa?
The African diaspora can channel these funds better by supporting SMEs and startups, who drive the economy. Currently, Pangea is leading the work at AfriLabs regarding the diaspora strategy and as an ecosystem player, we are working closely with organizations such as AfriLabs, AFRODYCE and CIDO to streamline diaspora engagement for impact. We are also looking into educating the diaspora to become angel investors, that is, how they can invest in the most optimal way to build and create success stories. Ultimately, it is about us collaborating and so, we hope to work with more organizations and strengthen diaspora engagement.
What avenues can we use to connect the African diaspora living in different countries?
There are many platforms we can connect the African diaspora especially from the different IT-based solutions like crowd funding platforms. Also, there are existing useful tools to support business intelligence in terms of how to invest and support startups that can be activated. The key thing is building ambassadors from the diaspora by creating good experiences and they can in turn get the African diaspora to become active investors.
Curated Conversation with Anna Ekeledo
How can the African ecosystem utilize the resources of the diaspora and how can the process be facilitated?
There is a need to better create systems that foster exchange of contacts, business information and knowledge; and this can be done through a range of approaches such as through relevant events that connect these groups, by building or leveraging on existing databases that host up-to-date information, frameworks and models to collaborate and through very carefully curated communities and networks where trust can be built between both groups.
What expertise/skills would African startups and SMEs benefit from the diaspora in terms of skills transfer?
While we cannot overemphasize the importance of understanding the local market and developing savvy business skills needed to operate in the African ecosystem, I believe that African startups would benefit a lot from learning business skills applicable to operating in the global business environment as well.
We need to see more African startups scale outside their countries and the African continent and startups would benefit from a diverse set of skills and knowledge transfer through mentorships or partnerships with the diaspora.
Skills related to new market risk assessment and management, cross border logistics, supply chain and distribution management, understanding the global business lingo and pitching to international investors, global finance, accounting, legal and trade policies, product adaptability, etc. These skills are also highly applicably in deepening market penetration and scaling in already existing markets they operate in.
