A Financial Constituency Hidden in Plain Sight
Diaspora communities already support economic stability across much of the developing world. Officially recorded remittances to low- and middle-income countries in the Global South were projected to reach $685 billion in 2024, exceeding foreign direct investment and official development assistance combined.
Remittances, however, are predominantly household financial flows. They help pay for food, housing, education, healthcare and emergencies. They should not be treated as a substitute for government revenue, international development finance or countries’ climate-finance commitments.
Yet their extraordinary scale tells us something important. Millions of people living outside their countries of origin retain financial, professional, cultural and emotional connections to them.
The opportunity, therefore, is larger than converting remittances into investment. It is about opening additional pathways through which diaspora capital can participate in businesses, infrastructure, technology, climate solutions and other productive assets in EMDEs.
That shift is visible across Africa and its diaspora, where organisations such as Wealth4Impact and 7 Generations Africa help entrepreneurs, families and inheritors of private wealth with governance, philanthropy and investment, a sign that diaspora finance is about stewarding capital, not just sending money home.
GERD and the Bonds of Trust
Ethiopia’s Grand Ethiopian Renaissance Dam (GERD) offers a useful lesson. Africa’s largest hydroelectric power project, GERD mobilised bond purchases, public contributions, salary donations, advocacy and support from Ethiopians at home and abroad. Diaspora participation grew from a shared sense of national purpose and years of engagement around the dam.
The lesson is deeper than “issue a diaspora bond”. GERD highlights the importance of building bonds of trust before asking for bonds of finance.
Identity, affinity and solidarity can motivate investment, but they cannot replace a credible investment proposition. Diaspora investors still need financial transparency, investor protection, understandable risk and credible reporting. Emotional connection might attract attention or even a first investment. Trustworthy institutions and compelling investment opportunities determine whether capital returns and scales.
This matters well beyond Ethiopia or Africa.
From Climate Finance to Investment in Sustainable Development
Climate resilience provides an especially powerful illustration of the potential.
For diaspora families, climate risk is often not abstract. It can determine whether relatives have reliable electricity, whether farms survive drought, whether roads remain open after floods and whether homes, businesses and schools withstand extreme weather.
That creates a natural connection between diaspora investors and opportunities in distributed renewable energy, water systems, climate-smart agriculture, resilient housing, sustainable infrastructure and climate technology.
The International Fund for Agricultural Development (IFAD), for example, has examined how remittances and diaspora investment can support climate resilience in sub-Saharan Africa, particularly in rural and agricultural communities.
But the opportunity should not be confined to climate, nor to Africa.
Across EMDEs, diaspora communities sit at the intersection of two worlds: they understand markets, institutions and investment cultures in the places where they live while retaining knowledge, relationships and affinity with the places from which they or their families came. That combination can be valuable in areas ranging from fintech and digital infrastructure to healthcare, agriculture, manufacturing and venture capital.
Building Bridges Between Diasporas and Investment
There are signs that development organisations, governments and financial institutions are beginning to take this opportunity more seriously.
In the UK, the Commonwealth Secretariat and ARK Group International recently convened a high-level roundtable at Marlborough House on Unlocking Diaspora Finances: A New Frontier for Development Finance. The discussion explored how African diaspora investment could complement traditional development finance, create jobs, strengthen enterprises and support economic diversification. ARK shared its experience building diaspora investment ecosystems in African markets and highlighted the importance of investment infrastructure that can organise and deploy diaspora capital at scale.
The wider UK development conversation is moving in the same direction. Evidence submitted to Parliament has highlighted diaspora communities not only as sources of remittances, but as development and humanitarian actors contributing skills, information, investment connections and resilience across borders. The submission on UK diaspora engagement can be read here. The Foreign, Commonwealth & Development Office (FCDO) provides the broader institutional home for the UK’s international development and diplomatic work.
This creates an important opening: to see diaspora engagement less as a niche question of remittance flows and more as part of the infrastructure connecting international development, trade, investment and innovation.
Beyond Africa: Diaspora as Economic Infrastructure
The same pattern is visible in other regions.
The UK-India technology relationship illustrates what becomes possible when flows of people, firms, skills and capital reinforce one another. The UK and India have established an India-UK Connectivity and Innovation Centre, backed by a combined initial government commitment of £24 million over four years and industry collaboration, as part of the wider UK-India Technology Security Initiative. It is described by the UK Government as a flagship example of the UK-India Research and Innovation Corridor.
A busy commercial ecosystem sits alongside this, including the Nasscom UK Forum, which convenes government and industry on AI, talent, investment and digital trade. The lesson for EMDEs is that connectivity between countries depends on networks of people and businesses, not just flows of money.
A similar model is being developed across the Americas. CoreNest describes its proposition as a gateway for investment in Latin American innovation and has convened US-based Latin America-focused capital, diaspora leaders and strategic partners around the region’s startup ecosystem. Its approach is explicitly about creating an investment bridge between international pools of capital and Latin American technology and entrepreneurship.
And there are examples much closer to our own work. Chemonics’ investment in Talino Venture Studios shows how capital and technology can travel through globally connected entrepreneurial ecosystems to address development challenges. Chemonics and Talino have formed a strategic partnership focused on market-ready, inclusive innovation, particularly around financial inclusion and digital infrastructure. Talino brings experience building inclusive fintech ventures including BayaniPay, Asenso, Earnie and Saphron. Chemonics invested approximately $5 million in Talino, whose Filipino-founded innovation base and relationship to globally connected markets illustrate how investment, technology and transnational networks can reinforce one another.
These examples point to a far richer idea of diaspora finance than remittances alone: venture investment, private wealth, philanthropy, entrepreneurship, technology transfer, expertise and market access.
Trust Is the Currency That Makes Connectivity Investable
None of this means every diaspora investment will succeed. Connection cannot compensate for a weak investment proposition.
Diaspora investors need the protections that other investors expect: clear use of proceeds, appropriate governance, transparent financial information and credible reporting. Countries facing severe debt constraints must also be careful not to regard diaspora wealth simply as another pool of sovereign borrowing capacity.
Lesotho’s exploration of a sovereign sustainable diaspora bond is instructive precisely because of the emphasis placed around the instrument itself on feasibility, project identification, regulatory preparation, proceeds management and impact reporting.
The same principle applies whether the vehicle is a bond, venture fund, savings product, private fund, fintech platform or direct investment.
Ultimately, diaspora capital is still capital. Affinity can help overcome information barriers and encourage investors to look at opportunities they might otherwise overlook. But sustainable mobilisation depends upon investments being investable.
Nor should diaspora finance become an excuse for wealthy countries to retreat from their international responsibilities. At COP29, countries agreed to work towards at least $300 billion a year in climate finance for developing countries by 2035 and called for public and private sources to reach at least $1.3 trillion annually.
Diaspora investment should add another bridge to the financing architecture, not replace the bridges that already exist.
Diaspora Means Movement. But It Also Means Connection.
The traditional story of diaspora is about movement: people leaving one place and making lives in another. But it is equally a story about connection. Relationships with families, communities, businesses and institutions endure across borders, and over time they become networks through which knowledge, talent and capital move in both directions.
Diaspora finance, then, is not a way to extract more investment from citizens abroad. Diasporas can be connective tissue between economies, linking investors to entrepreneurs, global expertise to local knowledge and new technologies to the places that need them.
Achieving the SDGs will take more than larger pools of money. It will take connecting capital to opportunity. The question is not what diasporas can send home, but what their networks make possible. Those connections may prove one of the most underused assets EMDEs have in financing sustainable development.
