Central Africa’s diaspora sends money home every month. No CEMAC state has ever asked it to lend. Nigeria raised $300m from its diaspora in 2017. The idea deserves a serious look, not a slogan.
A diaspora bond is a sovereign bond sold to citizens abroad, usually in small denominations, often at a rate below the market. Nigeria issued one in 2017, raising $300m from retail investors in the United States, United Kingdom and elsewhere. Israel and India have used the instrument for decades.
The case for
- Remittances are large and stable. They keep flowing through crises, when portfolio investors leave.
- The diaspora accepts a discount. Emotional attachment and country knowledge reduce the required return.
- It builds a retail investor base that can later buy domestic debt.
The case against, and it is serious
- Trust. A diaspora that does not believe its money will be used well will not subscribe, whatever the rate.
- Regulatory cost. Selling securities to retail investors in the US or the EU means complying with their securities law, which is expensive.
- Currency. A bond issued in CFA francs carries currency risk for the buyer; a dollar bond carries it for the state.
- Size. Issuance costs mean small deals rarely make sense.
What would make it work in CEMAC
Three conditions: a specific, visible project rather than general budget support; independent reporting on how the money is spent; and a regional approach, since the BEAC and the regional market regulator could authorise a single framework instead of six.
