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Worker Remittances and Poverty in the Arab World
The Arab world has one of the highest proportions of migrant to local workers in the world, with over 32 million migrant workers in the Arab states in 2015 alone. In addition, the region has one of the largest diasporas in the world. This means that many skilled workers are emigrating to wealthier countries and sending money home via remittances. But what do remittances in the Arab World mean for the region and its inhabitants?

Brain Drain vs. Gain

In Lebanon and Jordan, unskilled labor is provided by growing numbers of refugees and foreign workers, totaling over five million in 2015. However, as more foreign workers enter the country, growing numbers of high-skilled Lebanese and Jordanian nationals are emigrating. This often occurs when opportunities are limited, when unemployment is high and economic growth slows. The phenomenon is dubbed ‘brain drain’ as opposed to ‘brain gain’, whereby an increasing stock of human capital boosts economies. A drain occurs while poor countries lose their most high-skilled workers and wealthier countries in turn gain these educated professionals.

Remittances in the Arab World

These expatriates commonly work to improve their own living situations while also helping to support their friends and families. This is where remittances come into play. As defined by the Migration Data Portal, remittances are financial or in-kind transfers made by migrants to friends and relatives in their communities of origin. Remittances often exceed official development aid.  They are also frequently more effective in alleviating poverty. In 2014 alone, the Arab states remitted more than $109 billion, largely from the United States followed by Saudi Arabia and the United Arab Emirates.

There is no denying that remittances can be a strong driving force for the socioeconomic stability of many Arab countries. But not all the influences are positive. Some experts argue that remittances can actually hurt the development of recipient countries. Their arguments cite potential negative effects of labor mobility and over-reliance on remittances. They emphasize that this can create dependency which undermines recipients’ incentive to find work. All this means an overall slowing of economic growth and a perpetuation of current socioeconomic status.

The Force of the Diaspora

The link between remittances in the Arab world and poverty is clear. Brain drain perpetuates and high amounts of remittance inflow and outflow persist if living conditions remain unchanged. Policymakers are therefore focusing efforts on enticing emigrants to return to their countries of origin. By strengthening ties with migrant networks, and implementing strategies like entrepreneurial start-up incentives and talent plans, the initial negative effects of brain drain could be curbed.

Overall, though brain drain and remittances can seem to hurt development in the short-term, if policies can draw high-skilled workers back, contributions to long-term economic development can erase these negative aspects altogether. Young populations that have emigrated to more developed countries acquire education and valuable experience that is essential to promote entrepreneurship in their home countries. Moreover, their experiences in advanced democracies can bolster their contribution to improved governance in their countries of origin. The Arab world’s greatest untapped potential is its diaspora, and it could be the key to a more prosperous future, if only it can be harnessed.

Natalie Marie Abdou
Photo: Flickr

Borgen_Project_Foresight_Africa_Africa's_Top_Priorities_2013_Whitney_Wyszynski_Whitney_Michelle

The Africa Growth Initiative (AGI) at Brookings released a report of top priorities for Africa.  The AGI “brings together African scholars to provide policymakers with high-quality research, expertise, and innovative solutions that promote Africa’s economic development.”  The Foresight Africa report shows promising opportunities in Africa.  It outlines the top priorities for Africa in 2013.

Moving from “economic stagnation to above 5 percent GDP growth on average,” Africa is prospering.  Ethiopia, Ghana, Mozambique and Tanzania are some of the fastest growing economies in the world, and African governments are embracing this growth by lowering transaction costs.  Africa’s economic growth is creating a new middle class.  This middle class means new markets for goods and services.  The Foresight Africa report notes that it is a prime time for investors.

Some African countries are mirroring Asian models and engaging their diasporas for economic and social development.  South Africa, for example, is using TalentCorp’s model.  TalentCorp is a partnership between the government, the private sector and the overseas diaspora.  The model aims to bring highly skilled Malaysians living abroad back to their home country.

Countries everywhere recognize the potential in harnessing Africa’s diaspora.  In 2011, the United States Congress proposed the African Investment and Diaspora Act.  The bill was designed to support African development.  Ghana and Kenya are on the cutting-edge and have already “established units within their respective governments to oversee diaspora affairs.”  AGI’s Foresight Africa report points to these examples as models for other countries.

Check out the full report for more information.

Whitney M. Wyszynski

Source: Brookings
Photo: Daily Maverick

Somalia-Construction-Rebuild

Things are looking up for the Somali capital of Mogadishu as the sound of gunfire has recently been replaced by that of construction. Many from the diaspora are finally returning home to rebuild Somalia. As described by journalist Laila Ali of the Guardian, “New buildings and business are emerging from the carnage and lawlessness that pervaded the east African country for more than two decades.”

Many people who fled in the midst of the chaos are now choosing to return home, which has caused the demand for property to skyrocket. Mursal Mak, a British-Somali property developer who is returned after 22 years, has been following the increasing business opportunities. “Real estate is booming in Mogadishu” he says. “This evening I had a meeting with a client and he said ‘Mogadishu is becoming like Manhattan or central London; you are talking incredible prices when it comes to property.’”

Land rights have become sticky, however, with so much land unregistered or with ownership that cannot be confirmed. At times, people take the risk of buying land at half of its value for cases where ownership is unclear. But this has not seemed to disrupt the surge of buying and developing. From grand beach hotels to commercial banks, many from the diaspora are returning home in hopes of rebuilding business in Somalia.

Omar Osman is another Somali who has returned home to set up an internet company, Somalia Wireless, in hopes of increasing connectivity for the growing private sector. He explains, “We are trying to advocate the setting up of business to be as smooth as possible, because, ultimately, the growth of business will translate into job creation and prevent youngsters from being idle and walking into terrorism. Investing and making money is not the goal. The goal is to create jobs, do something to benefit the masses and make life better for every Somali.”

– Shannon Keith

Source: The Guardian
Photo: Laila Ali