In 2013, international migrants sent $413 billion home to families and friends — a huge sum compared to the $135 billion sent in foreign aid the same year. Yet the promise of this money, known as remittances, is stifled by a big problem that no one seems to be worried about.
Economist Dilip Ratha discusses the issue in today’s TED Talk (The hidden force in global economics: sending money home). In this deeply human talk, Ratha makes the case for diaspora bonds that would tap into the estimated $500 billion in annual savings held by international migrants around the globe.
Functioning like regular savings bonds, diaspora bonds would be sold by governments, private companies and public-private partnerships to migrants living abroad. And they would be sold in small values — from $100 to $10,000. The interest on these bonds could fund schools, airports and other key institutions in their home country.
This idea is starting to take root in Africa; the Kenyan government is finalizing plans to start issuing diaspora bonds by June 2015. To imagine the size of the market, Kenya’s diaspora community sent $807.2 million between January and July of 2014 — an almost 10% increase over last year. And the Ghanaian government is weighing the decision to adopt diaspora bonds as well.
Featured image via iStock.