New research reveals Africa’s diaspora communities could hold the key to solving the continent’s massive infrastructure and development financing challenges.
The 2025 African Economic Outlook report shows that while remittances to Africa reached $91.1 billion in 2023 and an estimated $95 billion this year, less than 5% of these funds currently support long-term investments.
The African Development Bank study proposes converting these consumption-focused flows into development capital through innovative financial instruments. “We need mechanisms to transform remittance dollars into hospital beds, power plants and factory floors,” the report states, advocating for diaspora bonds, equity investments and pension-backed instruments. Several countries including Nigeria and Ghana have tested such approaches with mixed results, often hampered by regulatory barriers and investor skepticism.
Trust remains a significant hurdle, with many in the diaspora concerned about corruption and weak legal protections. The report recommends creating secure digital investment platforms and strengthening governance frameworks to address these concerns. Beyond financial capital, African nations are being urged to tap into diaspora expertise through skills databases and short-term return programs that have proven successful in technology and healthcare sectors.
The Africa Finance Corporation estimates redirecting just 15% of remittance flows could generate $14 billion annually for critical infrastructure projects. As traditional development aid declines, experts argue systematic diaspora engagement may become essential for achieving sustainable growth across the continent.
Africa’s remittance flows now surpass foreign direct investment in many countries, yet this resource remains largely untapped for large-scale development. Successfully mobilizing these funds could redefine how the continent finances its future.
