DIASPORA OF TANZANIANS IN THE US – MY CONTRIBUTION

Rais Jakaya Mrisho Kikwete akihutubia katika  ukumbi wa mikutano wa Fantasy Land jijini Edmonton, Canada, wakati wa kukufungua mkutano wa Watanzania waishio nchini humo (Tanzania Diaspora Conference) Ijumaa jioni ya Oktoba 5, 2012

  Sehemu ya waliohudhuria mkutano huo

Lately, I have followed the diaspora dialog taking place among members of the Tanzania diaspora living in the US.  I have read with great curiosity all that is being brought to light regarding our participation in the effort to support and uplift our homeland’s economy, thanks to those who have gone the extra mile to obtain data that proves the validity of the initiative.  I would also like to address alongside this noble subject, the passionately celebrated issue of Direct Foreign Investment in Tanzania both of which subjects are for the good intentions of supporting the country’s economy.  In either case, I agree albeit with some reservations:

Before discussing the participation of diaspora in a homeland economy, let me first begin with the definition of the term diaspora which in recent years seems to magnetically draw interests of African countries to connect with compatriots leaving abroad and enlist them in the effort to help develop national economies.  The term diaspora originates with the Jewish communities dating as far back as 587 BC that had been forced out of their homeland in the Middle East by warring invaders, the Babylonians who conquered their land. But because of the strong love they had for their motherland, they kept their traditions and religion intact and always tried to find ways to connect with their loved ones at home and especially the religious community.  They were physically separated from their loved ones and their faith by force but they remained attached in faith and spirit with those left behind.  As a result, it is apparent, that their commitment was not so much based on the need to develop a contemporary economy but rather to defy the intentions of the invaders and strengthen their faith and tradition. To this day, ties between Jewish communities leaving outside their homeland  and those inside the country remain deeply rooted.  Out of the total number of Jews in the world, 8 million live outside the country of Israel. (source: Jews around the globe). Thus these communities were called diaspora.  But as time has gone by, the term diaspora has lost its core meaning and is now loosely applied to any group leaving away from their homeland despite the fact that majority of these have left their homeland voluntarily in search of a better life.  One therefore, has the liberty to distinguish between the original diaspora and what we have today.

Nonetheless the idea of sending money earned in a foreign land to your homeland isn’t a bad one because you are helping those who may be less fortunate such as family members.  This act, in an economic sense, is known as “Transfer of Funds or Unilateral Transfer”.  This act in itself is not an investment but simply means whatever you are sending out is only a sacrifice on your part for the sake of someone else.  Your earnings are reduced by the portion you are sending to increase the purchasing power of another.   Now, taken into consideration the aggregate sum of all the funds transferred in one given time period such as one year, one may consider this act to be to be of economic significance to the recipient country.  This is so because it is an infusion of money that ultimately enhances the country’s money velocity (speed of circulation) and causes what economists call multiplier effect, an economic function that plays a positive part in a country’s economy. Unfortunately, however, this type of funds is usually excluded in the computation of a country’s Gross National Product (GDP) because they are not part of production of the country. And, although their economic impact may be a positive one they are not part of the equation in production.

On the other hand, unlike unilateral transfers, a diaspora aggregate fund that is put together for a specific Investment venture is something I would consider of great merit, if properly organized and managed for the purpose yielding profit.  I commend the Ethiopian diaspora for what they are doing in their bond project.  Can this example be emulated by the Tanzania diaspora?  I am sure anything is possible where there is a will.  As many have already commented, the Tanzania diaspora is rich with talented individuals in virtually every facet of knowledge and skills.  If the Ethiopians are succeeding in their bond scheme, Tanzanians can as well.  There is no doubt it would take a great deal of effort to bring together the willing individuals with talent and financial resources to form an investment package and execute it in a viable venture in the homeland.  Equally important, a strong national policy designed to support this type of venture would be needed.  I am also a huge proponent of cultivating and nurturing young talents within the country in becoming creative thinkers and innovative individuals (refer to my book “The Monarch’s Dream –Chief Manana’s Wake-up Call to Africa”).  The diaspora can play a role in this respect by lobbying the national leadership in adapting this concept.

Meanwhile, to comment on DFI (Direct Foreign Investment) I must say I am not a big supporter of this idea either although I am fully aware of the apparent benefits DFI brings to a developing economy such as that of Tanzania.  DFI’s which are different from foreign aid in form of donations and grants, are business ventures bringing capital into the host country with the intention of making a profit.  Obviously, once projects are executed they create employment to the local economy and ultimately help businesses around the area thrive.  Depending on the scale of the project and how long it is intended to last, the economy of the host country may show significant growth in GDP and improvements in many aspects of it such as infrastructure and standard of living in surrounding areas.  In this respect it is most likely the host country will embrace the idea as a positive way to solving its economic problems.  But although this is becoming a trend In many developing countries where national leaders are setting out to find investors with the help of diaspora, DFI’s nonetheless, have their own long term adverse effects on the host country if left to dominate the economy.  Remember DFI’s are there to make a profit.  So they will do everything in their power to protect their interests in order to achieve their goal

How is it done?  Well, first if you want to achieve something in life and especially in the business world you have to be in control of every variable that goes into the equation of operation.  No investor goes into a foreign country and hands over their capital, their operating finances and assets to strangers, in this case the host country, to run things.  Naturally the investor has to have their own expertise ranging from administrative, professional and technical personnel to ensure they are comfortable with who is working for them.  And, even when signed agreements require that they hire nationals of the host country, they will do it in a highly controlled manner.  This may be done in form of hiring supervisory personnel over indigenous labor and of course liaison personnel between the government and the investor.   It is no wonder that in some cases investors will bring their own non-skilled labor.  Hence, this being the case in virtually every investor relationship, the likelihood of adversities outweighing benefits is high.

Indeed, in the short run, host countries will enjoy the apparent benefits which may range from in-roads constructed from project sites to main roads or railways and harbors, schools and clinics, depending on how agreements are designed.  But despite these benefits adversity will loom in the background and often times it is realized at a time when the investor is long gone.  Remember, the operative word here is control.  As an investor you make sure things are under control while your operation runs its course.  That is, you maintain the roads and fund the schools and clinics you built and of course, pay the labor wages.  But behind the scenes you make sure your realized profits are flowing out of the host country to your own bank accounts.  And, in the end, when all is said and done, contracts have come to an end, the capital and assets are withdrawn and repatriated to their country of origin or elsewhere to start a new project.  At this point, the host country may still enjoy a few years of economic prosperity until things come to a point where recapitalization is required, a critical point where another investor may have to be ushered in if the country is unable to fill the vacuum.

In summary the adversities that can stagnate if not cripple a developing country’s economy include:

-          Inability to manage or control vital economic operations fostered by foreign investors

-          Depletion of natural resources at the heels of investor control.

-          Limited ownership of assets due to lack of capital

-          Exploitation of cheap labor

-          Displacement of fertile land to the indigenous people during investor presence.

-          Migration of skilled and educated citizens in search of commensurate opportunities.

-          Foreign capital and any other form of aid are one shot deals that run their course and come to an end at some point.

The list can go on and on in this cycle of prosperity by investor capital with limited control by the host country. And, as members of a diaspora seeking to create investor relationship on behalf of our homeland, there is the above caveat to always bear in mind.  Are there alternatives to this mightily growing trend of today?  Yes, but I can only discuss this at a later point in time.

Prepared by: Simon Nkanda, BBA (Fin); Dip. AIB; Dip. NABAA (TZ)

Diaspora member – Dallas, Texas