Defending Diaspora Capital

Picture from Business Insider Africa

Economists have long linked external debt to diminished sovereignty. I did not learn this only in theory; I watched it unfold over years in markets. Debt piles up. Terms harden. External creditors set the terms. At the same time, our diaspora sends a river of money that rarely comes back as ownership. Sub-Saharan Africa receives tens of billions of dollars in remittances each year. Families survive, but little of that flow compounds as assets at home. That is not a failure of effort. It is a failure of design.

The African Development Bank and the World Bank have both highlighted the diaspora as an underutilised pool of capital. In a 2018 policy paper, Ratha, De, and Plaza estimated that Africans abroad hold between USD 400 billion and USD 500 billion in savings, a stock roughly equal to five years of the USD 100 billion in prevailing annual remittance flows that sustain households. Their work underlines the scale of the opportunity, but the responsibility for design lies with Africa. Sovereignty means deciding how this pool is mobilised, how it is governed, and how it compounds into assets at home.

The design I argue for builds on this foundation but extends it into the realities of today’s financial markets. Tokenisation and unified ledgers now allow reserves, bank money, and securities to operate on shared digital infrastructure. By combining these rails with guarantees that share risk, hard-currency settlement that removes conversion fears, and governance that tracks every flow from project to coupon, Africa can turn diaspora savings into capital. And capital, once disciplined and transparent, becomes a form of sovereignty.

This is the moment to act because the financial infrastructure is shifting beneath us. U.S. regulators, alongside major exchanges, are advancing frameworks that bring tokenised ownership into regulated markets. The real story is not only about access. It is about plumbing. Registries, transfer, custody, and servicing are shifting to programmable ledgers. We already see live instruments that are clear and pay on-chain. Money market funds operate on-chain. Digital bonds have been priced and settled in regulated venues. South African market actors are actively exploring tokenised credit with stronger rules now in place. These are operating realities, not thought experiments.

For Africa, the first truth remains. Remittances to families will not shift quickly because school fees and food require local currency. The lifeline stands. The contest is the surplus. Africans abroad hold vast savings in deposits and property, and platforms will now court them with one-click access to U.S. tokens that trade around the clock. Mobilising even ten per cent of it would unlock USD 40–50 billion, comparable to Africa’s annual receipts from multilateral institutions. The priority must be to target this surplus capital first, not household transfers that keep families afloat. If our offer is weak, more African wealth will compound elsewhere. Africa’s answer must be credible competition.

We must present investable vehicles that meet the diaspora where they already are. Digital rails help, but the wrapper is useful only when the asset is worthy. The solar grid must be bankable. The port expansion must be bankable. The water network must be bankable. Tokenisation adds three real utilities. It allows fractional entry, so the nurse in London can invest $500. It embeds programmable covenants (smart contracts) that enforce discipline. It makes servicing visible in real-time, so trust is earned through data, not just promises. Technology cannot rescue a weak project. Governance does that.

Credibility depends on three essentials. First, risk sharing. African-owned multilaterals must take the lead, and local and regional banks, together with continental remittance providers, need to stand in the stack as co-investors and distributors. That way, diaspora money sits above a real base of African capital and trusted payment channels. Global partners can add scale where their balance sheets add value, while the centre remains African.

Second, currency design. A saver in London or Atlanta will not risk a decade of work on unhedged local currency. Offshore project companies can issue the instruments, with coupons paid in dollars or euros and hedges applied where needed. Only projects with clear hard currency revenues, such as ports, energy exports, and toll roads, or those with sufficient hedges, qualify. This rule is not about exclusion but sequencing. Diaspora capital must first anchor itself in assets whose cash flows can be measured, audited, and stress-tested. Social projects remain essential, but they should draw on concessional finance or domestic budgets until credibility is built. Sovereignty means setting a high bar, proving discipline step by step, and widening scope only when the market trust is earned.

Third, disclosure and control. Contracts must carry audited cash flows and enforceable investor rights. Every payment should appear in a transparent registry, and covenants must be enforced without fear or favour. Sovereignty is not isolation. It is Africa setting the terms and showing diaspora investors that accountability is non-negotiable.

Liquidity is the hardest edge. A Zambian grid will not trade like a U.S. mega-cap. Plan for that. Appoint a lead market maker with clear obligations. Commit a standby repurchase line sized to expected turnover. List on a venue that already supports tokenised funds and treasuries, so cash and collateral move through the same pipes. Liquidity thickens when credible product sets share rails, settlement, and custody. Spreads tighten when investors trust both the asset and the venue.

We must also be honest about barriers that do not fit neatly into spreadsheets. The political hurdle is genuine. A compact of a finance ministry, a securities regulator, a development bank, and private managers does not form itself. Interests must align. Turf must give way to national purpose. Project selection is a discipline of its own. Finding and managing truly bankable projects at scale is hard work. Execution quality will decide reputation more than any white paper. The continent is not one market. South Africa’s capital markets are not Zambia’s. Nigeria’s rules are not the same as Kenya’s. Start where readiness is highest and build outward. A small credible success in one jurisdiction beats a grand plan that touches none. Kenya’s mobile experience demonstrated that retail bonds can reach people on their phones. We can meet savers in the same way with stronger governance and clearer rights. Tokenisation should complement what already works. Modernised diaspora bonds, public-private vehicles, and well-run infrastructure funds remain part of the toolkit. The goal is a full menu where a saver can choose by risk, tenor, and purpose.

The macro picture is simple. External debt in all its forms imposes trade-offs. Concessional loans may offer low interest rates, but they often embed conditions that dictate rules into domestic policy, thereby reducing national sovereignty. Commercial borrowing raises financing costs and exposes countries to global volatility. In both cases, external creditors narrow the space for autonomous economic decision-making.

Diaspora wealth is steady and close. In aggregate, it flows reliably, even if fragmented at the household level. Global market designers now openly discuss unified ledgers, where reserves, bank money, and securities converge in a single digital environment. The rails are moving. The question is whether African assets will be ready to ride them.

So, we keep the heart of the plan small and concrete. One distribution upgrade for power. One logistics node. One water asset. Start with a narrow ticket. Publish the calendar. Pay on time. Show the chain of cash. Let success teach the next step. As proof builds, instruments can expand, projects can scale, and the investor base can broaden from retail to institutional investors.

The lesson from Wall Street is not that remittances will disappear. It is that market plumbing is getting an upgrade because institutions chose to move. Africa can choose the same. If we meet diaspora savers with instruments that deliver yield, liquidity, and impact in the same place, remittances can become capital, and capital can become a source of sovereignty.

Disclaimer

This article does not constitute legal, financial, or investment advice. The author shares views for perspective and discussion only. Do not rely on them as a substitute for professional advice tailored to your specific circumstances. Always consult a qualified legal, financial, investment, or other professional adviser before making decisions based on this content.

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About the author

Dean N. Onyambu is the Founder and Chief Editor of Canary Compass. His insights draw on experience across trading, fund leadership, governance, and economic policy.

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