OP:ED: Ethiopia Diaspora Trust Fund: A great idea in need of a reset
OP:ED: Ethiopia Diaspora Trust Fund: A great idea in need of a reset

Addis Abeba, January 04/2018 – In the sweltering heat of a Washington DC summer day, thousands flocked to catch a glimpse of, hear from, and on the off chance, meet and embrace the new Prime Minister of Ethiopia, Abiy Ahmed. This level of stardom is unparalleled in Ethiopian politics, probably since the time of Emperor Haile Selassie I himself. The rest of the cast was no less stellar: ‘Lemma, Lemma..’ they chanted, after the President of the Oromia Region, Lemma Megersa. The self-effacing politician had risen to public endearment when he faced down the so-called ‘deep state’ and its core interests on live TV, a year or so ago – like it was the most normal thing to do. In the historic, directly televised joint press conference from the leaders of the four constituent parties of the EPRDF, Lemma seized every opportunity to lay bare and degrade the party’s constitutive ideology, the manifest lopsidedness of the power divide, and all the ills that these had wrought. It was a scene to savor. Viewers were treated to a full on, and dare I say, perfect display of evasive political lingo and doublespeak, as the leaders professed a shared vision for a new dawn. In reality, one side kept at tearing down the foundations of the deeply entrenched and whole encompassing system, whilst the other scrambled to salvage what it could. The tables had turned, ‘Team Lemma’ had finally arrived – out of the woods and onto the big stage.

Washington DC was the first stop on a series of diaspora outreach campaigns by the new leadership. Amidst the euphoria, the new PM reiterated his appeal to everyone to join hands and support development efforts back home. The ‘One dollar a day’ slogan he had inducted in parliament some months back was echoed by artist and activist Tamagn Beyene on stage. The response was deafening, the emotion gripping. You couldn’t hope for a better timing, nor occasion.

Six months on however, the PM cut a frustrated figure as he lamented the disappointingly small number of people who had made contributions: “On the basis that there are around 3 million Ethiopian diaspora, we asked for a dollar a day, but so far, only 2,800 have contributed (around 800,000 dollars in all). Not backed by actions, aspirations are no better than a daydream.”

At the time of writing, which is only a couple of weeks after this renewed call from the PM, the contributions have doubled and continue to rise – 1.6 million dollars and counting. No, the PM has not lost his luster.

Still, the whole conception of the Ethiopian Diaspora Trust Fund (EDTF), albeit a timely idea, is in much need of a revision – a ‘reset’, to be exact. To this end, a review and critique of the structure of, and approaches employed by EDTF to date, based on two strands of relevant literature: the evidence from diaspora engagement efforts elsewhere, and perspectives on why and how people give to philanthropic causes, is due. There is rich evidence in both cases to inform an effective re-design of EDTF and to shape the wider diaspora engagement agenda.

The set-up of EDTF constitutes a Board of Directors to oversee the operations of the Fund in-country, a Global Advisory Council to mobilize global support and advise on strategic directions, a Secretariat that includes the Executive Director and key staff to manage the planning for and allocation of funds, and implementing agencies who will be recruited based on a proposal submission process. These are ultimately accountable to the PM’s Office. So far, the Global Council has been established, featuring prominent figures from different walks of life: academia, business, human rights activists, professionals, notable and personalities, among others. Some critical voices have argued that the membership of the council has been biased towards US residents and the male gender; save this, the governance set-up and approaches of EDTF have not drawn much attention.

At the same time, there are some key assumptions that underlie this initiative, both explicit and implicit. The big one here is the reference to the ‘3 million strong’ Ethiopian diaspora and the projections made on this crude count. Next comes the high sense of faith in the euphoric support expressed for the new leadership – and its potential to translate into actual support. Lastly, there is a sense of underestimation of the process of setting up and running a philanthropic organization. The following statement on the Advisory Board’s Frequently Asked Questions page betrays the latter sentiment:

“Will any of the funds be used for administrative purposes?

. All support services are provided including the Ethiopian Diaspora Trust Fund Advisory Council members”

Contrast this with the enormity of tasks that EDTF ventures to embark on. The objectives stated on the EDTF website actually represent the full gamut of public services normally entrusted to the State and other non-State actors:

The Fund aims to finance projects that meet critical needs selected based on their potential to make the highest positive impact on groups and communities in Ethiopia in such areas as health, education, water and sanitation facilities, habilitation and rehabilitation of persons with disability, agricultural development, technology, women, youth, financial inclusion, small scale entrepreneurship and other income and employment generating projects. The EDTF will give priority attention to projects focusing on youth, women, small holder farmers, small enterprises and entrepreneurs, who can be agents of inclusive social and economic development.

In policy parlance, diaspora engagement nowadays represents a gaping ‘policy window’. Low- and middle-income countries (LMIC) are increasingly ‘woke’ to the huge benefits presented by their diaspora populations. The long-standing designation of the diaspora, by States, as an unruly and at times, anti-peace ensemble, is waning. Once dubbed, ‘foreign direct investment in hatred’, the group is rather increasingly recognized for its untapped resources and capital. Countries actively court their diaspora as a source of external finance that rivals, if not better than other sources of external support, such as the much-touted Official Development Assistance (ODA) and private capital inflows (See here and here).

In 2018, the World Bank estimated annual remittances from LMIC Diaspora to reach a record 528 billion dollars. This is triple the size of ODA these countries receive from high income countries. In addition, remittances are considered more preferable to ODA as they involve a more direct link between benefactors and beneficiaries, in contrast to the inefficiencies and conditionalities that hamper the ODA. In other words, remittances do away with the multi-level structures of ‘middle-men’ associated with ODA, in turn avoiding myriad possibilities for mismanagement and corruption. What’s more, remittances are considered more stable than other sources such as private capital flows; as less prone to speculation, capital flights etc.

The annual flow of remittances to Sub-Saharan African Countries stands at around 45 Billion a year; of which 25 Billion goes to Nigeria. Ethiopia’s share stands at a paltry 0.8 Billion. Neighboring Kenya commands a significantly bigger amount at 2.1 Billion – forget athletics Ethiopia, this is the one to contend! These figures are of course bound to be underestimations as remittances are also partly carried through informal routes, including Hawalas and personal transfers, which are not captured in these statistics.

Some concerns hang around the degree of productive investment that remittances ultimately enable, especially whether they spill-over to support the poorest sections of society. The poorest are unlikely to have kinship in the diaspora and thereby benefit directly3. In addition, the common utilization patterns of remitted resources favor consumption over investments (discussed here): 1. Family support and housing 2. Conspicuous spending and 3. productive activities. Still, remittances represent important inflows to local economies and communities, by way of boosting spending from recipient families.

A review commissioned by the Department for International Development (DFID) outlines different strategies employed by countries to engage the diaspora in development efforts. These include the mobilization and channeling of diaspora resources into Direct Foreign Investment (FDI) (notably in China, where half of the FDI comes from the diaspora); selling of government bonds backed by State Banks (the case of the ‘Resurgent India Bonds’ or the recent ‘Ethiopian Renaissance Dam Bonds’); the 2 percent annual income tax levied by Eritrea on its diaspora; government-led development projects supported by the diaspora (LINKAPIL in the Philippines, whose website claims to have mobilized over 62 million dollars as of 2017, and the Padrino program in Mexico that links donors to development projects identified by the President’s Office); matching funds that compliment diaspora contributions (Mexico’s “Tres Por Uno” that matches every 3 dollars raised from the diaspora, by 1 dollar from government coffers); Taiwan’s brain trust model that focuses on attracting human capital to engage in knowledge transfer and so on.

A few key lessons can be gleaned from this review. Countries deploy a mix of these different approaches to varying degrees; and usually, the philanthropic aspects are subsidiary to the business and investment interests. For example, India chose to prioritize its diaspora mobilization in the order of: ‘direct investment, portfolio investment, and humanitarian or other philanthropic assistance’. Secondly, there are clear lessons about the successes of Home Town Associations compared to national level contributions. Originally from Mexico, this concept has since been replicated in a number of countries. Indeed, Mexico has faced resistance when it sought to move to a national level effort, as the prospect of supporting one’s own locality continued to hold sway. The logic goes: people from the same locality are likely to maintain social bonds wherever they have settled, making it easy to mobilize their support for their towns of origin. In the case of the Ethiopian diaspora, similar social entities or mahbers bearing the names of the towns and localities of their members exist: the Kazanchis Mahber in Washington DC, Harrar Mahber in London etc. Thirdly, the review highlights the success of clearly identified and defined projects over general appeals for contributions. The former affords choice to donors regarding the type of projects they may favor, as well as allowing them to follow up on and potentially involve in the projects’ implementation.

Crucially, the review outlines the importance of developing a more accurate understanding of the diaspora. It argues that the relative make-up of each diaspora determines the level and type of engagement, and the resultant effects. For instance, it makes distinctions between the largely professional Indian diaspora and the more entrepreneurial Chinese counterpart; and how these have led to wildly contrasting impacts. It would hence be highly instrumental to undertake surveys that assess the scale, type and capabilities of the Ethiopian diaspora, as well as more in-depth investigations exploring the desires, preferences and sensitivities of the group. This could also include a voluntary registration of the diaspora, thereby easing communication and mobilization efforts.

Equally important, most philanthropic and investment initiatives are couched within broader efforts aimed at reassessing the stake of the diaspora in political, social, and economic processes.  As the diaspora are often marginalized in formal decision-making processes, there is need for some level of correction to facilitate an optimal level of involvement of this vital constituency. Citizenship and voting rights, and means of political representation should all be considered as part of this corrective. A number of countries have ensured political representation for their diaspora; for instance, Mexico has designated seats for diaspora representatives in its State legislative bodies. For the level of contributions that are expected, a ‘taxation-without-representation’ type arrangement just won’t cut it! To be fair, PM Abiy has already shown ample enthusiasm and support for these policy directions, which are to be applauded.

Diaspora engagement should also encompass extending a sense of concern and services to the welfare and advancement of the diaspora. These includes improved advocacy and advisory support, enhanced responsiveness to alleviate needs under emergency situations, as well as regular activities aimed at promoting the home-culture and sustaining goodwill amongst the group. Of particular interest, the Philippines actively organizes culturally tailored counseling services, schools, and entertainment activities in areas with high concentrations of Filipino migrants. China has also gone the extra mile to set up World Overseas Chinese Museums and World Overseas Chinese Cemetery – all part of a broad effort aimed at maintaining the vibrancy and sense of belongingness of its diaspora.

Lessons from the world of giving

The question of why people choose to give money to this or that cause, and why they might tighten or loosen their purse strings have long been the subject of inquiry in various fields including behavioral economics, psychology and sociology, among others (see here and here for example). ‘Giving’ is seldom a straight forward matter – even when the appeal comes in the form of duty to the motherland. Why do people skip a long line of homeless and needy people to offer their money to the church (as is typical in Ethiopia)? Does an act of donation reflect the severity of the state of the beneficiary or rather, the state of mind of the donor at that given time? Are people more compelled to part with their money in the case of a one-off donation or a long-term commitment? Such questions form the bread and butter of the sprawling philanthropic sector where methods of solicitation are continuously sharpened, deploying new and innovative methods by the day.

Studies of donor behavior dispute everyday assumptions of a rational actor i.e. the assertion that people give donations based on a logical assessment of need. Instead, multiple variables are known to play on the donor’s behavior. These range from mere inconveniences related to the timing, length of commitment and mechanisms of donation to the donor’s social networks. The framing of messages is an equally delicate matter: emphasize the severity and helplessness too much, and you may just overwhelm your donors. On the other hand, the more you define need in a goal-oriented and time-bound manner, the more likely you are to engage your audience etc.

What does this all mean to EDTF?

The foregoing scan of evidence from diaspora engagement efforts and the world of philanthropy signals some clear directions to EDTF. Whilst the simple message of ‘1 dollar a day’ is catchy and well crafted, it needs to be reimagined and fashioned within a broader synthesis of the diaspora agenda. It then needs to be articulated in the form of clearer goals and more practical, evidence-based strategies. This of course could only come out of wide-ranging research and deliberations around this crucial initiative. These will all require worthwhile investments in time, budget and effort. Whilst the volunteer-based approach is laudable, the aspirations of EDTF and the concerns of the wider diaspora engagement agenda are no mean feat. It will all require well considered strategic and operational investments.

These points are not made to criticism the EDTF point blank, but rather to capitalize on this highly opportune occasion and ensure a more effective and enduring mobilization of the diaspora. As stated at the outset, the popularity of the PM and the wider leadership team, and the sense of public engagement is quite historic. This in turn necessitates a thorough and tactical approach at all levels, to ultimately enable an outcome befitting the expectations of the times.

Here are some key recommendations:

As stated at the outset, the contributions to the Fund have picked up pace following the PM’s renewed call. Still, the rate falls short of the heightened expectations, with more of a trend of hopeful but agonizingly slow climb. The omens point to a flow-stutter-restart cycle, which could and should be avoided.

In a nutshell, there is an urgent need for a well-designed and comprehensive strategy that considers the full scope of the evidence and the opportunities abound. We ought to make the most of the strong wind in our sail i.e. the unprecedented change and sense of optimism, and popularity of the leadership both at home and abroad.  AS

Editor’s Note: Henock B. Taddese is a Teaching Fellow at Imperial College, London , England. He can be reached at [email protected]

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