By Samir Bouzidi *
The decision is recorded in the latest Finance Law 2025, voted by parliament on December 24; Senega laura in these terms “recourse to diaspora bonds in order to diversify debt in local currency”. A sign of the progress of the project, the schedule is already set with a planned launch of a first campaign before next summer as well as the level of yield of 5% served to creditors (compared to 7.75% for the last issue of ‘eurobonds).
On an African scale, a very selective and perilous exercise…
Nigeria remains the first African country to brilliantly initiate a “diaspora bond” in 2017 for an amount of 300 million USD. Since then, few countries on the continent have embarked on the adventure. Not even Nigeria, which did not consider it appropriate to repeat other campaigns, preferring to take on debt in Eurobonds, which are nevertheless very expensive. (official Nigerian information has nevertheless been circulating since this summer regarding the launch of a new “diaspora bond” in 2025).
On paper, “diaspora bonds” have everything to please an African state: less costly debt, closer ties with the diaspora, financial sovereignty… In practice, the approach involves a complex and long operational procedure with a very uncertain final impact. . The error of assessment commonly made by African strategists consists of considering that the better the diaspora transfers are, the more the “diaspora bond” is necessary! This prism often refers to realities that are far more ambivalent. One, unlike the subscribers of “diaspora bonds”, those who massively send funds to their families come more from the popular segments (workers, small traders, etc.), those who have gone abroad precisely to meet the needs of their families. their loved ones.
Secondly, in the case of “diaspora bonds”, the mechanism is significantly less emotional and involves more rationalities: level of financial education of the diaspora, critical financial performance threshold, subscription process, guarantees… up to the capital trust in the State, the issuing institution and its intermediaries.
Even if the political context has changed in Senegal, it must be remembered that in 2019, the “diaspora bond” in the amount of 30 million euros, issued by the Banque de l’Habitat du Senegal (BHS), a a bank with a certain reputation among the diaspora, had only been subscribed to 43% by the Senegalese and African diaspora… the balance being by institutions in the sub-region.
Already boost the savings of Senegalese abroad…
In reality, the first marker of success or otherwise of a future “diaspora bond” is the savings rate of the diaspora in the country of origin. However, today, barely 5% of the 2.94 billion euros (in 2023) sent by Senegalese abroad are dedicated to savings (mostly current and therefore liquid savings). Building on this reality, the State of Senegal should also give priority to better mobilizing the banking savings of the diaspora, particularly through the launch of dedicated products more in line with the requirements of these strategic clients and the key development issues. national (for example: regional development savings plan or food sovereignty savings plan, etc.). Also, given the profile of the Senegalese diaspora, the launch of “sukuks” (bonds consistent with Islamic ethics) should be considered, this would broaden the investor base towards the Islamic “umma” of Africa. and the world.
The prerequisites and markers of success for a “diaspora bond”?
Succeeding in a “diaspora bond” is not a recipe, but there are common markers among countries that achieve it. India and Israel, two world champions in this area, base their successes on the particularly successful integration of their diaspora at all institutional, societal and economic levels. In India, 30% of FDI comes directly or indirectly from the diaspora. As for Israel, it is the only state in the world built by the diaspora.
Nigeria has been able to anchor itself within its powerful financial and entrepreneurial diaspora in the USA and UK. It is in particular thanks to the skills and soft power of this financial and economic diaspora that the Nigerian “diaspora bond” issued in 2017 obtained approval from the very select American “Securities and Exchange Commission” and its British equivalent, the Financial Conduct Authority. A great historic first for an African State!
In the case of Senegal and unlike Nigeria, it will be very complicated to meet the requirements of the prudential financial authorities in France (1st host country for the diaspora), Italy, Spain…refractory in principle to savings mobilization vehicles public for a country outside the EU and in this case African.
In essence, it is necessary to anticipate a complicated and cumbersome operational process with the key points: strategic positioning, joint assets, financial conditions, guarantees, priority targets and anchors, distribution, subscription process…and last but not least: crucial trust capital to consolidate or even repair.
In substance, everything must be studied carefully and in form, the rule is to co-construct with the diaspora (especially financial). For example, the 2025 Finance Law plans to finance, in particular, via the next “diaspora bond”, the construction of a mango processing factory in Casamance; In my opinion, it would certainly be more impactful in terms of value proposition to instead consider the construction of a hydraulic energy dam or any structuring investment for the region and the country.
Is the timing right?
Making the diaspora dream while being able to get involved and at the right time, this is the complex equation for an emitting State. And it is better not to leave weakened in the eyes and wallet of a Senegalese diaspora today deeply divided. This is the main challenge of the future Senegalese “diaspora bond”, planned for the first half of 2025, less than a year after the difficult and very divisive electoral deadlines of 2024.
Perhaps, as the Senegalese proverb underlines “A good convert will be a better preacher”, it is now time to bring together, understand and listen to the WHOLE diaspora: a beneficial “Diaspora unity”…
About Samir Bouzidi
Ethnomarketer & international expert in mobilizing African diasporas
Committed entrepreneur, Samir Bouzidi is the
CEO of the solidarity startup “Impact Diaspora”, Promoter of the pan-African program “Invest in diaspora”.
