The 40th Session of the African Union Executive Council formally adopted the ‘Strategic, Business and Operational Framework for an African Diaspora Finance Corporation (ADFC)’ as the framework for the African Union legacy project on diaspora investment. This came after the endorsement by the African Ministers of Finance on 17 December 2021, and consideration by the relevant subcommittee of the AU’s Permanent Representatives Committee (PRC). The AU Commission shall undertake a further feasibility study, covering business operations, investment planning and criteria, and the application of ADFC funds.
ADFC will be set up as an independent, non-AU continental finance institution, operating as a social enterprise and working together with other African and global finance, development, and diaspora institutions. The first phase of the ADFC implementation involves the initiation of an innovative finance scheme through the RemitAid™ Remittance Match Funding mechanism. Working closely with partners, ADFC will develop, issue and manage Diaspora Bonds and Mutual Funds, to harness and channel diaspora savings and resources into socially responsible and impactful ventures, in priority sectors in Africa. ADFC profits and surpluses will be invested in a legacy Endowment Fund, and income earned from the Endowment Fund will be disbursed in the form of grants and soft loans to African development organisations and institutions, both in the diaspora and on the continent.
The AU Commissioner for Economic Development, Trade, Industry and Mining, H.E Albert Muchanga noted that the AU’s decision was historic, stating that the Heads of State and Government first made a commitment for a legacy project on diaspora investment a decade ago in May 2012, at the Global African Diaspora Summit in Johannesburg, South Africa. Commissioner Muchanga expressed the AUC’s gratitude to all Member States, stakeholders and development partners who supported and participated in the long formulation and consultative process. He thanked Professor Gibril Faal, the AUC Lead Consultant on Diaspora and Innovative Finance, author of the ADFC Framework Report, and founder of RemitAid™, for his leadership and longstanding commitment to expanding and enhancing diaspora contributions to development. He also urges all development and corporate partners to team up with ADFC, starting with the RemitAid™ scheme, to harness the untapped options and opportunities of diaspora investment and finance.
Note: The ADFC Framework Report was first produced in May 2019 after extensive research and consultations by the AUC Lead Consultant on Diaspora and Innovative Finance, Professor Gibril Faal. The Report underwent further stakeholder reviews starting in November 2019 in Cairo, Egypt. After a delay caused by the COVID-19 pandemic, consultations and reviews resumed in January 2021. Following a provisional endorsement in May 2021 and further consultations, on 17 December 2021, at the African Union Specialized Technical Council (STC) meeting on Finance, the AU Ministers of Finance endorsed the African Diaspora Finance Corporation (ADFC). The ADFC proposal and framework was then deliberated upon by the AU Permanent Representatives Committee (i.e. the Ambassadors) on 20-21 January 2022, leading to the historic adoption decision by the African Union Executive Council on 2-3 February 2022.
The ADFC Framework Report provided a new classification of diaspora investments, namely: Development Investment: Diaspora Philanthropy (DP); Socio-Economic Investment: Diaspora Remittances (DR); Economic and Business Investment: Diaspora Direct Investment (DDI); Regulated Financial Investment: Diaspora Portfolio Investment (DPI). It provided detailed qualitative and quantitative analysis. With formal remittance inflow to Africa in 2018 estimated at US$86 billion, the Report estimated that total remittance inflow was US$200 billion, factoring in informal and in-kind remittances [See chapters 2 and 3]. The ADFC Report also presented US$33.7 billion as a conservative estimate of the annual volume of the savings held by first-generation African migrants living outside Africa.
Source: African Union Information & Communication Directorate on 2nd April 2022