From Brain Drain to Brain Gain: Unlocking Diaspora Finance in Small States

With the recent wave of socio-economic shocks that have impacted the economies of small states, scaling up access to finance remains crucial. Exploring untapped sources of financing is therefore imperative to help member states achieve their development targets, including the Sustainable Development Goals, and build resilient economies.

The vital role of diaspora finance as an important source for funding national development remains largely untapped in many countries. Comprising remittances and diaspora investments, diaspora finance offers a reliable and stable alternative to traditional forms of external financing.

This paper seeks to explore how diaspora financing can contribute meaningfully to development. It examines the overall role of diaspora finance, emphasising the contributions to development of remittances and the potential for supporting key sectors in small states like tourism and addressing climate change. The paper reviews the range of tools available to facilitate diaspora investment and offers an in-depth analysis of diaspora bonds, highlighting the key factors that contribute to their success. It also presents policy recommendations tailored to the needs and contexts of Commonwealth small states.