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A more productive use of international remittances?

posted on Monday, March 08, 2010 02:16 PM

There is growing recognition that remittances from the diaspora constitute a new, effective and sustainable form of development finance, contributing significantly to the attainment of the Millennium Development Goals. According to the DFID, remittances from the UK now exceed £2.7 billion a year. London Rebuilding Society has joined forces with migrant organisations in the UK to develop a model for collective investment of remittances for the development of community programmes in Africa. The model, Mutual Support for Economic Empowerment (MUSE) is being developed with support from the EC/UN under the Joint Migration for Development Initiative (JMDI) and will be piloted in Nigeria over the next fifteen months.

MUSE developed somewhat organically out of our Mutual Aid Fund (MAF). Under the MAF scheme migrant groups buy shares in LRS, entitling them to borrow up to 4 times the value of their original investment for the purpose of on-lending to their members. We found that these ‘apex’ groups were soon using the capital and financial and entrepreneurial skills they had accumulated under MAF to invest in and set up social enterprises back in their country of origin. MUSE is in part a response to this development. It is an example of how financial institutions and products can be genuinely demand led. MAF is a product which empowers the borrower since each group can adapt it to meet their specific needs. London Rebuilding Society is now working with these groups to create a sustainable and stable framework for such investments – MUSE.

MUSE is built on the principles of mutuality and self-help and will entail mobilising investment from migrant organisations in the UK and then using this investment as collateral for leveraging further investment from ethical lenders in the UK. This aggregated investment will then be used in Nigeria to invest in the development of social enterprises working in the areas of health and micro-credit. MUSE will thus be pioneering not only a new way of mobilising remittances, but also a new way of doing business with remittances. The model is innovative in that it goes beyond mobilising resources from the Diaspora for investment in countries of origin, but is underpinned by social entrepreneurship as a strategy for ensuring that migrant organisations in the Diaspora are sustainable and thus in a position to continue supporting development initiatives in countries of origin. In addition, the model shifts away from grant driven community development to a portfolio of financing packages that include profits from social enterprise activity, loan finance, community investment as well as grants

London Rebuilding Society is delivering MUSE in partnership with two Nigerian- based organisations, Nurses Across the Borders International and Edo State Women Association

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