Diaspora business engagement in Somali regional state of Ethiopia

With support from the EU Trust Fund and in partnership with Mercy Corps, DRC Diaspora Programme and DRC Ethiopia have since 2020 joined forces to enhance diaspora business investment and engagement in the Somali Regional State of Ethiopia.

Among others, DRC has engaged with the Somali diaspora to assess how remittances are used and how they can contribute to building long-term business on the ground. DRC has supported the use of remittances for productive purposes with a USD 250.000 top-up programme for local initiatives, training for new entrepreneurs and sharing of best practices with the local community and the diaspora.

Business engagement

Through a grant from the EU Trust Fund, DRC country office in Ethiopia has included a component on diaspora investment and support to local business with a view to strengthen self-employment and job creation for refugees and host populations in the Somali Regional State of Ethiopia. DRC is mainly focusing on two models to engage in the region.

Partnerships between diaspora investors / diaspora entrepreneurs while still overseas
Remittances for Start-Up support

Investment

Types of Investment

The types of investment, in which the interviewed diaspora investors engaged in, include: agriculture, such as crop and fodder production, milk processing, among others; manufacturing industries such as steel/iron sheet factories; construction with an emphasis on real estate development and rental of construction materials; and the service sector, mainly on education, hotel and cafeteria services.

Motives of Investment

Motives for investment included mainly practical problems or challenges that the investors have observed in the region including unemployment, lack of better schools, shortage of fodder supply, gaps in housing provision, gaps in supply of construction equipment and materials, lack of leisure places etc.

The desire to contribute towards the solution of such problems has necessitated most of the investors to come and invest in the region. In fact, they would also accrue benefits in the form of profit from their investments while simultaneously playing their part to solve the identified gaps. Investors are for example engaged in:

Education
Technological innovation
Steel and plastic recycling factory

Therefore, it can be deduced from the aforementioned excerpts of key informant interviews, that most of them were inspired by the situation on the ground within the region as they look for investing in certain areas to benefit both themselves and the community. Some other diaspora investors reported that they were motivated by the awareness campaigns of the former regional government through the regional television and also through the outreach activities that they carried out. Some of the diaspora investors interviewed indicated that they were attracted by the awareness campaigns and opportunities that the government offered to the diaspora investors in the region. Finally, the recent change of the regional government has also served as one of the motivating factors for diaspora investment in the region. To this end, a diaspora investor engaged in real estate sector also noted how he and his business partner came to invest in the region.

To sum up, the motives of the diaspora investors were to contribute to, and benefit from, the development of the region by engaging in areas where there is serious gap. Gains to their pockets as well as to their hearts were the two main factors that motivate diaspora engagements according to the IOM (2018). The findings of this assessment reveal that diaspora groups are motivated by the available opportunities for business investments in the region as well as the desire to contribute back to their homeland and support developments in their communities.