The Impact of Diaspora Liberians on the Economy The need for a Robust Diaspora Policy Formulation

Authors: J. Baryougar White & Aloysius Juwee Morris

There has been a mounting debate as to the role that Liberian immigrants play in the socio-economic development of Liberia. The role of these Liberians has been misconstrued by Liberians living in the country partly due to the perception and the

optics created during the course of the crisis in Liberia. Many diaspora Liberians are believed to have funded different warring groups that participated in the mayhem that lasted for over 10 years and killed more than a quarter of a million of our people. Because of said perceptions, we as a nation have grossly underestimated their role in the development of the country. Thus, this article highlights the role these Liberians play in the socio-economic development of Liberia with special emphasis on remittances.

According to the Cambridge English Dictionary, remittance is an amount of money that you send to someone or money that is sent by a foreign worker back to their own country. The online encyclopedia, Wikipedia, defines remittance as a transfer of money, often by a foreign worker to an individual in their home country. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers' remittances are a significant part of international capital flows, especially with regard to labor-exporting countries.

Every year, billions of dollars are sent home by migrant workers across the world to their home countries. In 2018 alone, according to world bank statistics, over 529 billion dollars were sent home to low and middle-income countries by migrant workers and that amount is expected to go up to 550 billion by 2020. Out of these staggering figures, Liberia's contribution has been remarkably underscored mainly by Liberians living in Liberia.

Wage levels in high-income economies have been empirically proven to be 5 times as high as those of low-income economies; a fundamental factor that has led to many workers leaving their countries in search of better opportunities. (Michael P. Todaro/ Stephen C. Smith Economic Development, 11th Edition pg. 695).

Liberia’s story has been filled with many years of turmoil, economic challenges and diseases. The national wealth too has been largely distributed unevenly as well as the climate to work for a living wage within the confines of Liberia have seemed largely impossible. Unemployment is at its highest peak and has been a major problem even during the pre-war years. This is a condition that’s due largely to the absence of a vibrant private sector which provides alternative employment for people. As a result of these and many other conditions, Liberians have preferred to move out of the country to seek better living conditions and a better living wage.

There are an estimated 500,000 Liberians living in the diaspora, spread across the US, Europe Asia, and Africa and every year these people remit hundreds of millions of dollars back home. The monies these people send home amount to huge percentages of the country’s GDP.

It has been empirically proven that the flow of remittances to home countries of immigrants forms significant portions of their respective countries' GDPs and has been made parallel to the inflows of Foreign Direct Investment. As with the case of Liberia, the remittances to the country have averaged 496 Million USD annually since 2013; which constitutes 15.37% of the country’s GDP.

On the above graph, the blue line represents the remittance amount sent to Liberia every year, the orange line represents the remittance per capita/head while the grey line represents percent of GDP of these remittances

Unlike Foreign Direct Investments, these remittances come directly to the recipients and government in turn collects taxes on these remittances in the tone of millions of dollars annually through the banks. Money sent home from abroad is shown to be more stable than both private debt and portfolio equity flows, and several times larger than international development aid.

According to the International Foundation for Agricultural Development, Remittances lift families out of poverty, improve health and nutrition conditions, increase education opportunities for children, improve housing and sanitation, promote entrepreneurship and reduce inequality; a concept that Liberia benefits from tremendously.

These remittances also help in the attainment of the SDGs, and in the case of Liberia the Agenda for Transformation, the Poverty Reduction Strategy and now the government’s Pro-Poor Agenda for Prosperity and Development. In order for the government to ensure a larger scale benefits from the financial remittances, it should create an enabling environment that harnesses these inflows to productive sectors of the economy; encouraging investment by these migrants by giving them favorable conditions for investment in the economy.

Creating such an environment should begin with proper accountability and adequate information on the flow of remittances. Such an initiative will provide the necessary bolster and recognition these diaspora citizens need.

In addition, the government should establish a tax return scheme on these remittances. A tax return scheme will create a position of benefit for these Liberians and encourage them to increase the level of remittance that could be use as investment. In the same vein, government should create incentives for businesses establish from these remittances.

According to World Bank stats, remittances to Liberia has grown to be the second largest financial inflows to the country next to Foreign Direct Investment. According to Kunt and Peria (2006), both of the World Bank, Financial remittances have been documented to have a growth enhancing and poverty reducing effect on financial development of developing economies such as Liberia.

The impact of Diaspora Liberians on the economy cannot be overly emphasized. Remittances from the diaspora has been the buffer to the economy. These remittances feed families and send children to school. Our festive seasons are happily celebrated mainly because of these remittances. Our diaspora Liberians are heroes and they must be applauded.

Aloysius Juwee Morris is an emerging Economist; a candidate for Masters in Applied Economics at one of China’s C9 Universities: Xi’an Jiaotong University. Xi’an, China

Johnny Baryougar White, is a former President of the University of Liberia Student Union (ULSU), a Human Rights Practitioner and a Fellow with the United Nations Office of the High Commissioner for Human Rights in Geneva, Switzerland with Master of Arts in International Relations