Unlocking diaspora remittances: A strategic blueprint for shifting consumption-based remittances into investment

1.0 Introduction/Background

Diaspora remittances have been the subject of numerous studies at the macro and micro levels, and there is strong evidence that remittances are a major engine for development in Africa. Diaspora remittances have been the subject of numerous studies at the macro and micro levels, and there is strong evidence that remittances are a major engine for development in Africa. According to the World Bank in 2019, formal remittances to Africa reached US$86 billion [World Bank, 2019). Of this, 70% was received by Egypt, Nigeria, Morocco and Ghana. In the case of Nigeria, the amount remitted in 2018 (US$22 billion) was larger than the entire federal budget that year (US$18 billion). For five countries, formal remittances alone account for over 10% of GDP, namely, Comoros, The Gambia, Lesotho, Cape Verde, and Liberia. In addition to formal channels, migrants and the diaspora still use unregistered and informal channels to send money to Africa.

Remittance flows to Sub-Saharan Africa grew by 6.1 percent in 2022, to US$52.9 billion. Regional growth in remittances in 2022 was largely driven by strong remittance growth in Ghana (11.9 percent), Kenya (8.5 percent), Tanzania (25 percent), Uganda (17.3 percent), and Rwanda (21.2 percent). Remittances to Nigeria, accounting for about 38 percent of total remittance inflows to the region, increased by 3.3 percent to US$20.1 billion. The increase in remittance flows to the region supported the current accounts of several African countries dealing with food insecurity, supply chain disruptions, severe drought (Horn of Africa), floods (in Nigeria, Chad, Niger, Burkina Faso, Mali, and Cameroon), and debt-servicing difficulties. They also send in-kind remittances. If funds sent through formal, informal, and in-kind remittances are taken into account, it is estimated that annual remittances to Africa can be as high as US$200 billion (Dilip, 2020)

Remittances have been the largest source of net foreign inflows ahead foreign direct investment (FDI), ranking higher than official development aid (ODA) in Ghana. According to World Bank data on inward remittance, Ghana has witnessed a substantial rise in remittances inflow from US$2 billion in 2014, US$5 billion in 2015, US$3 billion in 2016, US$3.5 billion in 2017 to US$4.5 billion in 2021 to US$4.7 billion in 2022, increased to US$ 4.8 billion in 2023 According to Bank of Ghana data on inward remittance in the country showed that Ghana recorded US$ 4.8 billion in 2024 but increased to a record high of US$7.8 billion in 2025.

The international remittance space in Ghana has been growing since the Bank of Ghana introduced the Payment Systems and Services Act (2019) and the National Payment Systems Strategic Plan (2019-2024) to create an enabling regulatory environment which enhances financial innovations. Inward remittances to Ghana in 2025 grew to a historic high of nearly US$7.8 billion driven by digital innovation, increased diaspora confidence in economic reforms and urgent family support needs. This surge saw remittances exceeded foreign direct investment at about 6% of GDP, occurred despite early year concerns that a strengthening local currency would decrease inflows. Digitalization and Fintech Partnership had been a major contribution in the growth in the inward remittances.  A major driver has been the adoption of digital platforms for remittance termination. The Bank of Ghana mandated that Payment Service Providers (PSPs) and Fintech collaboration with Money Transfer Operators (MTOs) and banks to provide cash-to-account services. These channels offered greater convenience, reduced transaction costs and enabled mobile money wallets for instant receipt. Bank of Ghana’s improved regulatory frameworks (UGIR 2025). Bank of Ghana introduced updated guidelines for inward remittance services (UGIR) to increase transparency and speed. Macro-economic stability and confidence have also contributed to the growth of inward remittance in 2025.

The year saw a stabilization of the Ghana Cedi and falling of inflation. This has created confidence attracting more formal remittances rather than unofficial channels. Enduring diaspora support and need driven by consistent family needs for education, health, funerals and housing rather than just economic arbitrage. Improved public financial management, debt restructuring and a strengthened fiscal position increased the trust of the diaspora in sending funds through formal system. With these factors increased overall volume, thus Bank of Ghana has continued to push for Diaspora bonds initiative aiming to transition these flows from consumption to investment –oriented capital. Remittance inflow to Ghana is the single most important evidence of diaspora investment in the country. In addition to formal channels, migrants and the diaspora still use unregistered and informal channels to send money to Ghana, and they also send remittances in kind.

Remittances are a large and stable source of external financing that can be creatively leveraged for Ghana’s development goals. Remittances can improve capital market access of banks and governments in poor countries by improving ratings and securitization structures (Ratha 2006). Hard currency remittances, properly accounted, can significantly improve a country’s risk rating. It may even encourage many poor countries that are currently not rated to obtain a credit rating from major international rating agencies. Non-traditional sources of finance, such as remittances have grown in importance in the last decade in many African countries. In 2024, Nigeria received close to US$25 billion in remittances, ranking first in Sub- Sahara Africa followed by Ghana (US$ 4.8 billion) with country recorded (US$7.8 billion) in 2025. Because the flow of remittances to Ghana is high, rising, and stable, it offers huge opportunities to serve as collateral to secure financing for the country. Sub- Sahara African countries like Ghana should securitize remittances to promote investments, especially for infrastructure on the continent.

2.0 Diaspora Bonds: History and Lessons from Global Perspective (Israel and India)

Diaspora bonds can be an attractive vehicle for countries to secure a stable and cheap source of external finance. Since patriotism is the principal motivation for purchasing diaspora bonds, they are likely to be in demand in fair as well as foul weather. According to Ketkar & Ratha (2010) and Gevorkyan (2021), Israel has essentially offered a smorgasbord of diaspora bonds for various infrastructure projects such as telecommunications, energy, and transportation, thus accommodating the interests of a diverse group of diaspora members. In contrast, India has pursued a much narrower focus of using diaspora bonds only to alleviate pressure on their balance of payments and to raise capital during periods when access to capital on the international capital markets has been scarce. Additionally, Israel has offered vastly more flexible terms on which capital has been raised, offering fixed and floating rates and access for non-diaspora members to invest. In contrast, India has only offered fixed rates and access to diaspora members (Ketkar & Ratha, 2010). Moreover, Israel has chosen to back up their diaspora bonds by registering with the U.S. Securities and Exchange Commission (SEC), whereas India has decided against involving foreign jurisdictions, such as the SEC, despite losing out on access to the U.S. retail investor base. On the flip side, India has been able to avoid rigorous documentation and the risk of having to resolve potential disputes under U.S. law (Ketkar & Ratha, 2010; Gevorkyan, 2021).

3.0 Diaspora Bonds: History and Lessons from Across the African Continent

Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, has revealed plans to channel remittances into investment through diaspora bonds. Given the vision, it is emerging that Africa’s own history with the instrument reveals a nuanced mix of ambition, missteps, and emerging success. Amid the commitment, a recent research paper by banking and finance consultant, Dr. Richmond Atuahene, has offered deep insights from across the continent of Africa.  As part of efforts to guide the vision, Dr. Atuahene’s research reveals that patriotism alone does not guarantee investor participation as credibility, flexibility, and market design play a crucial role.  Globally, diaspora bonds have proven their worth. Countries such as Israel have raised tens of billions over decades, while India has consistently tapped its diaspora during times of financial pressure. Africa, however, has struggled to replicate this scale, largely due to structural and trust-related constraints. He therefore takes a walk through how some countries, even including Ghana, have attempted diaspora bonds in the past, how they ended, and the lesson for the BoG as he prepares to walk that path.

• Ghana: A Modest Start, a Missed Opportunity

Diaspora bonds are not new in Ghana. Ghana’s first experiment came in 2007 with the Golden Jubilee Savings Bond. It was designed as a local currency instrument with a 15% interest rate; it targeted Ghanaians both at home and abroad. According to Dr. Atuahene, the results were underwhelming. Of the GHS50 million target, only 40% was raised, and strikingly, just 6% came from the diaspora. The underlying issue was structural. By restricting eligibility strictly to Ghanaian citizens, the bond excluded a broader class of diaspora-linked investors. These included dual nationals, second-generation migrants, and non-citizen affiliates with strong ties to the country. In effect, Ghana marketed to the diaspora but did not fully open the door to them. 

• Ethiopia: Ambition Undermined by Trust and Regulation

Ethiopia stands as Africa’s earliest and most ambitious adopter of diaspora bonds. Beginning in 2008, the country issued bonds to finance what would later become the Grand Ethiopian Renaissance Dam, a flagship infrastructure project symbolizing national pride. The initiative evolved over time, introducing flexible features such as multi-currency denominations (dollars, euros, pounds, and local currency), varying maturities, and interest rates tied to LIBOR. Minimum subscription thresholds were also lowered significantly to attract a wider base. Yet, despite these innovations, performance fell short. Concerns over governance, political risk, and limited trust in institutions discouraged widespread participation. Matters were further complicated when Ethiopia faced regulatory action from the U.S. Securities and Exchange Commission, resulting in a financial settlement.

While thousands of diaspora investors participated, the overall scale remained modest relative to the project’s financing needs.

iii. Kenya: Strong Demand, But Structural Limits

In 2011, Kenya issued a 12-year infrastructure bond with a diaspora component. Offering a 12% return and aimed at raising KES20 billion, the bond achieved a 70% subscription rate, which is deemed as one of the strongest performances on the continent at the time. However, like Ghana’s earlier attempt, Kenya imposed nationality restrictions, limiting participation to Kenyan citizens. High minimum investment thresholds further narrowed the investor base. While the bond demonstrated appetite for such instruments, it also revealed how design constraints can cap their full potential.

• Nigeria: A Breakthrough Model

A turning point came in 2017 when Nigeria launched its diaspora bond on international capital markets. Structured as a global bond and listed in both the UK and the US, it was regulated by leading authorities and marketed through established financial institutions. The $300 million issuance, offering a 5.625% return over five years, was oversubscribed, reaching 130% of its target. Crucially, Nigeria’s approach addressed many of the shortcomings seen elsewhere: it broadened access, ensured regulatory credibility, and aligned pricing with market expectations. The result was that the diaspora investors responded positively when the instrument combined emotional connection with financial viability. Nigeria’s experience sharply differs from the earlier African experiences in diaspora bond issuance, suggesting that careful planning, securing regulatory approval in key high-income jurisdictions, in which large Nigerian migrant populations live, and competitive pricing may all have influenced the bonds’ success.

Across these experiences, a consistent pattern emerges. Diaspora bonds succeed not simply because they appeal to national pride, but because they function as competitive, trustworthy financial instruments.

According to the World Bank, Africa’s untapped diaspora capital remains vast, but unlocking it requires a shift in approach. Key lessons include expanding eligibility beyond strict citizenship, offering flexible and market-driven returns, ensuring tradability, and strengthening transparency and governance. For diaspora investors, these bonds offer the opportunity to help their country of origin while also providing an investment opportunity. The potential for diaspora bonds is significant for many countries with large diasporas abroad. However, diaspora bond issuance from countries with weak governance and high sovereign risk may require support for institutional capacity building and credit enhancement from multilateral or bilateral agencies.

Remittances already play a vital role in Ghana’s economy, but largely fuel consumption rather than long-term investment. The BoG Governor’s vision seeks to change that dynamic by transforming diaspora funds into a sustainable source of development finance.

The continent’s history offers both warning and guidance. Ghana’s next attempt at diaspora bonds will need to move beyond symbolic appeal and embrace a more sophisticated, investor-centric design. If the approach is done right, it could mark a decisive shift, from missed opportunity to a powerful new financing frontier.

4.0 Ghana Diaspora Bonds: The Potential Risks & Challenges to the Success of the Initiative.

As the governor of the Bank of Ghana (BoG), Dr. Johnson Asiama pushes forward with talks on the possible introduction of diaspora bonds, banking and finance consultant, Dr. Richmond Atuahene, is offering a deeper reflection of the possible risks and challenges that could mitigate the success of the initiative. In a research paper on the initiative, Dr. Atuahene centred on the possible deep-rooted structural, financial, and credibility challenges that could cause the initiative to hit rocks if not properly addressed. For Dr. Atuahene, the analysis is not to cast doubt on the diaspora bonds but to help in the formulation and design, so the risk factors can be identified early and addressed. While diaspora bonds promise to convert remittances into long-term investment, the risks surrounding Ghana’s attempt are significant and therefore require strong efforts to curtail them. In his research paper, the following are some of the possible risks and challenges he identified, calling on the authorities to pay attention to as they advance the initiative.

• Trust Deficit After Domestic Debt Exchange 2022/2023

Trust Deficits had many in the diaspora lack confidence in the transparency and governance of local investment structures, leading to reluctance to engage through formal, data-collecting channels. The “Trust Deficit” after Ghana’s Domestic Debt Exchange Programme (DDEP) 2022/2023 refers to the significant erosion of confidence by investors—including banks, pension funds, and individuals—in the Government of Ghana’s ability to act as a reliable borrower and steward of financial assets. Many individual bondholders and institutional investors, having suffered significant “haircuts” (net present value losses of ~30% for banks), became highly risk-averse, viewing government securities as no longer “risk-free”.

Recent Debt Exchange Programme undertaken by Ghana has made a lot of investors skeptical on prudent use of investor funds. Local investors are still aware of the challenges of the debt exchange programme which resulted in maturity dates of bonds extended by 15 years, while many took a haircut. Dr. Atuahene believes that the shadow of Ghana’s 2022 domestic debt exchange still looms large. Many potential investors, especially those abroad, remain wary of government commitments after the country’s default. Concerns about transparency, political interference, and the use of funds continue to erode confidence, making trust the single biggest hurdle. The trust deficit continued to affect market dynamics into 2024-2025, with lingering doubts about the sustainability of the new diaspora bonds.

• Weak Legal and Regulatory Frameworks

Current Weak legal and regulatory frameworks in Ghana threaten the success of new diaspora bonds by eroding investor confidence, increasing risks, and creating potential for mismanagement. Key issues include weak contract enforcement, limited creditor protections, high corruption, and political interference, which reduce the likelihood of diaspora participation and increase costs. Weak legal protections and transparency issues diminish trust, a critical factor for attracting investment from citizens abroad

Fragile regulatory environments make it difficult to enforce contract terms, increasing the risk that bondholders cannot recover their investments. Weak governance increases the perception of sovereign risk, requiring higher interest rates to attract investors, making the bonds expensive to issue. Without robust oversight, concerns arise regarding the transparency and ultimate use of funds, reducing trust and inhibiting participation.

A fragile legal environment poses another major risk. Weak enforcement of contracts, limited creditor protection, and underdeveloped bankruptcy systems undermine investor security. Without strong legal backing, diaspora bonds may struggle to gain credibility in global markets. Poorly defined legal standards for financial instruments can complicate compliance, particularly for international investors. These legal and structural weaknesses, combined with high macroeconomic instability like cedi depreciation and inflation, make potential diaspora investors wary of holding local-currency instruments.

• High Transaction and Compliance Costs

Cross-border regulatory compliance is expensive, often consuming as much as 4% to 5% of a bond’s value. Proper navigation of these regulations is necessary to ensure the bond remains financially viable.

High transaction and compliance costs represent a significant hurdle in the issuance of diaspora bonds, often limiting their viability to large-scale initiatives and affecting their overall profitability. These costs arise from several key factors, including legal, marketing, and regulatory compliance requirements in foreign jurisdictions. Marketing diaspora bonds to citizens in countries like the USA or UK requires costly registration with securities and exchange commissions or listing authorities, such as the UK Listing Authority and USA SEC. Costs include bond counsel, credit rating agency fees, financial advisor fees, and underwriting fees. Because diaspora bonds are specialized retail products, they require extensive network infrastructure, often needing to be distributed through retail banks, which drives up costs. Building confidence and marketing the bonds to the diaspora is complex and requires specialized, expensive efforts. High transaction costs, if not offset by a large volume of capital (usually requiring high subscription rates), can make the issuance not worthwhile. Out of several African countries that have issued diaspora bonds (Ghana, Ethiopia, Kenya, Nigeria), only the 2017 Nigeria Diaspora Bond was fully subscribed, highlighting the challenge of high costs relative to demand. From legal structuring to international marketing and regulatory compliance across countries like the United States, United Kingdom, and Canada, costs can consume up to 4–5% of the bond’s value. These expenses risk wiping out the financial benefits Ghana hopes to gain.

• Complex Cross-Border Regulations

Each major diaspora destination has its own strict securities laws. Navigating these fragmented regulatory regimes is both costly and time-consuming.

While countries like Nigeria successfully secured approvals in multiple jurisdictions, replicating that process remains a major challenge for Ghana.

Complex cross-border regulations are critically important in diaspora bonds because they govern the legal, financial, and tax interactions between the issuing country and the host countries where the diaspora resides. These regulations directly impact trust, cost, and legal feasibility, with compliance for instruments like US SEC regulations often required to ensure success. Diaspora investors need assurance that their investment is secure and that contract enforcement is robust. Weak legal and regulatory frameworks can cause potential investors to lose confidence. Issuing bonds internationally requires adherence to foreign securities laws, such as SEC registration in the US or compliance with UK listing authorities, to allow the legal sale of securities to residents abroad

• Currency and Inflation Risks

For diaspora investors earning in foreign currencies, Ghana’s exchange rate volatility is a serious concern. Depreciation of the cedi could significantly erode returns, especially on local-currency-denominated bonds. High inflation further weakens the attractiveness of such investments.  Currency and inflation risks are critical in the issuance of diaspora bonds because they directly affect the attractiveness of the investment to investors and the long-term debt sustainability of the issuing country. If not managed properly, these risks can lead to high interest payments, currency depreciation, and a potential default, particularly in developing economies, as seen in recent debates over Ghana’s diaspora bond plans. High debt-to-GDP ratios, often found in Ghana exploring diaspora bonds, mean that sudden currency depreciation can make coupon payments and principal repayment in hard currency very difficult, causing a potential debt trap. Diaspora bonds are often marketed on patriotism. However, if inflation is high and uncontrolled, this “patriotic” incentive may not be enough to attract investors who face significant losses in the real value of their savings.

• Limited Data on the Diaspora Market

Limited data on the diaspora market in Ghana is a significant barrier to formal investment, largely driven by the reliance on informal financial channels, a lack of trust in local systems, and weak data collection frameworks. While remittances are high—estimated at roughly US$7.8 billion in 2025—a substantial portion of these funds flows through informal channels, such as friends, relatives, or personal carriage, making them difficult to track

Surprisingly, Ghana lacks comprehensive data on its diaspora. Dr. Atuahene observes that where they are, how much they earn, and their investment preferences, to a very large extent, remain a mystery. A large portion of funds and investment activities go through informal channels rather than formal banking systems, making it difficult for the state to monitor. There is a lack of structured information regarding the demographic profile of the diaspora, their specific investment interests, and their capacity to invest, which makes targeted engagement difficult

• Mismatch between Investor expectations and bond structure

Diaspora bonds often require “patient capital,” tied up for years. However, many diaspora investors prefer liquidity and quick access to their funds.

Additionally, not all diaspora members are high-net-worth individuals, limiting their ability or willingness to invest in long-term instruments.

A mismatch between investor expectations and diaspora bond structure is critical because it directly determines the success or failure of the bond issuance, impacting the ability of developing nations to raise capital. When the structure—such as interest rates, maturity, currency, or risk—fails to align with what diaspora investors (who are often risk-averse regarding their home country) expect, it leads to undersubscription, reputational damage to the issuer, and a failure to tap into the intended savings. Diaspora investors often feel sentimental ties to their home country, but they are investors first and foremost. A failure to align the bond structure with their risk tolerance—especially in politically unstable environments—undermines trust and causes failure, as seen in Ethiopia’s 2008 and 2011 attempts

• Institutional Confusion and Policy Gaps

Unclear and overlapping mandates among government agencies handling diaspora affairs create confusion. Without a coherent national diaspora policy, engagement efforts remain fragmented, weakening trust and coordination. Ghana’s pursuit of diaspora bonds to leverage an estimated US$7.8 billion in annual remittances faces significant hurdles due to weak data, low trust following the 2022 debt restructuring (DDEP), and lack of institutional coordination. While the Diaspora Affairs Office of the President (DAOOP) drives engagement, a clear, centralized regulatory framework for bond issuance is needed. Key institutional confusion & policy gaps are lack of institutional harmony, absence of reliable data, trust and risk perception, weak communication strategy. Multiple entities (DAOOP, Ministry of Foreign Affairs, Bank of Ghana) are involved, causing a lack of a common voice and strategic alignment in engaging potential investors. A major structural gap is the lack of comprehensive mapping of the diaspora, including their locations, income levels, and investment capacity, hindering targeted marketing of bonds. The 2022 Domestic Debt Exchange Programme (DDEP) significantly damaged investor confidence, making diaspora members skeptical of government securities. The absence of a clear communication strategy leads to information asymmetry, preventing the effective dissemination of bond information and reducing potential investment. There is a lack of specific, tailored legislation to guide the issuance, ensure transparent fund management, and guarantee investor protection, requiring new regulatory frameworks

• Fragmented Diaspora Communities

The Ghanaian diaspora community is diverse. He notes that they organized along ethnic, religious, and regional lines. This fragmentation makes it difficult for the government to communicate effectively and design inclusive investment products that resonate across groups. Fragmented diaspora communities can significantly hinder the success of diaspora bonds by eroding the trust, communication, and collective identity necessary to encourage investment in their home country. Because diaspora bonds often rely on “patriotic” investment—where individuals accept lower returns to support national development—high levels of fragmentation can turn potential investors away. Many diaspora members live outside their homeland due to conflict, political repression, or economic mismanagement. A fragmented community often includes groups that distrust the issuing government, which can lead to low adoption rates, as seen in the case of Ethiopia’s, which fell short of expectations. Diaspora bonds thrive on a shared vision and a “patriotism” factor. Fragmented communities—divided by ethnicity, political affiliation, or generation—lack a unified purpose, making it harder to mobilize a “critical mass” of investors required to make the bond viable

• Overconcentration on Western Diaspora

Government engagement has largely focused on Ghanaians in Europe and North America, overlooking significant populations within Africa and other regions. This narrow focus risks missing out on a broader investor base.

The overconcentration on the Western diaspora (specifically in North America and Europe) in policy and engagement strategies—such as Ghana’s “Beyond the Return” initiative—often overlooks the substantial contributions and potential of other diaspora segments. While Western diaspora members are key for foreign exchange and technology transfer, a narrow focus can neglect crucial regional and global partners

Key points regarding this overconcentration include, neglect of Intra-African migration, cultural and practical adjustment hurdles, neglect of Non-Western diaspora regions, and focus on remittances over investment.  While Western engagement is popular, 90% of migrants in West Africa originated from other West African nations in 2020, representing a massive, often under-utilized, regional diaspora network. Western diasporas often face significant challenges when returning, including bureaucracy, infrastructure issues, and cultural adjustment, leading to some individuals leaving again. Diaspora engagement strategies often underemphasize communities in the Middle East, Asia, and other regions, which are also sources of remittances and investment. A heavy focus on attracting returnees often obscures the need to shift from reliance on short-term remittances to long-term investment from diverse, global sources. This imbalance suggests that a broader, more diversified approach to diaspora engagement could enhance development outcomes and economic stability.

• Reliance on Remittances Comes with Risks

Relying on remittances to structure diaspora bonds is risky primarily because it volatilizes debt repayment by linking it to unpredictable, private flows which are highly sensitive to global economic shocks and migration policy. While remittances are stable source of household income, securitizing them for sovereign debt introduces substantial risks, including currency mismatch, informal channel leakages and potential economic distortions in the receiving country like Ghana. Key risks of remittance-backed diaspora bonds are high volatility of inflows, leakages via informal channels, currency and default risk, shift from consumption to debt loading, fragile investor trust, regulatory barriers and compliance costs. Remittances are not guaranteed and can drop significantly during economic crisis or pandemic Covid 19 crisis in host countries thus leaving issuing country unable to service the debt.

A large share of remittances often flows through informal, unregistered channels rather than formal financial systems, making them difficult to track, trace and capture for bond repayment. Remittances are often sent in hand currency (US$, GBP, EURO) but used in local currency (Cedi). If the bond is denominated in foreign currency, it risks default in the local currency devalues a common scenario for many developing countries. Remittances act as a safety net for household consumption. Redirecting these funds to cover sovereign debt payments can strain domestic economies, raise prices for consumables and distort local markets. If the issuing government has poor governance or previous debt defaults- cases in Ghana or Ethiopia the diaspora may lose confidence making the bonds undersubscribed and unsuccessful. Securitizing future flows requires strict compliance with international laws (e.g.) USA SEC which are costly and difficult navigate, potentially exceeding the benefits of the funds raised. In summary, while remittances are a significant source of foreign exchange, they are not a stable collateral for long-term, structural debt due to their reliance on private behavior and external economic conditions.

Remittances are not guaranteed. They depend on migrants’ incomes, global economic conditions, and even regulatory scrutiny around money transfers.

As seen in countries like the Philippines, treating diaspora flows purely as income rather than investment capital can limit long-term development impact.

• Financial Structuring and Credit Concerns

Ghana is enhancing its diaspora bond framework, focusing on secure, transparent, and attractive investment pathways to support infrastructure and SME financing, as detailed in recent reports on the country’s economic strategy. However, trust remains a significant challenge following domestic debt restructuring, making robust financial engineering and clear, trustworthy investment structures essential for success. Bonds are typically long-term to fund developmental projects, with potential for lower coupon rates compared to international bonds due to patriotic investment motives The focus is on structuring bonds that are accessible on the retail market for non-residents and comply with necessary SEC and regulatory requirements

Questions also remain about the structure of Ghana’s proposed bonds. He warns that without backing from credible international institutions or asset-based guarantees, investor appetite may be weak. Ghana’s sovereign credit rating, around the lower “B” range, further complicates the picture.

The Domestic Debt Exchange Program (DDEP) has severely affected investor confidence, raising concerns about potential “haircuts” and repayment delays. High public debt, inflation, and volatility in exchange rates constitute significant risks for potential investors. Potential investors demand high transparency, credibility, and secured repayment guarantees to feel comfortable investing in Ghanaian securities. Increased focus on strengthening fiscal discipline, such as funding a “sinking fund” for debt recovery, is being implemented to improve the risk profile and investor sentiment. Ghana aims to emulate successful models from India and Israel by providing tailored financial instruments to build trust among the diaspora, ensuring that investment pathways are both rewarding and secure.

• Informal Channels Undermining Formal Flows

A significant portion of remittances in Sub-Saharan Africa flows through informal channels. This reduces the volume of funds within the formal financial system, limiting the potential base for securitized diaspora investments. Informal channels, such as unauthorized hawala-style transfers and hand-carrying cash, undermine Ghana’s formal diaspora bond efforts by diverting foreign exchange away from the banking system. These methods avoid banking fees and official scrutiny, limiting the Bank of Ghana’s ability to capture liquidity for developmental, formal instruments. Intermediaries often retain foreign currency offshore, using local currency loans to pay recipients in Ghana, which drains liquidity. High usage of informal channels makes it difficult to map diaspora income levels and investment preferences, complicating the design of attractive, targeted bonds. Informal channels are often preferred for their speed and lower costs, compared to the perceived risks of formal financial instruments following debt restructuring, which makes diaspora investors cautious.

• Understanding international regulatory compliance Requirements

Ghana must show greater understanding is needed of regulatory compliance requirements for each major host country, in particular the United States, the United Kingdom and Canada, which represent major migrant destination countries, each with widely differing securities and investment regimes. Typically, each country approaching the diaspora market has had to conduct this process individually, for example, Nigeria secured US and UK regulatory approval for its 2017 diaspora bond. But to mobilize African diaspora finance at scale, a more effective process is needed. With compliance costs expected to remain high, the Ghanaian authorities must collaborate   regularly with USA, UK and Canadian Securities authorities to mitigate these costs, provide initial and periodic assessments of the regulatory compliance regimes in these destinations.

Dr. Atuahene agrees that the vision behind diaspora bonds is compelling; however, clear success will depend on more than good intentions. For Dr. Johnson Asiama and policymakers, the challenge is to rebuild trust, strengthen institutions, and design a product that meets both global financial standards and diaspora expectations.

Without these reforms, diaspora bonds risk becoming another well-intentioned idea that struggles to move from promise to performance.

Diaspora bonds often require “patient capital,” tied up for years. However, many diaspora investors prefer liquidity and quick access to their funds.

Additionally, not all diaspora members are high-net-worth individuals, limiting their ability or willingness to invest in long-term instruments.

5.0 Towards a Successful Diaspora Bonds Issuance: 10 Strategic Recommendations for Policy Direction

Given the history of diaspora bonds in Ghana and Africa, banking and finance consultant, Dr. Richmond Atuahene, believes that there is a need for things to be done differently and strategically to make the initiative effective and successful. As the Governor of the Bank of Ghana (BoG), Dr. Johnson Asiama, advances plans to introduce diaspora bonds, the banking and corporate governance consultant is offering fresh ideas for the initiative. These “strategic recommendations”, if implemented properly, are what he believes will turn the idea into a credible and successful financing tool for Ghana’s development. His recommendations go beyond theory, offering practical steps to transform diaspora goodwill into sustainable capital.

• Make Diaspora Bonds a Core Development Tool

Diaspora bonds are specialized debt instruments issued by Ghanaian government or Bank of Ghana to its citizens living abroad to mobilize capital for development projects, functioning as a patriotic tool that that offers a lower cost of borrowing while connecting expatriates with their homeland growth. They are considered a core development tool because they provide a stable, long -term source of foreign currency to fund infrastructures like highways, efficient railway network, water dams, healthcare or education rather than relying solely on short-term private loans or foreign aids. These bonds are often earmarked for specific national projects such as Nigeria’s US$300 million bond in 2017 for infrastructure or Ethiopia’s attempt to fund the Grand Renaissance Dam.

Dr. Atuahene agrees with the governor that the country should move diaspora funds from consumption to investment. Instead of remittances being spent on short-term needs, diaspora bonds should channel these funds into long-term national projects. By tapping into the savings and patriotic instincts of Ghanaians abroad, government can raise relatively cheaper, stable financing compared to traditional external borrowing. Crucially, these bonds should be tied directly to visible infrastructure, such as roads, railways, energy, and water systems, so investors can see the impact of their money.

• Leverage Remittances through Securitization

Leveraging remittances through securitization in diaspora bonds means using future, predictable cash flows of money sent home by migrants as collateral to issue bonds to international investors, allowing Ghana to raise large -scale, low cost capital for projects. Instead of relying only on individual, smal-value transfers, this technique gathers these flows to secure debt which lower risks and can lead to investment grade-rating for the bonds. Dr. Atuahene highlights a powerful but underutilized strategy, which is using future remittance flows as collateral to raise financing. Through securitization, Ghana can package expected inflows, like remittances, export revenues, or tourism receipts, and use them to back bonds issued via special purpose vehicles. This structure, often managed offshore, reassures investors by ensuring repayments are made directly from foreign currency inflows. Countries like Brazil and Turkey have successfully used this model to secure better credit ratings and cheaper financing than their sovereign borrowing would typically allow. For Ghana, this could unlock access to larger pools of capital at lower cost.

• Tie Bonds to Specific, High-Impact Projects

Ghana tying diaspora bonds to specific, high impact projects primarily to build trust with investors, to trigger patriotism and ensure the investment is seen as tangible contribution to national development rather than general government debt. By earmarking funds for infrastructure highways, efficient railway systems, airports or dams government can bypass investor skepticism and attract capital from overseas citizens eager to improve living conditions in the home country. One of the strongest ways to build trust is transparency. Dr. Atuahene recommends linking diaspora bonds to clearly defined, large-scale projects, such as national highway systems or modern railway networks. When investors can track where their money is going, confidence improves, and participation is more likely to increase.

• Strengthen Institutional Backing

Strengthening international institutional backing is critical for Ghanaian diaspora bonds because it addresses the core challenges of low investor confidence after global default in 2022, regulatory hurdles in foreign jurisdictions and the need for credit enhancement to overcome high sovereign risk. While diaspora members often show patriotic interest in investing, they still require assurance that their investments are secured and transparently managed, particularly when dealing developing nations like Ghana. Credibility can also be enhanced by partnering with reputable international institutions. Organizations like Multilateral Investment Guarantee Agency and African Export-Import Bank can provide guarantees, technical support, and risk mitigation. Such backing reassures investors that both political and commercial risks are being actively managed.

• Invest in Data and Diaspora Mapping

Investing in data and diaspora mapping before issuing diaspora bonds is crucial to ensure high subscription rates, mitigate risk, and structure instruments that align with savings, investment preferences and trust levels of the diaspora. Without detailed mapping of where Ghanaian nationals reside, their income levels, and their savings patterns, bonds risk failing as experienced by countries like Ethiopia which fell short of its target compared to successful, data driven issuances by India and Israel. A recurring gap is the lack of reliable data on Ghana’s diaspora. He notes that who they are, where they live, and their investment capacity must be known to the Bank of Ghana.

Dr. Atuahene argues that better data will allow government to design targeted investment products and communicate more effectively. Without this, even well-designed bonds may fail to reach the right audience.

• Strengthen Legal Frameworks and Accountability

Strengthening the legal framework and accountability is key for Ghanaian diaspora bonds to build investor trust, ensure compliance with both local and international regulations and guarantee the transparent use of funds. Because diaspora bonds investors often have high levels of skepticism regarding their home country’s management, a strong legal structure provides the necessary security, while accountability mechanisms, such as transparent reporting, ensure the proceeds are directed toward intended projects. Trust hinges on strong institutions. The government may need new legislation to ensure investor protection, transparent fund management, and clear rights for bondholders. Improving regulatory systems and creditworthiness will be key to convincing diaspora investors that their funds are safe and well-managed.

• Build Strong Investor Protection Mechanisms

Ghana must build stronger investor protection mechanisms in diaspora bonds primarily to build trust and overcome skepticism regarding the risk of default, particularly when issuing country had been saddled with weak governance as well sovereign risk after the country default in 2022. These protections such as registration with international bodies like USA Securities and Exchange Commission, escrow accounts, and foreign currency denomination – which are essential to convert patriotic sentiments into capital as shown by successful issuances in India, Israel and Nigeria  compared to the failure in Ethiopia . To address major investor concerns, Dr. Atuahene recommends embedding safeguards directly into the bond structure. These include issuing bonds in stable foreign currencies (such as dollars, euros, or pounds) to reduce exchange rate risk and offering tax incentives to improve returns. He calls for securing partial guarantees from institutions like World Bank or African Export-Import Bank and backing bonds with future remittance flows to ensure repayment.  For him, these measures are essential to rebuilding confidence, particularly after recent economic challenges.

• Enhance Flexibility and Investor Appeal

Flexibility matters in the designing and marketing of diaspora bonds because it enables issuer to balance patriotic sentiment with economic viability, mitigate risk and tap into a diverse investor base that ranges from small -scale savers to wealthy Ghanaians. A flexible approach including varied denomination, currency options and project targeting-overcomes distrust in governments and increases the likelihood of oversubscription as evidenced in India, Israel and Nigeria. Providing options, such as allowing investors to receive payments in local currency if they have business interests in Ghana, can broaden participation.

• Transparency in the use of proceeds is critical to the issuance of Ghanaian diaspora bonds.

The proceeds of Diaspora bonds in Ghana should be earmarked for projects appealing to the Diaspora such as infrastructure projects, efficient railway systems, high ways, and social amenities. The Grand Renaissance Dam for example is very symbolic to Ethiopians as they have been clamouring for years to exploit their major national resource – the Nile River – which features in the earliest accounts of their national and cultural history. Likewise, the history of Israel, particularly the holocaust, played a great role in the decision of many Jewish people to invest in Diaspora bonds in the expectation of an eventual return to their home country. Israeli nationals have a shared vision to become a true “light unto nations,” that is, a source of creativity benefiting millions throughout the world. The country has traditionally been a leader in the fields of science, medicine, environmental management, water and technology. The proceeds realized through the sale of Israel bonds has helped to cultivate the desert, build transportation networks, create new industries, resettle immigrants, increase export capability, and maximize the nation’s overall economic potential. Thus, the end use of funds raised by the Diaspora is important and the issuing country must acknowledge that it is accountable to this group of investors, just as strongly as its own residents.

• Trust is probably the key factor in Diaspora bond issuance in Ghana.

Trust is the critical, foundational factor in Ghanaian diaspora bond issuance because it directly mitigates high-risk perceptions and bridges the gap between patriotic willingness to invest and the fear of losing funds due to poor governance or volatility. Investors require confidence that funds will be used for specific, transparent development projects rather than general government spending. High trust levels help overcome skepticism regarding political stability, regulatory quality, and economic management, which are major determinants of success. Following disruptions in the domestic debt exchange program, clear communication and trust in government accountability are vital to encouraging diaspora participation. Trust allows diaspora members to overlook certain risks and invest based on sentimental attachment, relying on their belief that the government will manage funds properly

Good governance, transparency and political stability are the foundations of success. Investors resident abroad, given their distance and in some cases, the underlying reason for their departure from the home country, must feel that the government has the capacity and goodwill to manage proceeds properly. This is why countries such as Morocco have been very successful. in leveraging migrant resources. In Ethiopia for instance, there is no capital market or bond law which governs issuances. This certainly dampened the comfort level of investors abroad, which in turn caused the Ethiopian government to focus more inward to local investors. The success of such diaspora bonds is contingent upon the government establishing credible, transparent, and legally sound frameworks to protect investments.

The study recommendations make is clear that diaspora bonds are not just a financial instrument; they are a test of trust, policy coherence, and execution. For Dr. Johnson Asiama and policymakers, success will depend on combining patriotic appeal with strong financial engineering, credible institutions, and transparent governance. He believes that if these elements align, Ghana could unlock a powerful new source of development finance by turning the diaspora into an opportunity for lasting economic transformation.

6.0 Conclusion

First and foremost, it shows the need for Ghana to ramp up engagement activities with its diaspora if they are to be able to leverage its remittances. Equally important is to allocate more resources to rebuilding confidence in the Ghanaian market in general, including but not limited to stabilizing the macroeconomic environment, strengthening legislation around consumer protection legislation, and cracking down on corruption. From the above we have shown how the diaspora continues to act as an important stakeholder in economic growth and development in countries of origin and/or transit, both through remittances but also investment in family businesses and property. Moreover, such financial contributions are mostly channeled to the informal and MSME sectors, which in Ghana are the motor of economic growth and, critically, job creation. Diaspora communities therefore represent increasingly important economic (as well as political) constituencies for governments in countries of origin. As noted above, diaspora remittances can help Ghana overcome the development financing gap and raise additional investment finance to meet growing infrastructure, energy, and other needs in national development planning.

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