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 it 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.
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.
Lessons for Ghana
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.
The Bottomline
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.
