The Commonwealth has called on economies such as Malawi to stop viewing emigration as a loss and start treating their diaspora as an untapped source of long-term investment capital.
In a report titled ‘From brain drain to brain gain: Unlocking diaspora finance in small States’, the Commonwealth estimates that diaspora investment potential is at over $73.2 billion (about K128 trillion) annually.
“Diasporas are not just sending money home, they are ready to invest in their countries’ futures,” reads the report jointly authored by Thomas Chataghalala Munthali, former National Planning Commission director general, Tamara Mughogho and Ruth Kattumuri of the Commonwealth Secretariat.
The report argues that emotional ties, savings and a willingness to accept lower returns make diaspora communities one of the most resilient and underutilised sources of capital for developing economies.
For Malawi, the opportunity is timely and urgent at a time foreign direct investment (FDI) remains subdued with public debt at about K16.9 trillion and remittance inflows weakening.
Reserve Bank of Malawi data show that FDI inflows declined from $160 million (about K280 billion) in 2023 to $148 million (about K259 billion) in 2024 while net remittances, amount payable after deducting certain charges, fell even more sharply from $21 million (about K37 billion) in 2019 to just $6 million (about K11 billion) in 2023.
The report proposes diaspora-targeted investment tools such as diaspora bonds, pooled savings schemes, equity funds, and digital platforms that make cross-border transactions easier and more transparent.
Reads the report in part: “Diaspora finance is more than remittances. It is investment capital, bonds, crowd-funding and goodwill… with a secret ingredient: emotion.”
The report builds on the “patriotic discount” concept, describing how many diaspora investors are willing to accept below-market returns in exchange for contributing to national development.
Scotland-based Malawian economist Velli Nyirongo believes Malawi should urgently create a Diaspora Equity Fund to allow structured, long-term investment in priority sectors such as agriculture, renewable energy and digital services.
“Equity involves shared risk and long-term commitment. It matches the mindset of many diaspora investors who want to be part of the solution,” he said.
Nyirongo said digital financial platforms, already in use for remittances, could be expanded to offer savings, insurance and investment products, but only under tighter regulation and improved transparency.
Governance analyst Anthony Mukumbwa in an interview warned that without structural reforms, formal channels will continue to lose ground to the informal foreign exchange market.
“Right now, many in the diaspora are bypassing banks because the black market offers better exchange rates.
“Let the central bank open up the market and allow exchange rates to be determined by demand and supply. That’s how you build trust,” he said.
Although the Malawi Government has acknowledged the value of diaspora investment, implementation has been limited.
In 2023, Minister of Finance and Economic Affairs Simplex Chithyola-Banda announced an initiative to attract foreign exchange through diaspora capital, but no progress updates have been published.
A similar policy introduced in 2017 also faltered due to weak coordination and lack of institutional follow-through.
While Malawi has the legal framework, including the Financial Services Act, Exchange Control Act, Securities Act and Payment Systems Act, these instruments remain underutilised.
The report observed that unlocking diaspora finance will require modernised tools and independent oversight.
