Mobilizing the diaspora for reconstruction of Haiti - via diaspora bonds


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In addition to the temporary protected status and facilitation of remittances - see my earlier post, when government offices and banks resume functioning, Haiti could usefully tap its large diaspora's wealth for the reconstruction of community infrastructure and social projects. This could be done via the issuance of "diaspora bonds". By diaspora bond, I mean not only bonding between the diaspora and the homeland, but more specifically a financial instrument for attracting investment from the diaspora.

In the past diaspora bonds have been used by Israel and India to raise over $35 billion of development financing (see my article with Suhas Ketkar). Several countries - for example, Ethiopia, Nepal, the Philippines, Rwanda, and Sri Lanka - are considering (or have issued) diaspora bonds recently to bridge financing gaps. Besides patriotism, diaspora members are usually more interested than foreign investors in investing in the home country. Not only Haitians abroad, but also foreign individuals interested in helping Haiti, even charitable institutions, are likely to be interested in these bonds. Offering a reasonable interest rate - a 5% tax-free dollar interest rate, for example - could attract a large number of Haitian investors who are getting close to zero interest rate on their deposits.

If 200,000 Haitians in the US, Canada and France were to invest $1,000 each in diaspora bonds, that would add up to $200 million. If these bonds were opened to friends of Haiti, including private charitable organizations, much larger sums can be raised. If the bond rating were enhanced to investment grade rating via guarantees from the multilateral and bilateral donors, then such bonds would even attract institutional investors.

By the way, if you are wondering whether Haitian immigrants are too poor to invest, consider this fact from the Current Population Survey of the US: nearly one-third of Haitian immigrants in the US belong to households that earned more than $60,000 in 2009. In comparison, less than 15% of the immigrants from Mexico, Dominican Republic and El Salvador in the US had that level of household income. A quarter of Haitian immigrants, especially women, are reportedly in the relatively higher paying health care and education sectors; only a small number of them are in the construction sector.

Credit enhancement would be necessary for Haitian diaspora bonds. My preliminary calculation suggests that a $100 million grant from official (or private) donors to guarantee such bonds (say, for 10 years, on an annual rolling basis) could actually generate $600 million of additional funding for Haiti! Such a guarantee structure could reduce interest rates on these bonds from over 15% to below 5% at the going rates. Also marketing diaspora bonds in the US would require a temporary exemption from SEC regulations; perhaps a tough sell, but well worth it under these extraordinary circumstances.


Dilip Ratha

Lead Economist and Economic Adviser to the Vice President of Operations, Multilateral Investment Guarantee Agency, World Bank

Otaviano Canuto
January 24, 2010

A great idea worth pursuing, Dilip. A good example of how innovative thinking may contribute a lot to improve lives of poor people.

Carrie Pemberton Ford
January 31, 2010

Dilip this is absolutely an initiative worth backing - I also think that it is worth driving forward ways in which the Haitiin diaspora can return on a flexible basis to senior managerial posts, or third sector initiatives within the country as it starts to recover - thus providing rapid routes back for knowledge transfer and a sense of connectedness for those Haitiins who have not migrated into the very different worlds in which their diasporic neighbours are invested.

February 03, 2010

Would Haiti's government have to set up? Could we do it? Could we help them do it?

Peter Burgess
February 12, 2010

The Haiti earthquake is another wake up call about the big issues that surround the raising of funds and the use of funds. The corporate sector reports on profit which is a result of using funds. The relief and development sector almost universally talks about money raised and money disbursed ... to which I would observe, this is not very interesting, what I want to know is how much good is being done with the money. After many decades of operation, it seems that the relief and development sector has very little idea of how much result it expects from the money it uses.

It would be good to get the diaspora involved, and good to have them mobilize resources, but the parallel issue is to get resources used so that there is meaningful socio-economic progress with world class performance metrics

Peter Burgess
Community Analytics

October 11, 2012


I was recently approach with the idea of issuing diaspora bonds for Haiti. The term diaspora bonds was not used but the essence of the project is the same. I am a financial professional with a major institution in the USA. I would love to get more information on how to facilitate the creation of these bonds. How do you maintain such a low interest rate for such a risky bond? Are the bonds issued by the Haitian government or a private entity representing the Haitian community? Would such a project interest a major US financial institution or would the project be overseen by a not-for-profit?

October 11, 2012

I'm sorry I mistyped my email in my last comment about diaspora bonds. please use to contact me.

Dilip Ratha
October 12, 2012

Thanks for your questions. Let me briefly reply to your questions in the order you pose them:

- A good source of information on diaspora bonds can be found in this paper . You may also want to read some chapters in the book on innovative financing for development .
- A low rate of interest on diaspora bonds can be expected because of lower rates that diaspora members get from saving deposits, and also because diasporas may have more knowledge and familiarity with their country of origin than foreign investors.
- Diaspora bonds can be issued by either the government or a private entity, but the funds raised should be used for a specific project -- that may require a credible oversight body.

Btw, a clever and very effective way to reduce borrowing costs and increase the tenor of a bond for Haiti would be to use donor grants to guarantee debt service for the next 12 months.

Vicki Brentin
December 21, 2013

Dilip, I came across this thread when doing some research on Haitian diaspora. I am curious if there is any updated information on the return of diaspora to Haiti post quake, with intent to invest and more significantly influence the rebuilding. Loved your ideas and wondered what measures have been taken to encourage investment by diaspora.

Bernier Lauredan
June 03, 2015

This is a great . The Bond was debated at Global Diaspora Congress at OAS and resolution/recommendations brought to the Haitian Government. The recommendations were well received by President Martelly who summoned his minister of Finance and the president of the Central Bank. Today, no follow up.

Eric Guichard
April 26, 2017

You can find a comprehensive study on Remittances for Development Finance for Sri Lanka. An indepth study of remittances based funding solutions we wrote for Asian Development Bank who commissioned the study. it includes practical examples of how to structure diaspora bonds, remittances-backed bonds and a new product which Homestrings has created called: Migrant Endowment Savings Accounts to address the problem of collateral and financial inclusion for Returnee Migrants. The report was commended by the government of Sri Lanka in an honorable mention at an OECD-ILO-ADB institute rountable on Migration in february 2017. please google: ADB Promoting Remittances for Development Finance - Sri Lanka feasibility Study. Please feel to contact me if you have any questions on the study.