Africa’s diaspora and its small givers can transform the continent

When we discuss philanthropy within the African continent, too often the focus is on the wealthiest class of Africans and the large contributions they can make. However, what matters more when it comes to charitable giving is the potential for billions of aggregate dollars from millions of small givers.

Charities Aid Foundation’s World Giving Index estimates that if Africa’s middle-class joined the rest of the world’s middle classes to give 0.5 per cent of their spending, the continent and the rest of the world would have $319 billion in resources for civil society organizations annually by 2030.

Indeed, it is the African diaspora and Africa’s middle-class that are the missing pieces needed to transform philanthropy in Africa and unlock the path towards achieving the Sustainable Development Goals (SDGs).

Philanthropy in Africa needs to catch up with the role that small donations play in transforming our communities. We have too-quickly accepted that philanthropy must be channeled via specific kinds of institutional arrangements or particular organizations.

Yet, philanthropy represents a voluntary donation, and every day, millions of migrants and middle-class families provide funds directly to their family, relatives and acquaintances voluntarily, and thus, are engaging in a form of philanthropy.

In most instances, middle-class philanthropy happens under the radar, unnoticed or unidentifiable. So are remittances made through informal channels that reach communities across the continent.

Those who send funds to support family and friends do not count themselves as benefactors, yet their contribution plays a significant role in transforming their principal recipients and extended networks.

For instance, two million Somalis abroad send home $1.4 billion, the equivalent to 23 per cent of the country’s GDP, and higher than any amount of foreign aid. Overall, African diaspora’s contribution amounts to $63 billion per year. Communities use it for education, homebuilding, land purchases and farm improvements, all critical enablers of social transformation.

We cannot ignore the philanthropic potential of their contributions. Imagine if the African diaspora redirected $315 million or 0.5 per cent of their annual transfers, to civil society organizations.

The real value, though, lies in reducing the transfer costs, that is the fees charged for funds to reach communities, which amounted to $16 billion in 2014. The commitment to reduce fees by 2030 from 11.5 per cent to 3 per cent is a positive step. It will save a lot of funds that can be directed from the diaspora into charitable giving to attain the SDGs.

The philanthropy of a few prominent African billionaires and millionaires are often cited as the primary solution. However, on a continent set to house the largest youth contingent in the world, it is in our interest to make Africa’s middle-class the engine of economic transformation.

As such, there is value in creating mechanisms for Africans to commit resources to their communities as some commit to their churches. Laws and norms of our societies should govern the evolution of philanthropy in Africa. African civil societies should play a critical role in reframing the debate to secure new sources of funding.

The onus is on us. If Africa’s middle-class can earmark funds of, say, between $1,000 to $10,000 per year for civil society organizations, the impact will be huge.

For instance, more investments in women entrepreneurs, like a clothing trader named Teresia, who works on the Uganda-Kenya border are required. Teresia and many other women manage $20,000 or more in working capital per year.

They do not need microfinance. Their businesses could grow even more from just $10,000 or more in philanthropic investment from the middle class.

Philanthropy should not be limited to select groups of people with large sums of money. There is often a gap that the middle-class can fill. The diaspora is contributing to individuals, but can do so more effectively and differently now.

We cannot afford to ‘lose the middle’ if philanthropy in Africa is to become a real impact-driven force across its fifty-four countries.

Carl Manlan is chief operating officer at the Ecobank Foundation, and a 2016 New Voices Fellow at the Aspen Institute.

The March 2018 issue of Alliance will look in-depth at diaspora philanthropy