As the global development financing landscape continues to evolve and face uncertainties, exploring alternative funding sources has never been more critical. One approach that consistently garners attention is diaspora investment—harnessing the financial contributions of migrant communities to drive economic growth and development in their home countries.
Remittances are a lifeline for millions, with the global diaspora sending billions of dollars home each year. While these funds are essential for household welfare, many migrants seek to go beyond providing financial support and invest in their home countries. To a certain extent this already happens where investment often occurs informally through relatives or friends, but to what extent is unknown. Understanding the true scale of diaspora investments is largely uncharted and the potential even more so.
Over the years, various models have emerged, including diaspora bonds, crowdfunding platforms, matched funding initiatives, and regional financing mechanisms led by institutions like the African Union. Despite growing interest, there is often a mismatch between investment appetite and viable opportunities and challenges persist across the different models, including limited trust in institutions, regulatory constraints and costs, poor financial literacy, weak communication channels, and exchange controls and currency considerations.
The recent IFAD experience in Mali presents a compelling case where new diaspora investment models focussed on equity investment were tested. Between 2020 and 2024, IFAD, through the European Union’s Transition Fund, piloted two approaches to mobilizing Malian diaspora investment in small and medium enterprises (SMEs) in Mali. These pilots explored different ways to connect diaspora capital with local businesses, addressing the critical gap between investment interest and viable financial mechanisms.
More than 70% of SMEs face a financing gap in sub-Saharan Africa, estimated at US$145 billion.
Testing New Approaches to Diaspora Investment
With 4 million members, the Malian diaspora sends home nearly US$1 billion annually, equivalent to 5% of the country’s GDP. While these funds are crucial for household consumption, many diaspora members—especially younger professionals—are eager to invest in businesses that generate jobs and drive economic growth, offering both self-sufficiency and financial returns. However, their investment opportunities in SMEs remain largely confined to personal networks and family connections, lacking the reliable and professional support needed to bring their investment ambitions to life.
IFAD’s ‘Investment practices and preferences of the Malian diaspora in their country of origin’ Report provides details on diaspora mapping of the Malian diaspora in select EU countries including assessing the willingness, ability and appetite to invest by diaspora networks as well as individuals.
Between mid-2022 and mid-2024, two pilot models were tested to bridge this gap:
- FADEV YiriMali – A pooled savings and impact investment model enabling diaspora members to collectively invest in Malian agribusiness SMEs. Inspired by the CIGALES investor-club model, FADEV YiriMali sought to establish diaspora savings clubs where members could pool funds and invest together in Malian SMEs. FADEV, a French social enterprise specializing in impact investment in Africa, served as the main partner, providing technical assistance, due diligence, and business support to maximize impact and investment viability.
2. Ciwara Capital – An investment company designed to offer professional fund management and risk mitigation for SME investments. Founded as a diaspora-led investment fund in France, Ciwara Capital was backed by professional impact investor Investisseurs & Partenaires (I&P) and partnered with Zira Capital, a Malian investment fund also supported by I&P. This model provided a structured vehicle for diaspora investors to contribute capital while benefiting from professional oversight, risk management, and strategic business support.
While both models aimed to mobilize diaspora capital, they took distinct approaches, leveraging different financial mechanisms and investment structures to achieve their goals.
Results and Key Learnings from the Pilots
FADEV YiriMali Outcomes: During the pilot, 18 young diaspora professionals (aged 25–35) invested in a moringa processing SME near Bamako, committing €12,000 with an additional €7,000 co-financed by FADEV and Cofides. This investment led to:
- 17 direct jobs supported, 24 jobs expected to be created
- 300 smallholder farmers supported through agricultural cooperatives, the number is expected to double in the medium term
For FADEV YiriMali, legal restrictions on shared savings accounts in the European Union made it difficult to formalize diaspora savings clubs in the way envisaged. As a workaround, FADEV created the FADEV-Passerelle Association, which collects funds and then lent money to FADEV to make investments in Mali. This workaround delayed implementation and complicated the investor communication, as it was a new and unfamiliar model.
The FADEV YiriMali project also had to adapt to the sudden shifts that followed the coup d’état in Mali, including the withdrawal of international aid to FADEV and a deteriorating economic climate. FADEV was initially set to co-invest alongside the diaspora, a key factor in building investor confidence. However, with the cessation of FADEV’s investment activities in Mali and growing economic uncertainty, its withdrawal from the market (apart from to support the diaspora investment) posed significant challenges to sustaining momentum. A partial guarantee supported by IFAD, helped to mitigate the risk of capital losses for youth investors.
Ciwara Capital Outcomes: In the same context, Ciwara Capital successfully mobilized €208,000 from diaspora investors within six months, surpassing expectations. Investments were made in two Malian SMEs—one in agribusiness and another in education—through Zira Capital, resulting in:
- Over 700 direct jobs supported
- More than 3,000 smallholder farmers supported through the financing of a rice processing company (see IFAD’s short video on Ciwara Capital’s investment in Mali in a company that is supporting rice farmers to adapt to the effects of climate change and help food security and nutrition in the region.
Additionally, Ciwara Capital produced an investment guide to mobilize diaspora and a White Paper: Mobilizing the diaspora through private equity: the case of Ciwara Capital in Mali, offering a blueprint to donors, professional investors and diasporas for scaling similar initiatives in other countries. The company remains operational and aims to transform into an investment fund and to raise €8 million euros from 2026.
Key Lessons Learned
Both Ciwara Capital and FADEV YiriMali demonstrated strong diaspora interest in investment in SMEs. Both remain operational and are seeking additional financing to scale.
Understanding Diaspora Motivations & Investment Behaviour: FADEV and I&P conducted in-depth studies on diaspora investment behaviour, shaping their models accordingly. Their adaptable investment structures reflect the aspirations, constraints, and risk appetite of their respective target audiences while also guiding governance, communication, and engagement strategies. (See IFAD’s Investment Practices and Preferences of the Malian diaspora in their Country of Origin Report for detailed data insights.)
Targeted Investment Models: Each initiative adopted distinct approaches tailored to different diaspora segments. Ciwara Capital targets high-net-worth individuals, with higher value ticket sizes and investments, seeking financial returns and socio-economic impact. FADEV YiriMali engages young professionals with lower-value ticket size and investments, focusing on impact as well as an interest in learning about entrepreneurship in Mali.
Regulatory Compliance & Lending Model Feasibility: FADEV YiriMali’s structure—pooling funds in an association that lends to FADEV for investments—proved viable and replicable. However, the Cigales model, which involves pooling money in bank account by savings clubs for investments, faced regulatory challenges in the EU. IPDEV is currently an investment company, rather than an investment fund, due to the costs involved.
Trust & Strategic Partnerships: Partnerships with I&P, FADEV, and Zira Capital were crucial in building credibility, ensuring quality investment opportunities, and providing essential investment management, capacity building, and impact monitoring. FADEV’s co-investment in SMEs further strengthened diaspora confidence. The long-lasting operational experience of both operators in Mali and risk capital investment in Africa has been decisive to mitigate high uncertainties linked to the fragile Mali context.
Investor Profiling, Diaspora Networks & Marketing: A deep understanding of the Malian diaspora in France was critical for effective investor engagement. Ciwara leveraged ethnic marketing experts to refine diaspora segmentation and tailor marketing strategies including intensive training sessions on equity investment. FADEV relied on existing diaspora networks for outreach followed by a series of trainings to individuals interested to invest. However, for FADEV, delays and changes in the investment model affected trust and investor appetite, highlighting the importance of ensuring a well-structured investment proposition before launching.
Enhancing Financial Literacy for Investors & Investees: Diaspora investors require training, technical guidance, and legal support to manage investment groups or funds effectively. Similarly, Malian entrepreneurs—particularly in agriculture—need support in understanding private equity structures. Addressing these gaps is essential for fostering sustainable investment.
Commitment, Resilience & Risk Appetite: Despite political and economic instability, diaspora investors have demonstrated unwavering commitment to Mali. While international organizations and some investors withdrew, diaspora-backed associations like FADEV YiriMali continued financing SMEs, even in uncertain conditions. This resilience highlights not only a strong risk appetite but also a long-term dedication to Mali’s economic growth.
Need for Long-Term Donor Support: Early-stage donor funding was essential for legal structuring, compliance, marketing, and initial investment capital. However, the typical 2–3 year donor cycle is insufficient for sustainability. Both models require additional financing to ensure long-term viability with a gradual substitution from donor to private sector financing.
Looking Ahead: Unlocking the Full Potential of Diaspora Investment
The experiences of FADEV YiriMali and Ciwara Capital provide critical insights into structuring, implementing, scaling, and sustaining diaspora-driven equity investment models. These lessons can inform future initiatives aiming to mobilize diaspora capital for impact.
- Adapting to Challenges & Scaling Impact: FADEV’s initial pilot had to pivot due to regulatory constraints and faced delays exacerbated by political and economic instability in Mali. Despite these challenges, the initiative proved the diaspora’s strong interest in innovative investment solutions. The association, created to raise diaspora capital and mobilise their savings, remains operational and FADEV is actively seeking additional funding to support new investments. Lessons from this experience could inform the replication of similar initiatives across other regions by FADEV and other impact investment organizations.
- Ciwara Capital’s Growth Ambitions: Ciwara Capital is also seeking additional financing with the goal of transitioning into a full-fledged investment fund. Its vision includes attracting both diaspora and non-diaspora investors to finance equity investments across the region, demonstrating the potential to scale diaspora investment beyond its initial scope.
These pilots are not just about mobilizing initial investments—they are about establishing trust, building track records, and creating the vehicles necessary for long-term diaspora investment. By proving the viability of these models, they lay the groundwork for more substantial and sustained investment flows in the future. However, as with any early-stage investment initiative, achieving financial sustainability takes time. Expecting investment vehicles to break even within a short timeframe is unrealistic, particularly in emerging markets where businesses face unique challenges.
By continuing to refine these models, fostering strategic partnerships, and securing patient capital, diaspora-led investment can evolve from pilot initiatives into scalable engines for economic development in Mali and beyond. With the right support, diaspora investment can become a scalable and resilient driver of economic transformation in some of the world’s most vulnerable regions.
