blog – FFRemittances

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.

Amid ongoing insecurity, climate change and political instability, Mali faces significant challenges in attracting the investment needed to lift its population out of poverty. In one of the world’s least developed countries, where one in five people lives on less than US$2.15 a day, families look to the Malian diaspora as a crucial source of economic support.

Overseas Malians send back over US$1.1 billion a year – remittances that account for over 5 per cent of the country’s GDP and meet the basic needs of countless rural families.

As new generations of emigrants start sending funds home, their investment preferences are shifting. IFAD research has found that, alongside sending remittances and funding social development, more and more members of the diaspora are exploring ways to invest in businesses that yield both societal impact and financial returns – and agriculture is high on the priority list.

Read more

The world is getting hotter, rainy seasons less predictable, storms more intense and in many places there is either too much water, or not enough– always in the wrong place and the wrong time! Global climate change is experienced locally by people across very different places and circumstances. For the rural poor in Africa, Asia and the Pacific and Latin America and the Caribbean this threat poses an ongoing humanitarian crisis. Extreme drought, floods, heatwaves, storms, and other climate hazards worsen poverty, threaten food and water security, health, livelihoods and settlements.

Consider the smallholder farmer in Mali, Guatemala or the Philippines who looks skywards and observes that “the rainy season never starts or stops when it used to, sometimes it begins slowly and then at the end, we get floods…in other seasons we begin with heavy rains and end in drought.” For smallholders who rely on crops to feed their families and livestock, shifting precipitation patterns can be life threatening. Fishers, herders and forest enterprises are also negatively impacted by a changing climate that contributes to land degradation, desertification, deforestation and shifts in the ranges of animal and plant species.

Farmers in Mali

Smallholder farmers and other rural livelihoods struggle to adapt to this growing set of risks in the face of declining economic opportunities and life chances. But most lack the know-how, tools, and finance needed to better protect themselves from climate change. Consequently, migration becomes a rational choice, particularly for rural youth. Migration is in many ways an investment decision for rural families, and the financial returns from migration can help in creating the economic opportunities that make such decisions less necessary in the future.

The main financial returns from migration are remittances – the money that migrants send to loved ones back home and they represent a vital financial lifeline for millions. In 2023, remittances to low- and medium-income countries were an estimated US$656 billion, resources that helped families with household expenses, including education and health and productive activities. In fact, remittances to these countries are more than three times Official Development Assistance (ODA) and for most developing countries these flows are more than the total of ODA and foreign direct investment (FDI).

Diaspora investment is another financial outcome generated by years of migration. These investors are migrants who settle in host countries and invest in productive activities in their countries of origin. These successful migrants invest across many sectors, including agriculture and land, and directly in enterprises. Many support entrepreneurial start-ups and bring a wealth of financial and business experience to local economies back home.

A good example of one such diaspora investor is an IFAD partner, Ciwara Capital, a venture capital fund owned by the Malian diaspora. Ciwara Capital recently invested in SOPROTRILAD, a Malian rice company with 400 employees that supports over 3000 small rice producers. Ciwara investment has enabled the implementation of the System of Rice Intensification (SRI) to reduce greenhouse gas emissions, water and fertilizer use and to increase crop yields.

Co-founders of Ciwara Capital

Is there scope for a programme to facilitate the use of migrant resources, both remittances and diaspora investment, for building climate resilience, generating local economic opportunities and eventually reducing the incentives to migrate?

For instance, evidence indicates that remittances help families better cope with climate change in agriculture and related rural activities. Remittances enable the purchases of resilient products and tools, such as new seeds, crops, water conservation tolls and a host of climate smart practices. IFAD pilot projects show that rural recipients will invest a portion of their remittances in climate resilience when given the right tools and incentives, thereby increasing agricultural productivity and the ability to withstand climate shocks. Scaling these models could empower more rural families to use their funds for resilience in sustainable ways.

These actions could include better financial options and know-how for families, such as low-cost microloans for resilient farming, climate insurance and other financial products that broaden the choices, information and know-how for remittance recipients and senders. Lower transaction fees for sending remittances for climate-related uses or savings programs designated for climate-resilient assets would also encourage greater resilience without infringing on the private nature of these resources.

Smallholder farmer in Mali

Toward this end, IFAD’s Financing Facility for Remittances (FFR) will launch a global programme, ResilientRemit, to maximize the impact of migrant remittances and diaspora investment for improving rural climate resilience and the sustainability of land use and other forms of natural capital, while increasing livelihoods, economic opportunities and reducing the incentives for migration.

ResilientRemit will scale innovative remittance-linked solutions, including technical and financial products that support climate resilience and sustainable practices, as well as business and financial models that facilitate diaspora investments in rural climate resilience. The programme will build know-how for smallholders and other rural enterprises, expand employment skills for rural youth, women and other disadvantaged groups. ResilientRemit will leverage IFAD projects and partnerships to broker opportunities for youth training and apprenticeships for decent employment. These could include IFAD Agribusiness Hubs, where available, and building on the impact of other IFAD projects such as the Rural Enterprise and Remittance Programme (RERP) in Nepal that provided migrant households with financial education and training in climate resilient agriculture among others.

Financial literacy training to women in rural Nepal

ResilientRemit will conduct market assessments that provide the first standardized collection of data on “green remittances,” including the behaviour and strategies of remittance senders and receivers, diaspora investment and related opportunities for improving rural resilience and reducing the incentives for migration. The programme will share learnings and strategies for enabling frameworks that facilitate the use of remittances, and will forge partnerships with national and international public, private and civil society stakeholders on leveraging migrant resources for adaptation and resilience and reducing rural migration. ResilientRemit can provide the incentives, know-how and options that can enable the financial fruit of past migration to sow the seeds for rural resilience and opportunity that will allow more youth to remain and come home.