HOMETOWN ASSOCIATIONS (HTAs) AGRIBUSINESS INVESTMENT

Hometown associations agribusiness investment. Picture of mobile money transfer.
Diaspora hometown associations agribusiness investment.

Hometown associations agribusiness investment. The diaspora agribusiness investment model discussed in this article is useful if you are looking for group investment opportunities. Especially, if you want to invest in agribusiness in your country of origin.

This article addresses how diaspora investments by hometown association goup members can contribute to agribusiness development. Based on a key group feature.

In this article you will read about the features of diaspora hometown groups.

In addition, the article presents an agribusiness model that your hometown association can take advantage of, in order to invest in agribusiness in your country of origin.
A diaspora comprises of actors which include individuals (diasporans) and groups such as diaspora organisations.

These associations include hometown associations, religious associations and business associations.
If you live in the diaspora, you are probably a member of one or more associations.

Otherwise, you may have been supported by them. Especially as a newcomer, with resources such as money, information about work, housing etc.

What is a diaspora hometown asssociation (HTA)?

A diaspora hometown association (HTA) is a group of people living outside their country of origin.

They represent their place of belonging e.g. village, town or district, in their country of residence.

These associations are usually concerned about the welbeing of their members in the diaspora and with the improvement of their place of origin.

Features of diaspora hometown associations.

Diaspora HTAs serve their community in different ways for example:

  • A key feature of HTAs is the transfer collective remittances. These are used to support developmental activities in their place of belonging such as building of schools, roads, healthcare centres etc.
  • They tend to raise funds among group members through membership fees.
  • Sometimes they also carry out fundraising events. 
  • In some other cases, diaspora HTAs can carry out philanthrophic projects in other areas in the country of origin.
  • They arrange or participate in cultural events to establish connections between their country of residence and country of origin.

Why is there an interest in diaspora agribusiness investments?

One key characteristic of a diaspora is the shared belief that there should be a collective committment to the maintenance or restoration of an original homeland. As well as, to its safety and prosperity.

The World Bank Group is deepening its engagement in “mobilizing diaspora investments for development, e.g., via diaspora bonds, and leveraging remittances for financial inclusion remittances”.

Importance of hometown associations collective remittances to agribusiness.

We know that diaspora remittances are money sent home to family and friends, for philanthropic projects, community-to-community transfers, business-to-business transfers etc.

However, despite the fact that diaspora remittances to low -and-middle-income countries has grown to above $529 billion since 2018.

More than thrice the sum of the OECD’s annual Overseas Development Assistance (ODA) in the same year.

Yet, there is no clear link between remittances and development in many developing economies.

Top ten remittance-receiving countries. Bar chart by World bank.
Top ten remittance-receiving countries.

Ways collective remittances can drive hometown associations agribusiness investment.

When a diaspora community association sends money home, it is an attempt to engage themselves in poverty alleviation and rural development in the country of origin.

There is an ever increasing need to invest in agriculture as the global population rises and dietary preferences change.
Many people are taking advantage of the growth in the vegan or plant-based market. There are opportunities for investing in agribusinesses that serve this market.

However, the agriculture sector is constrained by a variety of factors such as: inadequate or ineffective policies and high transaction costs to reach remote rural populations.

A study of motivations for investing back home was carried among individual Nigerians in diaspora.

The results show that more diasporans prefered to invest in a business in Nigeria. To support job creation and income for the local community.

Motivations of diasporans for investing back home. Diaspora research bar chart.
Source: Akiode (2017).

Since the objectives of diaspora community associations are primarily in the interest of their shared ancestry.

Also, their collective remittances are often used as a means to influence homeland politics and to develop social projects.

Therefore, there are established linkages through which those projects are carried out.

The same linkages can be mobilised for transfering collective financial resources to support agricultural development.

However, more people in diaspora will be interested if such investments are business investment rather than philantropy.

Hometown association agribusiness idea.

If you are interested in investing in agriculture as a community development association in diaspora.

A way to contribute to agriculture and invest in agribusiness is an adapted village adoption model.

What is a village adoption model for agribusiness investment?

A village adoption model is a rural credit programme that makes use of the resources existing in all layers of a rural society.

The existing resources are then used to generate resources and lower transaction costs to support smallholder farmers.

The village adoption scheme has been implemented in the past to help rural farmers to access financial capital in India. It has also been adopted in some parts of Nigeria.

How will a village adoption model work for agribusiness?

The way the village adoption model could work is that HTAs would establish a diaspora credit scheme fund which will be managed through a bank e.g. a microfinance bank.

All farmers are expected to belong to a registered cooperative society.

HTAs would adopt villages in the same way as families adopt children.

When the diaspora community association adopts a village, it is conscious that it will be respomsible for mobilising enough resources.

Home town associations will mobilise both financial and human resources to make the smallholder farmers self reliant and prosperous.

Smallholder farmers will be able to borrow at very low interest rate with little or no form of security.

Monitoring is enforced through peer-monitoring. Everyone is free to report the conduct and activities of the other person during group meetings.

The role of the bank is to act as a catalyst and it has to plan for the integrated development of the adopted villagers.

In addition, traditional rulers help to confirm the genuineness of the farmers and the accuracy of the information about land tenure and other customary practices.

The bank acts a co-ordinator, facilitating the disbursement of adequate credit for farming operations.

On top of that, the bank will also bring together all the agencies that are involved in supporting the agricultural productivity of the rural farmers.

The use of a chain guarantee system means that a default by one, is a default by all – everyone is equally liable.

Conclusion

Diaspora community associations are primarily concerned with the development of their place of origin.

The practice of sending collective remittances to support projects back home is a key characteristic of HTAs.

This practice is an established mechanism that helps to channel support from the diaspora back home.

The same practice can be used to encourage diasporans and diaspora hometown associations to make financial investments in agribusiness.

References:

Assessing the Participatory Aspects of Credit Programmes: evidence from a

Village Adoption Scheme in Nigeria by C.U. Okoye 1998.

Surplus labour and the development of the rural economy: implications for Anambra state of Nigeria by Ike D.N 1988