TUESDAY 10 FEBRUARY 2004

MR CHUKWU-EMEKA CHIKEZIE, COUNCILLOR MURAD QURESHI AND DR LOLA BANJOKO

  Q160  Mr Davies: You think they would do it cheaper.

  Councillor Qureshi: They will have to be tested. The real problem is—

  Q161  Mr Davies: I want very specific answers. If they could do it cheaper and their existence is well known, why is that not happening at the present time?

  Councillor Qureshi: I heard proposals the last time I was there in November that they are putting up mechanisms for that. The other role they could play, which would be an interesting development, is they could also convince the migrants that investing in projects that they advance would be a useful way of putting their money into projects which they sponsor, so it moves away from the family-centred investment which they tend to have. There clearly is a market there.

  Q162  Mr Davies: That is an altogether different function, finding and promoting investment opportunities, if they are good investment opportunities, it is altogether different from transferring money to the targets chosen by the owners of the money, in this case mostly their families.

  Councillor Qureshi: I do not know how extensive their networks are in the Middle East, that would be the critical thing.

  Q163  Mr Davies: You do not have any other suggestions.

  Dr Banjoko: In terms of my suggestion I think when you look at it the remittance market is a dark, uninformed market, in other words if I want to send money home I do not have a lot of information, I am not well-informed, it is all by word of mouth, somebody will come to me and say, "have you tried this money transfer, they are cheaper than this?" It is not a case of picking up a booklet, have a look at the rates. Make it more transparent and then competition becomes much healthier, people will be forced to drive their cost down because there are some cheap ones, but they cannot compete on the same scale as the large organisations. The first thing everyone wants to do is to use the cheaper option, that is why people send money through friends or family. I think creating more transparency and making people more informed so you are an informed consumer of this service would help. I think that is something which should be looked at.

  Mr Chikezie: Can I say on this point, let us not forget that where some of these money transfer businesses are located are actually in the communities where there is a high concentration of migrants and diasporas. With trans-national business we do not fully know what their role is in the communities, in areas that are quite marginalised and poor in London and in the United Kingdom. Whilst we are looking at competition as important, the idea that a multi-national bank moves in now and takes that market and puts these smaller operators out of business as the consumer I win but it is the community that has actually been generating some wealth and jobs locally is something that we have to be very careful about.

  Q164  Mr Davies: We were already talking about having an effective transfer mechanism—the cheaper the transfer mechanism, the more people are likely to transfer. On your own evidence both of your organisations have said this is an enormously important flow, far more important than the flow of total aid, we have seen the figures already in our inquiry, then surely the priority is to make sure this mechanism work as efficiently as possible. If it is not a fully understood market, if there are informational problems, as Dr Banjoko was suggesting, you want more transparency and more competition, and so forth. I think we have explored that as far as we can this afternoon. I wanted to come back to what Councillor Qureshi said about remittances, the question was, "how do we make better use of them?" He spoke about the need for DFID to develop policies with regard to them. My colleague Chris McCafferty asked what specific policies you had in mind and you said something about encouraging people to buy bonds. Is that right?

  Councillor Qureshi: I understand from the last act DFID has now these new powers. I feel in conjunctions with the Treasury it is something worth pursuing which would merit a lot of consideration by the diaspora communities. One of the issues that we come across and we have talked round is governance issues back at ancestral homes. This may be one way of avoiding some of those issues, although I do think we can play a role in that. I do think there is scope for that. I suggested the type of investment I think migrants might be interested in, road, airport, infrastructure, the type of thing which is quite straightforward to do.

  Q165  Mr Davies: What concerns me is surely there is a potential conflict here because there is a confusion between three different things, one is the transfer function, who is delivering the money most cheaply and putting it in the bank account in Bangladesh or the recipient country, that is one thing and we have agreed that the system is not working as adequately as it should be. The second thing is giving people good investment advice, that seems to be exactly the same if you are living in Dhaka or Los Angeles or Tokyo, you have a range of possibilities for putting your money into investment and maybe you need some professional advice about what to do with it. The third thing is aid policy, there are governments who are determining it is a good idea to invest in one thing rather than another and build infrastructure rather than something else. They are terrible conflicts of interest in mixing up these things. If you are offering people a good investment and saying, this is a good way to invest for your retirement, your future, your children's future that should not be mixed up with some development policy of your own because if so you will find that you are not certain that you are giving genuinely disinterested investment advice, which is a very serious matter. Equally this should not be mixed up with transferring money, you should not feel that because you are transferring money the money is somehow being diverted to some purpose which might not be in your own long-term personal interest. Is it not highly desirable, as in any other good transparent financial market that there should be a clear distinction made between these three things and there should not be the kind of muddle or confusion which I am referring to.

  Councillor Qureshi: I do not think there is the muddle that you are suggesting. I think it is quite acceptable to go to a bank and transfer money or exchange money on the one hand and invest in some product they offer to you. I am not suggesting that is the model we are talking about, I am talking about acting as an honest broker, whether it be an indigenous NGO involved in the transaction of the money if it has the networks, particularly abroad, and governments like the United Kingdom Government offering this. Ultimately people make their own decisions about whether the return is good enough for them or not.

  Q166  Mr Davies: One hopes they do.

  Mr Chikezie: I want to say that your questions seem to be premised on the idea that people make these separations when in actual fact the same pound is going for a number of different objectives and people understand that this is partly about their interest, it is not just a financial thing because you will support say the family back home not as looking for a return rate on your investment but because that builds up social capital, it builds up your relationship. I am not sure you can use exactly the same models that you are using, which are appropriate in some cases but not all in the way that people look at these things.

  Q167  Mr Davies: People should surely be clear about their objectives, their objectives may be to maximise development in their country, it may be a collective objective, it may be a personal objective.

  Mr Chikezie: I do not have to—

  Mr Davies: My concern is that Mr Chikezie referred to DFID developing policies on this.

  Q168  Chris McCafferty: I would like to pursue that point but from a different angle, you are all well aware of what DFID's poverty reduction strategies are and they are really based on investing in basic health and education, clean water, sanitation and so on. That investment in limited by funds and although members of this Committee are very proud of the fact that that investment is growing year-on-year it is limited. You have all talked about the large volume of transactions, remittances that are going from family to family, clearly there is an enormous opportunity there to invest some of that money by the fact that there is more money going in in remittances than there is through our policy reduction strategy, my question really is, and it does touch a little on what Quentin has been saying, is it possible to persuade private individuals to put their money, their hard earned cash into projects that are for the wider public good, albeit it is back in their home country and albeit their wider families will benefit? Is that realistic? Can it be done? Would it be perceived as interference, almost as nationalisation of somebody's private earnings. Again a point that Quentin made, is it wise and sensible to mix up the idea of investment with improving the quality of life back in the home country? Indeed if the money is channelled in that kind of way should there be a return on it or should it be given freely?

  Dr Banjoko: Can I say it is not going to be hard because people are already doing it. There is an issue about how it is going to be presented, what are the structures in place that will ensure that I know I am not putting my money into bottomless pit, after all if I send it to my family I know it is going directly there, if I send it I know that it is going to where it is needed. As the Chairman of Nigerian Diaspora when there was a fire somewhere in Nigeria we were inundated with Nigerians who wanted to send things back to Nigeria. You do not have to plead with people, people will react. The question is, how is it going to be presented? Who is going to come and present this thing? Is there credibility behind whoever is presenting it? The Nigerian Government initiated the Nigerian Diaspora so there was an issue there, people believed that the money was going to be used by the government for their own means rather than what they wanted. It is a question of how it is going to be presented and what is it going to be used for. Generally speaking people are already doing it. I have had people who have got in touch with me in terms of Africa saying, I do not want to go back to Africa but I want to do something for Africa. People are looking for somewhere to put their money towards credible projects.

  Q169  Chris McCafferty: They would not be looking for a financial return on that money?

  Dr Banjoko: They are not looking for a financial return.

  Q170  Chris McCafferty: They need to know the money was going to what was intended. They would want to see there was a return in terms of the investment, a product or a project that was finished.

  Councillor Qureshi: There is a very good example, the Bank of Brazil launched a bond aimed at expatriate Brazilians in Japan and raised £300 million, which the expatriate Brazilians were happy to invest in. When you do these things you have to offer them a decent return, I think you can do that, it does not necessarily mean just infrastructural investment. I suggested earlier the example in rural Punjab where quite a few people invested in the green revolution through family allotments and what have you, and there is scope to do that. There is an issue in some countries where the migrant community would be confident about investing in those vehicles, not through the ancestral home country governments financial vehicles but through an honest broker like DFID under the United Kingdom Government's auspices. That is what we are suggesting here. If that sets the trend going that in itself would be very useful.

  Q171  Chris McCafferty: Do you think that kind of bond purchase or money for projects, a banking system that had DFID's name on it people would be more comfortable with it or more trusting of it than possibly than the ancestral home countries? Do you think that would be more popular?

  Councillor Qureshi: I am obviously suggesting that and it is because of some of the governance issues you have in countries, and I suspect that might be an issue in Nigeria, I am not one to comment on Nigeria.

  Dr Banjoko: I am sure you know about Somalia and the fact it is the diaspora, which built the university. There was no return from that for them, their return is the joy in seeing the project completed and the value it adds to the life of the students and the country as a whole.

  Q172  Chris McCafferty: Goodwill.

  Dr Banjoko: Yes. In terms of DFID it goes back to my point earlier, "Who is DFID?" The reality is that some of the diaspora do not know who DFID is. All of a sudden DFID turns up and puts money in. They think, is DFID an extension of what I am running from. It is a question of you have to cross that bridge in terms of making the community aware of who you are, what you are doing, what your success stories are, what you have done and what you intend to do and building those bridges into the community. In terms of raising the funds I can say it is not a problem. I am getting to the point where all I am doing through African communities is redirecting Africans to people, saying to them, "if you want to do this go in that direction". There are people who feel it as an obligation, their contribution towards the development, and some of it is probably them saying, "I am here, I am okay but what am I doing to give it back?".

  Mr Chikezie: I do not quite see where DFID adds value in the scheme, that would be the question, where does DFID add value? You are presenting it as an either/or, either the Nigerian Government or DFID—that is an easy choice.—I think there are other options that could be explored in that respect. Your first question is an important one, that is whether after I have cleaned this building all day and Gordon Brown has given me a little bit of money left and I spend this money in my country of origin, the tax has already been paid and DFID tells me I should do this with the money I think is problematic. I think conceptually that is flawed. We should twist it on its head, the fact that I am linked in with the household and communities—do not forget some of these transfers are not just household to household but it community to community—the fact that I as an individual or a community are getting an expression of need from people, often very poor, in Africa gives me some insight and that is probably information that could influence DFID's policy. I see that the other way round, because people are remitting money they could work with DFID and advise DFID and maybe it could be a case of matching some of that funding. After all after 50 or 60 years of development—and it is not just the African governments that have failed in development projects—we need to have a much more thorough re-think about some of those issues. I would say one thing, different people want different things, some people do want a return on investments, some people are happy to see their money produce a social return and we need mechanisms that address each and every one of these. Some people will take a lower return on investment, some people like to have a high risk and high return or high loss. There are all of these different types of investors.

  Chairman: We are not going to have time for any further questions. Thank you very much for coming and answering our questions. Thank you very much for opening up this whole area of the contribution of the diasporas, which I think is an area which has not been sufficiently touched. Thank you for your submissions. You will have got a sense of some of the issues that are concerning us all. At the end of this process we produce a report with recommendations to our Government, to DFID, and if you feel having heard and taken part in this afternoon's session there are any other practical suggestions you think we should be putting forward in our report please do not hesitate to submit them as a supplementary note. Thank you very much, it has been an extremely interesting afternoon.