Diaspora bonds require trust, not appeals

* Many Malawians living abroad work long hours, make sacrifices, and support families and communities through remittances

* They are not detached observers; they are already deeply invested in the country’s survival

* When they hesitate to channel more of their savings through official programs, it is not because they lack love for home — it is because they are doing a rational assessment of risk versus return

Analysis by Dr. James Kadyampakeni, economist expert

Governments like to speak of patriotism when courting citizens abroad, the diaspora. They talk about duty, belonging, and the emotional pull of home. In principle, a diaspora bond can be a powerful instrument — it can mobilise foreign exchange, finance infrastructure, and connect nationals overseas to national development in a structured way.

But there is one ingredient no financial instrument can survive without: trust. Right now, trust is in short supply.

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Many Malawians living abroad work long hours, make sacrifices, and support families and communities through remittances. They are not detached observers; they are already deeply invested in the country’s survival.

When they hesitate to channel more of their savings through official programs, it is not because they lack love for home — it is because they are doing a rational assessment of risk versus return.

So a hard question must be asked: Why should someone deposit money into the formal banking system at an official exchange rate that significantly undervalues their foreign currency, while those with political connections are widely believed to access that same foreign exchange and benefit from parallel market opportunities?

Whether authorities like it or not, this perception is powerful. And in economics, perception shapes behavior just as much as policy.

If an individual sends in dollars or pounds, converts at a lower rate, and then watches well-connected actors multiply value elsewhere, the message is clear: the system rewards proximity to power, not participation in national development.

Under such conditions, appeals to patriotism begin to sound like requests for sacrifice without fairness.

A diaspora bond launched into this environment will struggle. Not because the diaspora is unwilling, but because the framework appears uneven.

Investors, whether domestic or abroad, want three basic assurances:

* that the pricing is fair;

* that the rules apply equally; and

* that their funds will be used transparently and productively.

Remove any one of these and confidence weakens. Remove all three and participation collapses.

History has taught Malawians to be cautious. Episodes of policy inconsistency, governance disputes, and questions around how public resources are managed have left scars. Announcing a new instrument without repairing those fundamentals is unlikely to change behavior.

If the government truly wants diaspora money to flow through official channels, it must confront the exchange-rate concern directly. It must close opportunities for arbitrage that favour insiders. It must create oversight mechanisms that are visible, independent, and credible. And it must show, with evidence, how funds translate into tangible national benefit.

Trust cannot be demanded. It is built.

Until then, many abroad will continue choosing the paths they believe protect the value of what they have earned. Moral appeals will not override economic reality.

If policymakers want higher diaspora participation, the solution is straightforward: fix the incentives, guarantee fairness, and demonstrate integrity in action. Do that consistently, and the diaspora will respond.

Without it, deposit levels will remain exactly where they are.

Dr. Kadyampakeni

Note: Dr. James Kadyampakeni is based in Canada and this analysis is based on the Reserve Bank of Malawi (RBM) enticing Malawians in diaspora to remit funds back home by opening newly-introduced-diaspora-foreign-currency-denominated-accounts/ after disputing rumours that the government was planning-to-introduce-worldwide-income-tax.

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