Diaspora: Need for better banking institution to attract remittances

Can be a valuable tool for globalisation of local businesses

Humayon Dar November 15, 2015
Jobs of Pakistani banks in the GCC countries and even in the UK and USA has been not more than serving as ‘collection boxes’ for remittances. PHOTO: FILE

LONDON: Pakistani diaspora are estimated to be around eight million in number, and over 4% of the total population of the country.

On average, every third household in Pakistan has someone in the immediate family living, working or studying abroad.

There are two types of Pakistani diaspora: the Pakistanis working abroad as guest workers (the expatriate); and those families that left Pakistan a long time ago and have now been naturalised in their host countries. The overseas Pakistanis working in the countries comprising the Gulf Cooperation Council (GCC) represent the former category while the so-called British Pakistanis are the most prominent in the latter category. While American and Canadian Pakistanis also maintain their close contact with Pakistan; it is arguably the British Pakistanis who hold a central position in the Pakistani diaspora of the type 2.

Pakistani exporters of ethnic consumption items (e.g., food and clothing) have followed the overseas Pakistanis of the latter category in the countries that host them in sizable numbers. For instance, the United Kingdom has over 3 million Muslims out of which about 2 million are of Pakistani origin. Pakistani banks like HBL and UBL have also followed clusters of Pakistani diaspora around the world.

While it is true that in general not all the members of a diaspora community are warm to companies or brands from home, overseas Pakistanis have shown a lot of commitment to their motherland. The emerging Pakistani corporates seeking an international identity can use the Pakistani diaspora clusters in various countries as springboards for growing revenue and gaining brand recognition internationally before breaking out into the mainstream.

Many businesses and governments overlook this inexpensive and low-key approach to globalisation because of developing countries’ ambivalence toward emigrants, who are often thought to have abandoned their homelands.

Pakistan in no way proved an exception to this general trend. That old-fashioned attitude is giving way to the realisation that targeting diasporas and capitalising on their success abroad could be a valuable tool for globalisation of local businesses and attracting foreign direct investment.

Investment in UBL by a prominent British Pakistani is one such example. This article focuses on the need of setting up a specialised bank for Pakistani diaspora. The proposed bank may be named OPF Bank after the long-established Overseas Pakistanis Foundation or just a Diaspora Bank and could be used as an excellent channel to attract additional remittances and sustain their inflow.

World Congress of the Overseas Pakistanis (WCOP) is a relatively new organisation, based in London, which has achieved a lot in its short history in terms of not only integrating Pakistani communities within the host countries but also for building an image of Pakistan in the wake of the on-going war or terror.

“We have scores of British Pakistani families based in London, who would invest in the proposed Diaspora Bank if the Government of Pakistan comes on board as even a symbolic shareholder,” said WCOP Co-Chairman Syed Qamar Raza.

Numerous banks in Africa (particularly Nigeria and Kenya) offer specific services for their respective diaspora communities. Pakistani banks in the GCC countries and even in the UK and USA have also been serving the diaspora communities, but their main job has been not more than serving as  ‘collection boxes’ for remittances or serving some minor functions in correspondence banking.

The proposed Diaspora Bank should be a modern banking institution, with state of the art technology for digital banking. Its primary function should be to maximise the inflow of remittances to Pakistan from across the world. Hence, the range of financial services offered would have to be much more than a deposit collection box, and may include asset management and advisory.

The writer is an economist and PhD from Cambridge University

Published in The Express Tribune, November 16th, 2015.

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