One fateful trip to the salon was all it took to turn a Philadelphia-area strategy consultant into a diaspora entrepreneur. Haitian-born Yve-Car Momperousse had the idea to start her business, Kreyol Essence, after being unable to find Haitian Black Castor Oil—which she remembered from her childhood as a miracle cure for dry and damaged hair—on the market in the United States. Today, Kreyol Essence’s line of luxury beauty products from Haiti has created much-needed jobs and brings natural, Haitian-sourced ingredients to buyers all over the United States. Momperousse shared her company’s story at last week’s Business Future of the Americas conference in Port-au-Prince. The event, sponsored by the American Chamber of Commerce in Haiti, explored the theme of diaspora investments in Latin America and the Caribbean. How many other diaspora entrepreneurs like Momperousse are out there, looking for an opportunity to invest in their home countries? And how can international organizations support their efforts?
The MIF has many years of experience working with both entrepreneurs and with transnational remittance senders, so emigrants from the region who start businesses based in their countries of origin are definitely of interest to us. Our work on remittances and savings has led to two important lessons on diaspora entrepreneurship: (i) not every migrant is an entrepreneur; (ii) family remittances should be considered separately from business investments. Remittances serve a critical function for many families as a consumption-smoothing mechanism, allowing them to stay out of poverty and devote resources towards building human capital through education and preventative healthcare. Investment in a business venture requires a certain amount of risk-taking and commitment of time, as well as the ability to travel frequently to the migrant’s home country, things which may not be an option for every migrant remittance-sender. The ability to better segment the migrant remittance-sending market is thus critical to understanding how to direct interventions promoting diaspora investments.
In 2013, the MIF surveyed 2,000 migrant remittance senders from Latin America in the Caribbean living throughout the United States. After learning about Kreyol Essence, I took a look at the data to see if it offers any clues about the profiles of potential diaspora entrepreneurs. Seven percent of survey respondents reported saving money in order to eventually start a business in their home country. At first glance, these migrants do not report sending more remittances to their families on average than the rest of the sample, remitting an average of $212 per transfer. However, these potential diaspora entrepreneurs reported notably higher levels of savings ($7,356 average savings) than the overall sample ($3,447 average savings). These potential entrepreneurs also displayed higher levels of engagement with the financial sector in their home countries, with 44% maintaining a bank account in their country of origin as compared to 11% overall.
It will be important to develop more of these types of clues as a first step in designing successful savings and financing vehicles for diaspora entrepreneurs, by helping policymakers and practitioners focus efforts on those who have real potential – and interest – in investing in a business venture back home. For more information on savings as a vehicle for investment targeting remittance clients, check out our program website at www.remittancesandsavings.org.