Networking the SA diaspora

4 September 2002

The UCT Graduate School of Business, with support from the World Bank, is establishing an international diaspora network of South African professionals working abroad that will pave the way for South African businesses to take advantage of international opportunities.

The project is one of the first World Bank initiatives to test the opportunities for mobilising diaspora networks to boost economic growth and investment in developing countries. A similar initiative has also been launched in Armenia.

“There is growing evidence that the economic and investment potential of diasporas could become an important development resource for low- and mid-income countries”, World Bank Senior Country Economist Lev Freinkman said in statement released by the School.

“While expansion of new companies in developing economies is often constrained by lack of market knowledge and the high costs of entering new markets, diasporas accumulate considerable business, networking and marketing skills that could reduce these barriers for market penetration and growth.”

According to World Bank figures, emigration to rich nations has reached a record high, with between two and three million people making the move each year. Freinkman said that the potential inherent in these numbers is “grossly underutilised”, and that the influence of diasporas on business development and growth is unlimited.

“This makes the issue of considerable interest to the World Bank and others who are involved in development assistance”, he said.

“South Africa presents a very interesting opportunity for analysis of the potential of diasporas, because the South African diaspora has considerable business skills and, probably more importantly, is well organised and tightly linked.”

The project to support diaspora-related initiatives in South Africa and Armenia received a World Bank grant through an international competitive process called the Development Market Place.

The establishment of the South African diaspora network is being managed by the Centre for Innovation and Entrepreneurship (CIE) at the Graduate School of Business. The Centre’s director, Mike Herrington, said the World Bank awarded the contract to the School because of its reputation as a leading South African tertiary institution with regard to innovation and entrepreneurship teaching and research, along with its successful track record in supporting start-up businesses and building networks.

“The CIE already has strong networks in place both locally and internationally that are involved in assisting new business start-ups, and so we are well placed to set up and administer the diaspora network”, he added.

Herrington led a fact-finding mission to the UK in June to lay the groundwork for the network. The School contacted graduates from both the UCT and Stellenbosch business schools living in the UK, and hosted a workshop in London to introduce the concept. The South African Business Club, with 450 active South African members living in London, also participated in the event.

Herrington said they have been overwhelmed by the response, with a number of prominent business people expressing their willingness to be a part of the initiative.

He said that the indication is that the network has the potential to have a significant impact on participating businesses, particularly small and medium organisations looking for international opportunities.

“The network will increase the quality of international market and competitor information available to these businesses and reduce the cost and time of obtaining reliable information from international markets. This will boost export potential, open the way for more joint ventures with overseas companies and encourage investment in South African businesses”, said Herrington.

In the coming months, the CIE will set out a constitution and modus operandi for the South African diaspora network, and hopes to have the network fully operational by early next year. reporter