Why Does the Nigeria Diaspora Invest in Their Country of Origin?

Abstract

In recent years, diaspora members are considered key contributors to the economic development of their homeland. Not much is known about what motivates them to invest in their country of origin or why investment intensity varies among diaspora communities. It is to this end that the direct causality assumption of Nigerian born diaspora investment is examined using Nielsen & Riddle (2007) investment motivation framework. Using this interdisciplinary approach, an individual level conceptual model of diaspora homeland investment is generated. The model examines the effects of inter-diaspora cultural differences, the three types of investment expectations (financial, social, and emotional) and the factors that moderate them to better understand this phenomenon. The study shows that members of the Nigeria diaspora community do not invest in their homeland for financial reward. They invest for perceived emotional returns and this is positively moderated by the degree of their social embeddedness in their country of origin as well as in their country of residence. They also invest for perceived social rewards. This is also moderated by their social embeddedness. Understanding why the nascent Nigeria diaspora investor or entrepreneur invest in their homeland is an important first step to identifying ways that governments can attract diasporic investment and entrepreneurship through marketing and other promotional efforts.