How could the Moldovan diaspora be convinced to invest in the development of the Republic of Moldova?
The massive participation of the diaspora within the last elections suggests that state authorities will have to expand the national diaspora programs and strengthen the dialogue. The determining factor of labor migration from Moldova is the economic one, due to the low level of wages and insufficient income in rural areas. If emigration intentions persist, it will put constant pressure on the pension system. It is expected that 2030 the number of pension beneficiaries could exceed the number of employees.
This is one of the main conclusions of the Policy Brief prepared for the Institute for European Policies and Reforms (IPRE) by Dumitru Vicol, IPRE’s associate financial analyst and Vadim Pistrinciuc, Executive Director of the Institute for Strategic Initiatives (IPIS).
According to the authors, although no precise official data are available on the number of people who emigrated from the Republic of Moldova, as a result of the analysis and aggregation of official data, but also research conducted in recent years, we can estimate that the number of those who left the country is at least 900,000. But it could even reach 1.3 million people. It is also estimated that most of those who have already left are abroad with their families. Today, a quarter of households in the country receive remittances, and within households that are dependent on remittances, transfers accounted for 52.4% of disposable income for 2018. The proportion of remittances in disposable income decreased from 19% in 2014 to 13% in 2020.
“The national authorities should focus more on attracting savings from the diaspora, which could be estimated of at least $ 800 million a year. In this regard, it is important to expand national programs such as ‘PARE 1+3’ and ‘DAR 1+1’. Another opportunity is the development of the eco-crowdfunding system and investments in enterprises. The savings of those residing abroad could be deposited in state securities, which would create additional income for a potential return“, mentioned Dumitru Vicol.
The authors also recommend the revival of Diaspora Excellence Groups and expand their contribution to the implementation of national sustainable development goals.
“New efficient solutions and better collaboration between national authorities are needed for a more accurate estimation of citizens’ mobility. The authorities must continue international cooperation in concluding new bilateral social security agreements with countries where a large number of Moldovan migrants reside, including Canada and the United Kingdom. Last, but not least, the coordination of programs for attracting savings and activities related to the diaspora needs a more elaborate status for a Bureau for the Relations with Diaspora. The new statute should provide financial and administrative autonomy for BRD and half of the board of directors should be formed by members of the diaspora”, mentioned Vadim Pistrinciuc.
The authors conclude that the authorities should focus more on attracting savings from diaspora, which could be estimated at more than $ 800 million per year. Although there is reluctance to invest in the country due to lack of trust in the authorities and political instability, it is necessary to convince the diaspora, but also policy makers, that potential profitability in some sectors, such as agriculture and production in general, could cover country risks.
This policy brief was developed within the project “Policy Bridges with the EU: Securing the Europeanization process of the Republic of Moldova”, implemented with the support of the Soros Foundation Moldova. The views expressed in this publication are the ones of the authors.