Complacency with Misgovernance Haunts Countries with Rich Diaspora

When I first heard about the massive explosion that obliterated the port of Beirut, my first thoughts went to the small West African country of Gambia, where I jetted off back in 2012 as a grad student in London. To my surprise, the country was filled with Lebanese residents. The Lebanese dominated the local economy, running everything from local shops selling imported goods to large logistics companies that made international trade to that remote corner of the world possible. Locals seem to be accustomed to the Lebanese presence, established over course generations of migration as part of European colonization.

Further research found the Lebanese to be ubiquitous around Africa and beyond. Across much of West Africa, South America, and of course, the Middle East, Lebanese migrants built up their communities, becoming an economically successful minority that produced the likes of now-disgraced former Nissan chairman Carlos Ghosn. The success of the Lebanese diaspora buoyed the prospects of Lebanon itself, as Beirut remained a sort of business and financial center in the Arab world on the backs of the billions of dollars Lebanese emigrants around the world sent back to the homeland.

But while remittances boosted the economic fortunes of Lebanon, it also bred complacency. In a country that continues to suffer from underlying sectarian strife that caused a devastating civil war decades ago, the constant influx of money from abroad made it less urgent for the government to tackle fundamental issues of governance. In the best of times, there was plenty of money to go around to offer political patronage to each and every ethnic and religious group that made up the diverse nation of Lebanon and its national government of unity that sought to take care of every group.

The footdragging on governance reforms was causing problems in Lebanon even before a massive explosion hit Beirut. As COVID struck, Lebanese businesses abroad suffered. Migrants who normally sent remittances home had to cut back as they themselves saw incomes decline. The loss of remittance led to a financing hole for the Lebanese government and the country a whole, leading to inflation and loss of the value of the Lebanese pound in an import-dependent economy. As people's purchasing power declined, protests on the streets weakened a government that was already struggling.

The explosion that destroyed the country's main port is but one episode in the downward spiral of Lebanese economic mismanagement and governance issues. The destruction at the country's most important point of international trade will only further weaken the economy and make any efforts to rebuild the infrastructural damages suffered by the city more prolonged and expensive. While the international community pledged their financial support, the fundamental structure of the Lebanese economy, one that depended on remittance to help shield misgovernance due to endless sectarianism, will continue to hamper future prospects as COVID rages on.

The lesson of Lebanon should be heeded by other countries with large diasporas that funnel cash back home. Just like Lebanon, the likes of the Philippines, and many South Asian states depend on sending workers abroad to earn the hard currency needed to keep governments running and people fed back home. Many of the migrant workers abroad are being disproportionally affected as COVID hits industries that they are most likely to be employed, whether it be hospitality, retail, or construction. As remittance flows dry up and migrants move back home unemployed, governments will have to deal with the twin threats of financial shortfalls and social discontent.

Like Lebanon's, the governments of other countries with large diasporas grew too comfortable with the business model of sending people abroad to make money for people back home. Like Lebanon, they put off necessary reforms to encourage business development at home by putting in place the necessary infrastructure and policies to attract investments. And like Lebanon, they will soon face the negative consequences of the delays in reforms, as the local economy tanks with the fortunes of the diaspora. While Beirut's explosion is particularly notable, the possibility of misgovernance in other countries leading to similar events cannot be excluded.

COVID and the events in Lebanon should convince other governments that the business model of diaspora dependence is not sustainable. Instead of waiting in hopes of COVID going away and remittances rebounding, governments should move with the assumption that the post-COVID world will not be the same as the pre-COVID one in terms of the macroeconomic environment. As countries around the world become keener to become self-reliant in terms of both economic development and employment, it is time that greater emphasis is placed on governance reforms rather than how best to squeeze money of the diaspora.