The coronavirus pandemic and its devastating economic impact on developing countries could fuel fresh interest in so-called diaspora bonds that allow migrants to support their countries of origin, experts from the World Bank and other groups say. Dilip Ratha, the World Bank’s lead economist on migration and remittances, told Reuters that diaspora bonds could generate about $50 billion a year in total for developing countries, potentially helping to offset a sharp drop in foreign direct investment that is slated to fall by 37% this year. However, such claims have met with scepticism in some quarters, given the plight of many migrants who have lost jobs and income during the crisis and as direct transfers of wages to their home countries – known as global remittances – decline sharply.

World Bank officials on Friday warned that developing economies could suffer close to a 3% decline in economic output if consumption and investment do not rebound quickly after the coronavirus pandemic. Ratha said the World Bank has previously worked with Nigeria and India on diaspora bond issues and that other countries have expressed interest in recent months as they scramble for resources to fight the virus and mitigate its impact. Jay Benson, a senior researcher with the One Earth Future Foundation in Denver, Colorado, said potential issuers with large diasporan populations included Ethiopia, Somalia, Kenya, Liberia and the Democratic Republic of Congo.

Ratha said diasporan investors were typically less skittish than outside investors.

Farouk Soussa, senior Middle East and North Africa economist with Goldman Sachs, said such bonds were most successful during a crisis in the home country, when better-off migrants were able to help, but the coronavirus crisis has hit everyone, everywhere “We have heard the World Bank and others warn of sharp fall in remittances and it would seem bizarre for migrants to be sending less money home but to still have an appetite to invest in diaspora bonds,” he said