The Role of Diaspora Investment in Economic Development: A Case Study of Mogadishu, Somalia

This paper investigates the role of diaspora investment in fostering economic development in post-conflict Somalia, focusing on Mogadishu as a case study. Employing a mixed-method approach, the study integrates both qualitative and quantitative data from structured interviews, surveys, and institutional reports. The research introduces a conceptual framework linking diaspora investment (independent variable) with economic development (dependent variable), mediated by human capital and institutional quality and moderated by access to finance. Findings demonstrate that diaspora investment contributes significantly to job creation, entrepreneurship, innovation, and infrastructure improvement in Mogadishu. Diaspora investors have been instrumental in revitalizing key sectors such as real estate, construction, telecommunications, education, healthcare, banking, and hospitality. They also serve as channels of knowledge transfer, modern management practices, and technological diffusion. However, challenges such as political instability, weak governance systems, weak legal and regulatory frameworks, and inadequate access to formal financing mechanisms hinder the full realization of diaspora investment potential. The study concludes that diaspora investors serve as key catalysts for post-conflict economic transformation, bridging global resources with local needs and opportunities. It recommends the establishment of robust institutional frameworks that facilitate diaspora engagement, the formulation of a national diaspora investment policy, improvements in governance and the rule of law, and the development of financial instruments tailored to the diaspora. These steps are necessary to sustain and scale the diaspora’s contribution to Somalia’s long-term development.