Credit Insurance for Maori Land Development

Monday October 12

Credit Insurance for Maori Land Development

A credit insurance scheme may help to unlock the potential of multiply owned Maori land assets, according to the Maori Economic Development Commission.

In its second report to the Minister of Maori Affairs the Commission has continued its investigation of the barriers to full use of Maori land assets. These include a lack of access to finance, the inability to use multiply owned Maori freehold land as collateral for loans, cumbersome ownership structures, and a lack of well-educated and experienced managers.

“To fully develop that land we need finance. But, aside from a good business plan and confidence in the skills of people to whom they advance money, lenders need security for the finance they provide. We want to retain the land for the benefit of future generations and cannot risk that by using land as security for loans. At the moment lenders’ need for security and our desire to hold land in perpetuity are completely at odds,” says Commission member Bill Osborne.

“A credit insurance scheme which allows Maori to borrow without putting land at risk and gives lenders proper security has the potential to break that deadlock,” says Mr Osborne. “Development proposals will still have to stack up and lenders will still want to deal with competent people following best practise models who can meet their debt servicing obligations.”

Capital backing for a credit insurance scheme could be sourced from a variety of potential backers, including the Government and Maori organisations, says Mr Osborne.

“Over the next few months the Commission will work on developing a properly researched proposal which can be presented to Maori asset owners and possible backers.”

ENDS

Contact: Andrew French. 025 425 615

Copy of full report available from Maori Economic Development Commission 04 496 1456

Also available on the Commission’s website at www.medc.co.nz

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