06 July 2015

Indigenous Investment Principles: decreasing perceived investment risks and increasing confidence

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It’s late one afternoon in June and Bruce Martin, Managing Director for the Regional Development Corporation and member of the Indigenous Advisory Council, returns one of my calls. He had just walked out of a meeting with other leading Indigenous business men and women in Darwin and they had finalised the drafting and acceptance of the Indigenous Investment Principles.

Ignorant, I asked what these principles were. Bruce proceeded to passionately explain to me that these principles are essentially a set of guidelines that will help Indigenous businesses decrease perceived risks of investment and increase confidence.
Ok, so… what does that mean?
Very patiently, Bruce illustrates what he is trying to explain to me with an example: if a company has the choice of investing in the United States or in an Eastern African country – assuming that both regions are offering exactly the same benefits – the investing company will most probably opt for the United States.
Why? Well because the United States is perceived as being much more stable than that region of Africa. Does it mean that Eastern Africa would be a bad place to invest private funds? Does this mean that the US would be a good place to invest?
The answer to both these questions is: not necessarily. It’s just that when we compare Eastern Africa and the US, the latter appears to be much more stable.
Bruce and the other members of the working group are hoping that Indigenous businesses across the country will adhere to the principles and, as a result, there will be an increase in private investments in regional and remote Australia – places that have historically been largely dependent on government funding. 
According to Indigenous Business Australia, the Indigenous Investment Principles objectives are the following:
1. To protect and preserve the cultural heritage of Indigenous Australians, through successful investments of Indigenous communities’ assets
2. To improve, protect and foster the best interests of Indigenous Australians by successfully achieving their investment objectives. This will ensure the economic independence and social development of Indigenous communities
3. To develop financial and commercial skills in Indigenous communities to contribute to sustainable investment practices
4. To build confidence and respect in financial markets, to promote and encourage investment into Indigenous communities
5. To have in place a transparent and sound governance structure that provides for adequate operational controls, risk management and accountability
These investment guidelines were inspired by the Santiago Principles. These were originally published in 2008 by the International Forum of Sovereign Wealth Funds as voluntary guidelines that governments should adhere to in order to promote an open, international investment environment. If a group of countries has started to successfully implement these principles, why can’t Indigenous businesses succeed in doing so on a national level?
 
Bruce Martin will be speaking at Akolade's upcoming Indigenous Economic Development Conference on 28-30th October in Cairns to discuss attracting investment in northern Australia and identifying growth industries.
 
 




Although Alexandra didn’t know much about conference production before first coming across this opportunity with Akolade, she has quickly become passionate about her job. Gaining in-depth knowledge in a variety of new fields without going through exam stress? Who could ask for more? If ever you speak to Alexandra and wonder what that funny accent is, it is from Quebec, French-speaking Canada. Do not hesitate to ask Alexandra about her former life on the 47th parallel; she will be thrilled to talk to you about snow storms, skiing and -35⁰c!
 

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