mĀORI ACCESS TO BUSINESS AND HOME LENDING
Simple and effective solutions.
Originally published on LinkedIn 10/12/24
After listening to the Reserve Bank Governor’s kōrero on Māori access to capital, it's clear there is still a lot more to be done and investment required.
To accelerate the Māori economy and the wider economic recovery, Aotearoa must take bold steps to address systemic inequities in our financial systems. Governor Adrian Orr stated, "Improving Māori access to capital is a powerful enabler we all need to collectively prioritise." But why should we care and what is the impact on non Māori?
To put it simply, Increasing Māori access to lending will lead to greater economic stability for Māori families, increasing household income, reduce financial stress and improve overall economic well-being. Leading to better educational outcomes, as financial stability provides a conducive environment for learning and improved housing conditions leads to better health outcomes, reducing the reliance on the health system associated to nutrition and health problems associated with poor housing. Not to mention the tax benefits from increased productivity and profitability of Māori businesses that lending enables.
Having spent 12 years in the banking industry and having a personal passion for increasing Māori access to lending. Teahooterangi Pihama - Pou Matua of RŌA CONSULTING wants to propose the following solutions that should be prioritised by the banking industry, regulators and government to significantly increase Māori access to business and home lending.
Firstly, Te Pūtea Matua - Reserve Bank of New Zealand needs to create a risk weighting class that is impact-focused rather than security-based (LVR). This recognises the social and cultural impact of lending to Māori businesses including how the collective nature of Māori communities actually reduces perceived risks of non property backed lending.
Secondly, Te Pūtea Matua - RBNZ needs to mandate that banking licenses require Māori board members and executives. This embeds Māori perspectives within the governance of financial institutions and enables access of Māori banking teams to leaders that truly understand and represent their needs, and prioritise good Māori customer outcomes by design.
Thirdly, the government need to explicitly legislate Māori access to lending. By enshrining this in law and demanding six monthly disclosure statements, similar to climate related disclosures, risk management disclosures and capital disclosures. This will be critical in ensuring transparent progress of this topic, including fair and equitable resourcing. Asking for banks to provide voluntary data and establishing universal access to bank accounts is not far enough by any stretch of the imagination.
Finally (for this article), The Treasury - New Zealand should create a whenua Māori housing and business guarantee scheme. As main centres expand, Māori land increases in its economic viability across many sectors. A guarantee scheme similar to the Residential Development Underwrite and Covid-19 business finance guarantee scheme will provide a safety net for lenders and encourages investment in Māori enterprises and housing.
Governor Orr also highlighted, "Māori were too often in the category of being under-served by the financial system." Implementing these solutions will create a more equitable financial environment that uplifts Māori and strengthens economic independence.
What will be the impacts of not actioning these solutions?
Well Māori access to lending and home ownership rates would continue to fall. Leading to a banking industry, Tiriti o Waitangi equivalent settlement to the Sealord deal.
Maybe waiting for WAI2750 to inject capital into Kiwibank by selling down shares to Māori wouldn't be a bad outcome either. Iwi making Kiwi better off.
If you have any whakaaro, feel free to share in the comment section of the original article.
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