Reality TV

Governments can use their voice to attract investment

Do governments always need to spend taxpayer money to address large, endemic societal challenges? Here's an idea: why don't they ask others to pitch in—big institutions that are forever scouring the planet for good ideas to invest in at scale, profitably, and responsibly? In other words, governments can clear their throats and use their voice to sing for help. And what better way to make an impact than to invite their bosses—taxpayers—to participate in the selection of projects to sing about?

With apologies to the Voice, governments can create compelling reality TV shows too.??

By actively inviting foreign direct investment and shining a spotlight on innovative opportunities, governments can get the private sector to do some of the heavy lifting. Involving the public in the selection of projects makes particular sense when we're talking (or indeed singing) about enabling large-scale social development without adding to public debt. Let's dive into a simple example, based on our project in Aotearoa New Zealand.

The AAA Club. Did you know that New Zealand is one of just seven OECD countries that holds a AAA credit rating from both Moody’s and Standard & Poor’s—an elite club that no longer includes the U.S., Britain, or France?

Club membership has its privileges and presents an extraordinary opportunity:

• Monetizing New Zealand’s Credit Rating: The government can invite innovators to lay out actionable, shovel-ready proposals. Applicants would need to explain how funding from global investors would unlock the opportunity. Next, applicants could explain, in layman’s terms, why mathematically a partial government guarantee is unlikely ever to be called upon. Then, the applicant could pay the government (ie, the taxpayer) an annual fee for the use of its full faith and credit.
• Facts on the ground: the New Zealand government recently allocated $200 million to stimulate the development of new homes for qualifying Māori families. To put this in context, that is about ￡90 million from a AAA-rated sovereign. Do that for five years and we're talking a cool $1 billion from the taxpayer.
• Here's our idea: Throw open a competition to find projects in which the Māori community pays the government $1 billion over five years to use their AAA Club status to address challenges at sufficient scale to entice investors from across the Tasman to take a look.
• The Voice: A Transparent Selection Process: As our initiative delivers results directly to Māori families, why not include ordinary New Zealanders, including Māori iwi, hapū, and whānau?(tribes, subtribes and families) on the judging panel?? Of course, the entire process should be live-streamed on YouTube so taxpayers can tune in and vote too. Before long, Netflix will pick this up and franchise it to other countries.*
• The judging panel. While we're being creative, let's put some investors on the panel so they can ask penetrating questions about each proposal and compete—like Dragon's Den—for the privilege of investing in these opportunities. Big institutional investors typically have shareholders, competitors, and senior executives with stock option packages. Behind closed doors, their investment committees have every incentive to be conservative. Live-streamed? Not so much.

Global demand for social purpose projects: Did you know that several retirement savings institutions have investable assets that exceed New Zealand's annual gross domestic product? They hire people whose jobs are dedicated to scouring the planet for big, new attractive projects. Finding projects that tick every box—environmental impact, social impact, robust governance, yield enhancement, asset and liability matching, shovel-ready, big enough to move the needle—is hard work. Sprinkling a AAA-rated guarantee on top might just help them with big ideas coming from innovators who—by dint of their innovation—can't prove that their ideas are backed by precedent.

Thought leadership: The New Zealand government would make money with our idea, not call on taxpayers to dip into their pockets. This model can work elsewhere too. Since the U.S. and the U.K. are no longer in the AAA Club, perhaps they have a thing or two to learn from those who are.

Our approach is bold but, when New Zealand speaks, the world listens, and not just on the rugby field.

So, what do you think? Should governments use their voice to attract investment—or keep silent, waiting for someone else to act? ??

Ike Udechuku | Cofounder | Pathway

#ForeignInvestment#NewZealandEconomy#ImpactInvesting#InfrastructureFunding#PublicPrivatePartnership#SustainableDevelopment#FinancialInnovation#EconomicGrowth#HousingSolutions#GlobalInvestment

*Other streaming platforms are available.??