Tikanga-based banking services needed to tackle inequalities

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NOTICE: After celebrating Matariki, the highlight of renewal and regeneration in the Maori calendar, now is a good time to think about how to solve a major problem that is preventing us as a nation from achieving true growth and real well-being.

These are the lingering inequalities in our financial system for members of marginalized communities, especially Maori.

Giving everyone fair and equal access to the financial services they need is not only the right thing to do, it is the key to reducing the pressures of housing availability and affordability, intergenerational poverty and the lack of skilled workers. This makes sense both from an economic standpoint and from a tikanga standpoint.

Our current system is simply not configured to make this possible. A new approach is long overdue.

RNZ

The Bottom Line: The most recent figures show that the Maori homeownership rate was 31% compared to 52% for the total population.

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The Reserve Bank and the leaders of the private banking system recognize shortcomings in the current financial system that make it nearly impossible for Maori to have equal access to finance, let alone fair outcomes.

The Reserve Bank released a discussion paper titled Maori financial services institutions and arrangements in March 2021 which highlighted these disparities, such as standard risk frameworks of banks not allowing lending on community-owned land.

This means that in the majority of cases, Maori land has not been developed or improved in a way that creates wealth or other benefits such as housing for landlords and the wider iwi.

Renata Blair of BNZ recently spoke about her own experience of being turned down by big banks to develop two new houses on Maori land despite a good salary and very low risk.

The Reserve Bank and the leaders of the private banking system recognize shortcomings in the current financial system that make it almost impossible for Maori to have equal access to finance.

Robert Kitchin / Tips

The Reserve Bank and the leaders of the private banking system recognize shortcomings in the current financial system that make it almost impossible for Maori to have equal access to finance.

A new model of shared prosperity

This shows a fundamental disconnect between the traditional financial sector and Maori stocks.

Standard models of economic investment are profit-driven only, driven by supply and demand, while the Maori approach is more focused on long-term generational benefits, well-being, and equitable outcomes.

As Rangimarie Price, director of The Connective, said in a recent discussion for The Edmund Hillary Fellowship: “The model currently in use says we have to make money. And then, with what we have left after making money, we will do good. From a tikanga perspective, tikanga is all about purpose and well-being, not profit.

With a growing Maori population, New Zealand’s economic prosperity depends on the ability to bridge this gap, to find new ways of working that do not rely on traditional banking structures.

The disparities that are occurring are currently seen as the problem of the marginalized, but if we come together to find a solution, all of society will benefit.

Consider the fact that the average Maori age is 24. Come to think of it, the success of this 24-year-old will determine what our retreats will look like. It is therefore in all of our interests to help this young person have a solid financial future.

To quote the President of the Productivity Commission, Ganesh Nana: “We must recognize the value of what we have here and develop our own model, our own intellectual property and… kaitiakitanga [guardianship], manaakitanga [support and respect], integrate them into our business models.

Ganesh Nana, Chairman of the New Zealand Productivity Commission.

Provided

Ganesh Nana, Chairman of the New Zealand Productivity Commission.

So what would this new model look like?

The only way forward is to work with Maori and other marginalized communities to create shared prosperity, placing community at the center of decision-making.

There is no one-size-fits-all solution, but a top-down structural approach to finance and a bottom-up method that works with individuals to build financial literacy and decision-making skills is needed.

Work from top to bottom and bottom to top

Two organizations I’m involved with illustrate every part of this equation. PowerFinance is a fintech that works alongside iwi to secure alternative financing streams for housing and other major projects at lower interest rates and more sustainable terms.

Since traditional banking structures cannot provide this kind of flexibility, there is a huge opportunity – and a need – for such innovation.

Businesses that recognize that shared ownership does not automatically add risk to a loan and are ready to innovate with technologies such as blockchain that ensure loans are safe and responsible for both financiers and the bank. iwi, could transform financial services and outcomes for marginalized people.

The essential ingredients required are a willingness to partner with iwi to co-design solutions and look beyond the immediate investment opportunity. This is an approach that is not limited to one project to be funded, but to the overall needs of the iwi, so that the funding is approached holistically so as to achieve greater benefits and more durable.

Meanwhile, the nonprofit Māori Women’s Development (MWD) supports Maori Wahine entrepreneurs who do not have access to funding from traditional financial institutions.

Our work recognizes that improved financial literacy and improved decision-making skills are essential to ensure long-term business success and financial prosperity.

That is why, in addition to providing grants of up to $ 50,000, 80 percent of MWD’s work is focused on pastoral care, where the women themselves make decisions and solutions are sought with our counselors.

Having both the right funding structures in place to provide funding and the mindset that financial transactions cannot be treated in isolation are essential if we are to create truly equitable results for Maori.

The need for restorative financing

The last piece of the puzzle the current system lacks relates to this mindset – recognizing that every financial transaction supports a bigger goal, which isn’t always profit.

We need to put more emphasis on restorative finance, or finance that “seeks to remedy the systemic injustices that extract and penalize communities of color, the poor and the working class by making investments that generate community wealth, produce governance structures that benefit the whole and strengthen community power.

Kataly Foundation CEO Nwamaka Agbo said of investors: “People want to see perfect success before they take the leap.

“It’s my job to remind them that this is not an academic study and to challenge them to ask themselves if there is any part of their investment that they could use to explore and experience. with a community or an individual. “

While MWD is still the only option for Maori businesswomen, despite its inception over 30 years ago, it is time for our approach to short-term investing and our financial system as a whole to change.

When you put Maori in a house, it is not about the house. The house is a tool for making people healthy, giving them a stable future, allowing them to take root, to plan and to move forward.

If more organizations develop innovative financial models like PowerFinance, or take a restorative approach to investing, we can lay the groundwork for many more homes and a much healthier future for everyone.

– Teresa Tepania-Ashton is the Managing Director of Māori Women’s Development.


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