The NRC has set up the Investment and Growth Reserve, a fund designed to spur economic development in Northland.
It is an insightful intervention which, combined with other sources of capital can be used to partner with the community and to leverage further investment into Northland. This is a key economic development tool for Northland.
An excellent example of the future vision held by the Northland Regional Council is the establishment of the Investment and Growth Reserve (IGR) in 2010 – 2011. The objective is to lead by example through investing directly in projects that deliver real benefits to Northlanders. By exercising new ways of supporting investment into the region this collaboration creates rewarding business and employment opportunities.
Funds from the IGR are invested in projects and ventures within Northland that will increase:
- jobs in Northland
- the average weekly household income of Northlanders
- the GDP of Northland
The key principles of the Investment and Growth Reserve
The IGR provides loans, direct investments or equity investments that will deliver an appropriate rate of return taking into account the level of risk, revenue flows and anticipated economic development and well-being improvement.
To safeguard against risk the following guidelines are adopted:
- All potential recipients of funding will be assessed for credit worthiness
- All parties who intend to conclude major contracts with will be subject to formal credit approval
Types of funding allocations made by the Investment Growth Reserve
The types of funding provided by the Investment Growth Reserve can be categorised into three main areas:
- Loan funding or directly invested funds for;
- capital expenditure for new ventures or expanding of existing businesses
- operating expenditure for a finite period of time on condition of sufficient capital
- equity investment (that is the Reserve can be used to buy shares/an ownership interest
- Impact Investment funds for projects that have the potential to lift the economic performance of Northland.
- Funding is also available to assist with feasibility assessment and business case development.
Level of Funding Available
There is no set value per project however consideration will be given to:
- The extent to which the project promotes sustainable, regional economic development
- The contribution the project will make to improving the social, economic, environmental and cultural well-being in the region
- The extent to which the project aligns with the vision of other organisations in the region
- The project’s fit with the Northland Regional Council’s economic development priorities
- The extent to which the business case demonstrates that the people involved have the capacity and capability to undertake the project
- Return on investment
- Opportunity cost
- Risk and in particular, the extent to which the project is inter-dependent with other projects
- The amount of investment and type of commitments other parties are making to the project
- Any security provided to secure the funding
- The need for Reserve funding.
How is the Reserve fund managed?
All projects’ are assessed for funding eligibility against a robust business case assessment tool. The Northland Inc. Board considers all projects and makes a recommendation to the Northland Regional Council and Council makes the final decision on the funding of projects.