Sovereign Wealth Funds

Creating Sovereign Wealth Funds for Aboriginal and Northern Local Communities

Project Leader: Dr. Greg Poelzer
International Centre for Northern Governance and Development
University of Saskatchewan

Project Team:
Student
Melanie Plante, University of Saskatchewan

Community Partners
TBD

Timeline:  April 2016 to March 2017

Project Summary

This proposed research project explores the value, importance, and prospects of creating sovereign wealth funds (SWFs) for Aboriginal and Northern local communities. SWFs typically comprise government revenue from natural resources, or non-renewable revenue, which is then converted into a renewable financial pool of capital through investing part or all of the revenue earned from natural resources into other forms of investments, often foreign investments (The International Working Group of Sovereign Wealth Funds, 2008). Norway, Alaska, North Dakota, and Chile are four examples whereby the use of SWFs has led to creating greater investment stability and creates intergenerational wealth. However, what’s been less investigated is the role SWFs can provide to economic development, especially for Aboriginal communities and communities located in northern and remote regions. In Canada, most northern communities are predominantly aboriginal and resource industry continues to be the primary economic sector for most communities. We have seen that Aboriginal people in Canada have been able to negotiate far more significant arrangements with resource companies than they could in the 1960s and 1970s, leading to substantial economic benefits to Aboriginal communities (Coates, 2015). For instance, a collaboration between Cameco/Areva and a small Aboriginal community in northern Saskatchewan, called for benefits amounting to some $600 million over 10 years (Coates, 2015). Examples like these create the potential for the creation of SWFs in Aboriginal communities, which can facilitate their financial independence, support development in their own territories, and create long-term wealth. In turn, this research project aims to document the existing and potential opportunities for creating SWFs in Aboriginal and Northern local communities, and proposes recommendations for how this can be accomplished.

Purpose

This research project examines the notions of Aboriginal and community-level Sovereign Wealth Funds and the extent to which it can serve as a tool for northern communities to take advantage of the financial benefits received from resource development and manage those benefits to spread wealth over generations to maximize sustainability. Through providing a gap analysis on the current literature on Aboriginal and community-level Sovereign Wealth Funds and recommendations for best practices, this proposed research project aims to develop and disseminate this knowledge, so that communities in the region can utilize it to their benefit.

 Methods

The research will consist of conducting a gap analysis on the literature and compiling expert information on Aboriginal trusts and Aboriginal Sovereign Wealth Funds. The gap analysis will summarize the research on past and current, and failed and successful Aboriginal and community-level SWFs in Canada and beyond. Through synthesizing the existing knowledge, the proposed research project will then compile the lessons for best practice in creating and managing SWFs.

A research assistant will be conducting the literature review and gap analysis. The skills they will learn include compiling, analyzing, and synthesizing existing research on Aboriginal and community-level SWFs; and writing reports, research briefs, and academic articles. As the research assistant is a masters student whose research is in the area of resource development, the project will dovetail and expand on their area of research.

The project will involve travel to Anchorage, Edmonton, Vancouver and Yellowknife to collect qualitative data through interviews with experts on Aboriginal Trusts and Aboriginal Sovereign Wealth Funds.

Anticipated Outcomes

The findings of the proposed research project will have implications on policy that can have transformative impact to create sustainable communities.

For more information contact:

Greg Poelzer
International Centre of Northern
Governance and Development
University of Saskatchewan
280.1 Arts Bldg, 9 Campus Drive Saskatoon, Saskatchewan, S7N 5A5

Email: greg.poelzer@usask.ca
Twitter: @GPoelzer

– See more at: http://gregpoelzer.com/