Preparing Nunavut for World Investmentby Nicola on 2013-07-07
Investment Readiness: Preparing Nunavut for World Investment
Dr Nicola Davies
To provide better health, education, and living standards for its people, Nunavut needs to develop its economy. With very limited capital available locally, it is necessary for the leaders of Nunavut need to look further afield to encourage inward investment. This process requires an accurate assessment of what Nunavut has to offer outside investors, and what steps need to be taken to improve Nunavut's attractiveness to such investors. This is largely what Nunasi Corporation, set up in 1976, are doing as part of their commitment to creating wealth for Nunavumit through quality business investments.
Difficulties to Overcome
The problems Nunavut faces in attracting inward investment include its remoteness from major markets and from sources of raw materials, compounded by a lack of infrastructure such as roads. In addition, there is the very short history of involvement in modern economic life, leading to a small industrial base and lack of relevant industrial or technological skills. Moreover, although Nunavut has an area the size of Western Europe, its population is less than 35,000, and its workforce less than 12,000. This limited domestic demand makes the development of local industry difficult, particularly since the home market is not especially affluent.
The opportunities open to Nunavut centre on its mineral wealth, including gold as well as coal, oil and gas; and an abundance of fishing and wildlife. There is also the rich cultural heritage of Inuit communities. As world supplies of oil and other minerals dwindle, Nunavut's stocks will become increasingly significant. Already, China has invested $400 million in northern Canada's mineral wealth, and this trend looks likely to continue. With proper investment, tourism could also potentially become a major source of income, providing a means to utilise the culture and natural beauty of Nunavut. However, to exploit these opportunities, Nunavut requires funds and commercial acumen. In order to attract these, Nunavut needs to be able to offer a workforce and infrastructure that outside investors consider suitable for their needs.
Photo courtesy of David Ho.
Makivik Corporation, in Northern Quebec, was set up in 1975 to administer funds given by the Canadian government to Inuit to settle land claims. Makivik has used these funds to initiate development projects, including housing, a local construction industry, social development, community recreational facilities, law and order, and a marine infrastructure to allow transport to and between Nunavik's 14 main communities, which is not possible by road. The workforce in this construction industry is 70% Inuit, and as well as providing valuable housing construction capacity, including gravel crushing and foundation work for buildings, it has helped to train Inuit workers in essential skills. However, to be competitive with other regions, Nunavut needs to offer more than these basic skills, which is where higher and further education comes in.
Nunavut's equivalent is the Nunasi Corporation, whose vision is to "maximise profits for our shareholders and to create training, employment and economic opportunities for Inuit of Nunavut so they obtain the knowledge and experience that will enable them to have greater economic independence." The Corporation currently has investments in construction, transportation, retail, logistics, expediting, bulk fuel storage and supply, medical boarding homes, digital communications, and manufacturing.
Education is Crucial
Another significant function of Makivik has been to establish scholarships for successful Inuit students to attend higher education facilities in conjunction with institutions in other parts of Canada. This is essential to Nunavut's future, as the first requirement for inward investment is to offer a skilled workforce. At present, only a little over a quarter of the Nunavut population has graduated from high school. The higher education needed to train the engineers, doctors, teachers and other professionals who are required to sustain a successful economy, is still very much in its infancy.
Nunavut Arctic College does have some programs to help residents obtain the skills needed for business and administration jobs, as well as community health. Nevertheless, Nunavut's small population has made it difficult to sustain a full university. This constitutes a significant gap in Nunavut's development. Without the education and skills training to allow Inuit workers to service incoming investment, that investment will be difficult to attract. Or, if it does come, it will rely to a higher degree than it ought to on imported skilled labour and will therefore bring less benefit to the people of Nunavut.
The Nunavut government does provide a range of financial incentives for overseas companies seeking to invest, but these are limited in their attractiveness by its insistence on part local ownership, or a joint venture with Inuit owners. Although there are understandable cultural reasons for these requirements, experience in other countries has shown that such barriers can be counterproductive, as they reduce the attractiveness of Nunavut as a destination for inward investment. The World Trade Organization urges states to remove barriers to inward investment. Such investment is highly sought after by many countries, and to be competitive it helps to have as few restrictions as possible. If more Inuit were able to gain the education and skills needed to encourage and support inward investment, such barriers would in any case be less necessary, and the flow of inward investment would increase.
Inward investment is an important source of funds to help develop Nunavut, and provide a better standard of living for its people. The areas in which Nunavut is suitable for inward investment include mineral exploitation, tourism, fishing, and wildlife related pursuits. However, to attract inward investment, Nunavut must first have a skilled workforce capable of providing the services an investor requires. To do this, education is vital. At present, the level of educational provision and attainment in Nunavut is not sufficient to achieve this goal. Nunavut also needs to ensure that its rules and regulations do not raise unnecessary barriers to inward investment.
Dr Nicola Davies is a Psychology Consultant and Freelance Writer with an interest in health and well-being. Her publications can be viewed at www.healthpsychologyconsultancy.com. Alternatively, you might like to sign up to her free blog: http://healthpsychologyconsultancy.wordpress.com/
Nunavut Investment Opportunities out of the Ordinary - http://www.edt.gov.nu.ca/apps/UPLOADS/fck/file/coldw%20invest.pdf [Last accessed 07/07/2013].
Building Nunavik - http://www.makivik.org/building-nunavik/ [Last accessed 07/07/2013].