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In a milestone achievement for Aboriginal and Torres Strait Islander entrepreneurs, more than $1 billion in contracts for First Nations businesses have been supported through Indigenous Business Australia’s (IBA) Performance Bond Trust.
The bonds were initially introduced by IBA six years ago, with the agency now supporting more than 500 performance bonds valued at almost $60 million, while the contracts are valued at $1 billion-plus.
A performance bond is issued to one party of a contract as security against the failure of the other party to meet the obligations specified in the contract. Banks often require a 100 per cent cash deposit as security for the bond, which ties up considerable amounts of working capital.
When the Performance Bond Trust was established, IBA co-invested $10 million in the facility along with the National Indigenous Australians Agency (NIAA) matching a further $10 million.
“IBA’s Performance Bond Trust has assisted First Nations contractors across the country to participate in a wide variety of contracts including mining, civil works, construction, facility upgrades and renewable energy construction by guaranteeing their capacity to complete projects while requiring minimal security,” IBA CEO Kirsty Moore said.
“We’re extremely proud of this milestone figure – it ultimately contributes to Aboriginal and Torres Strait Islander business growth which is positive for everyone.”
Originally known as the Aboriginal and Torres Strait Islander Commercial Development Corporation, IBA assists Indigenous Australians with buying their own homes, establishing businesses and investing in commercial ventures to provide strong financial returns.
Today’s news comes four months after IBA and banking giant NAB (ASX: NAB) signed a Memorandum of Understanding (MoU) to collaborate on the development of an Indigenous Business Guarantee.
The guarantee will enable IBA and NAB to support more Indigenous business customers to access capital through access to NAB’s specialist bankers and commercial lending solutions.
The bond partnership that took IBA’s total contract value to more than $1 billion was through Mine Power Solutions – an SA-based construction, mining and electrical contractor which has been successful in winning contracts at Olympic Dam.
Mine Power Solutions managing director Cameron Buzzacott, who is a long-standing IBA customer, was the initial performance bond customer through one of his other ventures, Zancott Knight.
“In mid-2018, Zancott Knight strategically decided to collaborate with IBA, transitioning away from our traditional banking institutions for bond requirements,” Buzzacott said.
“Being IBA’s first client, this bond was pivotal for both companies. For Zancott Knight, it was a turning point as it not only streamlined the process of bond origination but also freed up working capital to grow our business.”
“This growth has strengthened our market presence and allowed us to seize new opportunities and execute more projects, enabling Zancott Knight to navigate the competitive landscape with confidence and agility.”
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