“(3) The aggregate of the principal of all sums outstanding for purposes other than the provision of consideration for the acquisition of bank assets shall not exceed €5,000,000,000 or such other amount that the Minister specifies by order for the purposes of this subsection.” Section 50(3) of the NAMA Act which sets out the total limit that NAMA can advance to developers for working capita/finishing out projects
Cast your minds back to 2009 when NAMA was conceived and you might just about recall that it has always been the intention for NAMA to provide financing to developers to finish out projects – in fact in the NAMA Act which was passed into law in November 2009, it was envisaged that €5bn would be made available.
And as recently as February 2012, NAMA stated that it had approved €402m advances to developers in the Republic of Ireland for Irish projects, of which €289m has so far been handed over.
This morning in Galway, the NAMA chairman, Frank Daly (pictured above) is announcing that the Agency plans to invest €2bn in projects by 2016 which he claims will create 25,000 construction jobs plus another 10,000 jobs in the wider economy.
So far the details, including workings which show how the 25,000 and 10,000 are derived and the annual phasing of the investment, are sketchy in the press release issued by NAMA.
How credible is the 25,000 jobs claim? Difficult to say as NAMA has not provided detailed workings, but in Northern Ireland recently, the finance minister Sammy Wilson claimed that GBP 580m (€700m) of shovel-ready infrastructure projects would create 2,500 jobs. In Northern England recently it was claimed that €450m investment by NAMA might create 3,000 jobs. With wage levels on this side of the Border being nearly twice those in Northern Ireland, somehow the 25,000 claim looks far-fetched. It is a bold claim and coincidentally is equal to the total direct employment in the IFSC.
The regular audience on here will know that there have been longstanding calls for NAMA to use its cash mountain to invest in the crisis-torn Irish economy rather than redeem its bonds which cost it just over 1% per annum in interest and which don’t have to be redeemed until 2020 – see here and here. So this morning’s announcement is to be welcomed in general, but why is NAMA not using the full €5bn available to it from the NAMA Act – after all, after Minister Noonan temporarily raided the NAMA coffers in March to pay the Anglo Promissory Note, it was most clearly established that NAMA could lend and provide equity for all sorts of projects that would help address the crisis in the Irish economy.
NAMA Wine Lake 
It is never too late to do the right thing but why has it taken this long and who will be ‘accountable’ for not implementing this policy sooner.
The amounts of money seem small in relation to NAMA’s cash balance of €5billion.
It would make far more sense to spend at least 1.0 billion each year for the first three years of this program. Or front load the program more than that.
On the amount of jobs, these seem too high for the amounts of money being spent.
500 million at a very 60% labour content and 30,000 pa salary will account for 10,000 direct jobs per annum.
Listening to Frank Daly now, he is being disingenuous with his 30,000 direct jobs claim. The only way that figure could be correct is 7,500 jobs each year for four years ‘totalling’ 30,000’jobs. That is not ‘30,000’ jobs, Mr Daly. It is 7,500 jobs each year over four years.
There would of course be some indirect jobs as a result of the spend.
However my welcome is tempered by the NAMA proposal to loan money for purchase. That should not be done. It is a waste of resources on already completed buildings. It will not generate one extra job in the economy or add one iota to to GDP or GNP.
No word yet on what NAMA propose to do with these properties once completed? If they sell or let them, it will go against their percieved policy to date of holding property off the market. If they release them, unless it is in tandem with their new 80/20 product, very few potential (non-instutional) buyers would appear to have the means to buy them.
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Reblogged this on Machholz's Blog and commented:
More lies to prop up this financial toxic entity awash with insiders on vast lottery salaries
I suspect a substantial portion of this money and jobs will go towards assessment and eventual demolition of the now rotted ghost developments belonging to Nama up and down the country.
Clearing the backlog by any means neccessary; all the better to facilitate the profits of the vultures now circling Ireland.
And all this will be paid for by the Nama Bailout in 2018. Get yourself a dollars worth.
Hi – couple of typos in the orignal. Can you substitute this when moderating? Thx.
Circa 2008, a reasonable rule of thumb was that spending €100,000 on building construction would result in an average of one person being employed directly for a year. Divide 25,000 into €2bn, and you get €80,000 per person employed.
Given the drop in construction costs, it is reasonable to conclude that:
1) NAMA doesn’t actually mean what the rest of us mean when it talks about numbers of “jobs”. Instead, it means the number of years of employment, so if the money is spread over the period from July 2012 to December 2016, the average number of jobs it will generate over the period is 5,556. Once the period is over, the incremental jobs will all be gone.
2) €80,000 per year of employment seems like a reasonable estimate under current conditions, so NAMA’s numbers look OK analytically even if they don’t mean “what it says on the tin”.
If one was to instead apply the job creation definition used by EI and IDA Ireland, the job creation number would come out at zero.