Aboriginal Business is Growing Faster Than the Canadian Economy
President & CEO
Canadian Council for Aboriginal Business
The Canadian Council for Aboriginal Business (CCAB) has been bridging the gap between the corporate sector and the Aboriginal community since 1982. CCAB works to improve economic self-reliance of Aboriginal communities while assisting corporate businesses. It is the only non-profit organization working in this sector that receives no core government funding and also the only one to receive the endorsement of the Canadian Chamber of Commerce for its business-driven programs and services.
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1- The private sector, natural resource companies and investors in particular, is taking steps to engage aboriginal businesses. The public sector needs to catch up.
2- Aboriginal communities are not opposed to natural resource development, but they need to have a say in them.
3- The government needs to prioritize aboriginal business in order to ensure self-sustaining economic development for aboriginal communities.
The government must put in place targets around indigenous employment, engagement, business leadership development and procurement for all companies it does business with.
What are the factors that make aboriginal business grow faster, on average, than the Canadian economy?
Although I consider that we’re just at the beginning of the development of aboriginal business growth in Canada, TD’s market reports stated that aboriginal businesses contributed $12 billion to Canada’s economy in 2016 – and that number only continues to grow. I think there are a few things that have made our businesses grow faster, on average, than the wider Canadian economy. One is recognition – as Indigenous people, we are the only people to be recognized in Canada’s constitution. When companies are looking to advance projects, especially in natural resources, which constitute 16-17% of Canada’s GDP, they are looking to develop certainty, which indigenous businesses can provide. 90% of court cases fall in the favour of indigenous communities, so Canadian companies are starting to understand that it is better to partner than to litigate.
Moreover, indigenous business comes with a lot of know-how and innovation, as 55% of Aboriginal businesses are implementing innovation in their companies by introducing new products, services or systems to business operations. Compared to roughly 25% of non-Aboriginal firms. There has also been a definite uptick in the last couple of years with Prime Minister Trudeau saying the indigenous relationship is the most important relationship to his government. The conclusion of the Truth and Reconciliation Commission of Canada (TRC) has also contributed to this increase.
“Aboriginal businesses contributed $12 billion to Canada’s economy in 2016, and that number only continues to grow.”
For a very long time, there have been relatively few employment opportunities in indigenous communities. So, community members themselves are becoming innovative and starting businesses to support their families and their community. Therefore, the natural tendency to start business within communities is strong.
How would you qualify aboriginal business culture in terms of social impact, the environment, sustainability and climate change?
Firstly, I think aboriginal business is more of a social business enterprise. There is a recognition amongst our people that we have experienced significant challenges in this country, so there is often a drive to support our own people by hiring them and making sure that benefits from the business actually go to our people and the communities that we work within. So what often separates an indigenous entrepreneur from a non-indigenous entrepreneur is a stronger connection to the community.
“When companies are looking to advance projects, especially in natural resources, […] they are looking to develop certainty, which indigenous businesses can provide.”
In terms of the environment, we are often dubbed as the caretakers of Mother Earth and the reconciliation of development and the protection of Mother Earth is one of the biggest challenges in this country. There is a misperception that our communities and businesses are opposed to natural resource development when quite the opposite is true. Many of our community leaders and businesses see the opportunity in natural resource development, for example in oil and gas, mining and forestry. It is not that we are opposed to it, but our communities and businesses have to be integrated into all parts of the value chain of a business, whatever it is. Our voices must be heard when it comes to mitigating environmental impact and businesses should make sure that our communities are benefiting. Long gone are the days when truckloads of natural resources would go by without us being decision makers in how they are developed and how we benefit from them.
CCAB is working to grow and improve opportunities for aboriginal businesses. How do you do that and what can the federal government, provincial governments and the private sector do to support this mission?
My earlier comment about the Prime Minister’s remark about the government’s relationship with Canada’s indigenous peoples is the most important one. If the PM was sitting in my office right now I would ask him, “I believe you but why is your government giving all the non-indigenous companies that are competing in the supply chain a free ride by not requiring them to put the same level of effort in when it comes to the Indigenous people?” The government does not require them to put targets in place around indigenous employment, engagement, business leadership development and procurement. They can go about doing business as usual without putting any time, energy or resources into indigenous people.
“Many of our community leaders and businesses see the opportunity in natural resource development, […] but our communities and businesses have to be integrated into all parts of the value chain of a business.”
It is different in the private sector. Our organization administers our Progressive Aboriginal Relations (PAR) program. It is 17 years old and we have over 70 companies in it. In the private sector, we have a company like Suncor that is PAR Gold Certified. These types of organizations have strong targets, policies and practices. They have the infrastructure to meaningfully engage and support indigenous communities and businesses through procurement, employment and engagement. So when Suncor puts out a contract for companies to bid, the contract states that aboriginal businesses that are certified by the Canadian Council for Aboriginal Business (CCAB) will get an extra five points on the scorecard. So price, quality, safety, and other factors being equal, Suncor would procure an aboriginal business. If it cannot find an aboriginal business, because many aboriginal businesses do not compete at that multimillion-dollar range yet, they will give five extra points on the scorecard to other PAR companies because everybody that does business with them needs to understand the importance of indigenous relationships and advancing those through employment, procurement and other means.
We are working with the federal government to help advance such policies and practices through the federal spend so that we can influence more companies that do business in the federal and provincial governments to consider better practices with indigenous communities and businesses.
“If the PM was sitting in my office right now I would ask him, “[…] Why is your government giving all the non-indigenous companies that are competing in the supply chain a free ride by not requiring them to put the same level of effort in when it comes to the Indigenous people?””
Private sector support is increasingly coming from the investor community. Investors, particularly around natural resource projects, are looking at whether companies have solid relationships with indigenous communities because they understand that one of the biggest risks for any kind of resource development in this country is the company’s indigenous relationships. You can see that with the Site C Dam project in British Columbia, you see that with pipeline projects east and west. If communities are feeling like they have been slighted, like they have not had the opportunity to engage in how they are going to benefit and mitigate a project’s impacts, they are going to fight these projects. As I mentioned, indigenous peoples are recognized in the constitution, we have treaty rights, we win 90% of the court cases, so investors are now looking at a company’s performance on indigenous relationships and if they are not in place, that is a risk to the project. And if the project is risky, the cost of capital goes up or capital might not even be available until the company gets that in alignment. So this is a strong driver of engagement with aboriginal communities and businesses.
What gap is CCAB’s Tools and Financing for Aboriginal Business (TFAB) program focused on bridging?
Our research has shown that the biggest challenges for our indigenous businesses are getting access to capital, human capital, and the networks, tools and services to help support business growth. TFAB is designed to address exactly those gaps. It is designed to connect both indigenous and non-indigenous service providers to indigenous start-ups in order to grow aboriginal business. There are a number of buckets from financing to human resources, computer technology, legal and regulatory, and others that any of our members can put their tools and services in. These tools and services are then marketed across the country, in an open source format, for any business to access. As aboriginal businesses come into the forefront, we need to make sure that they have all the financing tools that are available to help them succeed. A stronger indigenous economy means a stronger Canada.
“As aboriginal businesses come into the forefront, we need to make sure that they have all the financing tools that are available to help them succeed. A stronger indigenous economy means a stronger Canada.”
Are you optimistic about the future of business for Aboriginal Canada?
I am extremely optimistic. I think the more progressive companies make space for indigenous businesses to flourish, the more everyone begins to realize that there is a much bigger pie that can be developed together.
When you look at the 94 calls to action by the Truth and Reconciliation Commission, business is at number 92. Businesses are sometimes overlooked because this country and the government are too reactionary to Band-Aid solutions. But indigenous communities with strong economic bases are the ones that are progressing, self-sustaining and are on the stronger path for self-determination because they can empower their own decisions through their economy. If we are going to be truly sustainable as communities, we have to stop relying on the governments as our only source of revenue. They still have fiduciary responsibility for a lot of our programs but that is not enough for us to be able to get self-determination.
“Indigenous communities with strong economic bases are the ones that are progressing, self-sustaining and are on the stronger path for self-determination because they can empower their own decisions through their economy.”
When we at the CCAB think about reconciliation, we like to focus on economic reconciliation. I like to look at the end game, which is when our aboriginal communities are no longer managing poverty but start creating and managing wealth. The only way to manage wealth is by creating it, and the way to create it is by leveraging our assets being our people, innovation and land.