How to Unlock the Indigenous Economy

The Indigenous economy is poised to drive growth in Canada – but only once its potential is unlocked. The door has been barred for generations because of the Indian Act, which effectively took Indigenous communities out of the mainstream economy. 

We are making our way back in and showing the way forward. It is about economic reconciliation – and the time to act is now. 

Effects of the Indian Act on the Indigenous Economy

How exactly has the Indian Act held us back? For starters, First Nation governments were not recognized. We were denied access to capital and higher education. For decades, we were not even permitted to hire a lawyer to fight for our rights.

Earlier in my career, after many years in international business, I returned home to Squamish First Nation as a negotiator in the areas of economic development, land management and finance. I served eight years on the Squamish Council. It was then that I experienced, for the first time, a Canadian financial institution treating me differently as an Indigenous person. I was trying to get a one-month loan for my Nation and was told we would need a ministerial guarantee – and even with that, the rate would be prime plus 4%.

Economic development cannot happen without access to capital. 

The First Nations leaders who helped create the First Nations Fiscal Management Act (FMA) in 2005 recognized the problem and did not wait for someone else to solve it. Eventually, the government agreed with the proposal we put forth and the FMA became law.

Since that time, the First Nations Financial Management Board (FMB) has supported First Nations in achieving sound financial management and administrative governance. And like our sister FMA institutions, we are getting results. 

How to Improve Access to Capital for Indigenous Communities

FMA-scheduled First Nations have so far borrowed nearly $2 billion to support their development, at interest rates comparable to rates the Government of Ontario pays for borrowing money. They have seen their community well-being indexes rise and their own sources of revenue increase. 

Success stories include a coalition of Mi’kmaq Nations coming together in 2021 to buy 50% of Clearwater Seafoods in a $1 billion deal, with financing provided by the First Nations Finance Authority (FNFA). 

Today, 348 Nations – more than 60% of Indian Act First Nations – have chosen to work with FMA institutions. Progress is being made, but more needs to be done.

The FMB recently launched a practical plan to advance economic reconciliation. RoadMap is a collection of optional pathways to support First Nations in achieving economic development and self-determination goals. It is a plan for moving away from the federal government managing poverty to a system where First Nations generate wealth.

RoadMap is an Indigenous-led response to calls to improve access to capital for development, for the jurisdiction and fiscal powers needed for sustainable governance, and to close the infrastructure gap. 

Among other Indigenous-led institutions, RoadMap proposes the creation of the Indigenous Development Bank to address the unique capital needs of Indigenous economic development and remove the structural barriers that have limited entrepreneurship, major projects, and other economic activity.  

We are also calling for an Indigenous Investment Commission to provide better rates of return on the trusts owned by Indigenous communities and the opportunity to invest in our own economies.

The FMB is working with standard setters to ensure that Indigenous factors are embedded in new Environmental, Social and Governance (ESG) standards for corporations, which could, among other things, improve access to capital for sustainable Indigenous projects.

We also want to ensure that First Nations have the fiscal powers and jurisdiction needed to achieve their economic and self-determination goals, including jurisdictional clarity in their traditional lands. 

The Time is Now for the Indigenous Economy

Canada cannot afford to maintain these barriers to the Indigenous economy. For example, the country’s economy is heavily reliant on natural resource extraction, but those projects cannot move forward without Free, Prior, and Informed Consent (FPIC) from impacted Indigenous communities. Success happens when Indigenous communities have the opportunity to be full partners in these projects, both as decision-makers and economic beneficiaries. 

It is time to breathe life into the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP), which is now law in Canada. It is time to take meaningful action toward economic reconciliation. The success of the FMA institutions and the RoadMap Project shows how this can happen. 

Economic reconciliation means sharing wealth and power; it means First Nations will have control over our economic destiny. And it is in everyone’s interest.