Indigenous Economy: $100 billion in unrealized potential
National Aboriginal Capital Corporations Association (NACCA)
The National Aboriginal Capital Corporations Association (NACCA) is the national association for a network of Aboriginal Financial Institutions (AFIs) dedicated to stimulating economic growth for Aboriginal people in Canada. The AFI network provides financing and support to First Nations, Métis and Inuit businesses. NACCA is membership-driven and is committed to the needs of Aboriginal Financial Institutions and the Aboriginal businesses that they serve.
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1- Lack of access to capital remains a huge barrier for Indigenous businesses, which AFIs are trying to close.
2- The government should create strong institutions focused on Aboriginal economic development that are not under any department per se and have direct contact with the Treasury Board.
3- The private sector should contribute towards an Indigenous Growth Fund, which would finance large projects.
The government needs to start implementing recommendations from the United Nations Declaration on the Rights of Indigenous Peoples, the Truth and Reconciliation report and the Royal Commission on Aboriginal Peoples (RCAP) – “Just take them out, dust them off and start implementing.”
What role do you see Indigenous communities playing in Canada’s economy now and in the future?
TD Economics estimated Indigenous contributions to the Canadian economy to be $15 billion in 2006 and $30 billion by 2016. In a general sense, Indigenous communities have the potential to contribute about $100 billion in annualized income towards Canada’s economy. We are continuing to rise, but the gap between Canadian and Indigenous communities, in terms of the quality of life and economic development, is holding us back. These gaps exist in education, health, infrastructure and economic development.
However, we are seeing a shift in the perception of the Indigenous economy. Right now, with over 200 court cases in favour of Indigenous rights, Indigenous people hold a little more leverage in the development of their traditional territories. So corporations increasingly need to consult and develop relationships with communities.
How can the federal government restructure financing towards Indigenous communities?
To date, the federal government has been providing less than 2% of the Indigenous budget towards Aboriginal economic programs through Indigenous and Northern Affairs Canada (INAC). That has been reduced in the last 30 years by about 50%. So we are actually going in the wrong direction. No society in the world has ever been successful without access to capital – unless you have access to capital, you cannot take advantage of opportunities. The government really needs to reverse its position on Aboriginal economic development and make a concerted effort to provide access to capital for Indigenous communities.
NACCA works with a network of 58 Aboriginal Financial Institutions (AFI), which provide developmental lending and business support services in every region of the country. If we can provide a more diverse set of services through these institutions, we can ensure a more robust economic development support mechanism. AFIs were provided with $240 million 30 years ago and they have turned it into $2.4 billion in lending. Over the past 10 years, they have been operating with insufficient resources because they were not given enough capital to reach sustainability at the outset and have not received any new capital for about 20 years. So, the fact that they are still in business shows their resilience. If the government were able to provide some capital to the 40% of AFIs that require it, the network would become efficient and be able to lend at the current levels of demand. The AFI network is not set up to provide loans larger than $250,000, which could cater to larger businesses. So if we could create a growth fund that provides capital from $250,000 to $2 million, we would be able to fill the gap that Indigenous economies are experiencing.
Aboriginal communities are just used to promises and no follow through from the Federal Government. So, if Prime Minister Trudeau were going to follow through, he would set up institutions that are not under any department per se, but that stand on their own and have direct contact with the Treasury Board. NACCA is well positioned with the Aboriginal Financial Institution network to be one of those first institutions.
What are NACCA’s key priorities to support the growth of Aboriginal businesses in the coming years?
NACCA has submitted a business case to the Government of Canada for the allocation of $35 million in additional annual spending over the next five years. That allocation would go towards providing capital to the AFIs that lack adequate resources. We also have a plan to create an Indigenous Growth Fund, which would allow the private sector to invest low-cost capital so that AFIs can, in turn, retail it to their network of clients and develop Indigenous businesses on a larger scale. If we create a growth fund, it will create 3,500 loans and $3.7 billion in lending by 2050. To existing businesses, we are going to provide about 50,000 loans worth $4.5 billion, which would generate a GDP impact of $5.7 billion.
NACCA is also working towards creating institutional alignment to ensure that Indigenous institutions do not end up duplicating services. We have also submitted a request to increase our capacity development program for AFIs and entrepreneurs. We are going to have a million Indigenous youth by 2027 and we have to have a plan in place to ensure that we give them jobs.
How can we realistically raise the standard of living in Indigenous communities?
Ultimately, self-government is the long-term goal. We want to be in charge of our own institutions, servicing our own people and creating our own income through our lands. There are multiple layers of planning that are required to ensure that we get to that point. We essentially need to use the United Nations Declaration on the Rights of Indigenous Peoples as a framework to get us there. It has all the recommendations on how governments should be working with and supporting Indigenous people. The same framework is provided in the Truth and Reconciliation Commission (TRC) report and prior to that, the Royal Commission on Aboriginal Peoples (RCAP). These reports have been paid for but not implemented. Just take them out, dust them off and start implementing because the situation is still dire and the recommendations are still sound.
How can Canada’s Indigenous youth fully realize its potential in the coming years? What must government do to enable this?
I do not think there is enough support for the youth right now. That is why I want to create a National Youth Committee to provide feedback in order to ensure that we are meeting the youth’s needs. They are going to be the leaders in the future and we want to make sure we get it right, and education is a big part of that.
I do not see a lot of optimism among Indigenous youth. There has been a 10-year black cloud of no-support hovering over Indigenous communities. During the Harper government, many support institutions were closed down. Now, the government is talking about recreating the same sort of institutions because they were born from a need. The youth has been through those 10 years and now it is seeing some momentum with the Trudeau government. However, there have been a lot of pronouncements and promises from the current government, but no real action towards furthering our rights to lands and resources.