Public and Private Investment Needed to Grow the Aboriginal Economy
- Indigenous communities have always had an economy; “Indigenomics” combines the Indigenous economic worldview with today’s modern capitalistic context to form a blended economic system.
- The government must increase its spending towards the Indigenous economy to support its growth, thereby empowering Indigenous communities to resolve the many pressing issues they face.
- Private sector support for the Indigenous economy far exceeds government spending. Procurement, employment, skills training and investment are great ways for the private sector to make an impact in Indigenous communities.
The Indigenous economy has the potential to reach $100 billion, but we need companies, government and our communities to contribute towards it. Economic development is a permanent and long-term solution to the numerous problems that Indigenous communities face.
What is the current state of Canada’s Indigenous economy and its relationship with corporate Canada?
In 2016, TD Bank estimated that Canada’s Indigenous economy amounted to $32 billion; the growth in the Aboriginal economy has been outpacing the national average since then.Many companies, particularly in the resource sector, continue to show a commitment towards including Aboriginal businesses in their supply chains and employing Indigenous people. For example, Suncor spent approximately $600 million on local Aboriginal businesses in 2018.
“In 2016, TD Bank estimated that Canada’s Indigenous economy amounted to $32 billion; the growth in the Aboriginal economy has been outpacing the national average since then.”
The Aboriginal business sector is thriving and the 94 ‘calls to action’ of the Truth and Reconciliation Commission are bringing attention to the Indigenous economy. Call to action Number 92 is particularly salient in this context since it addresses corporate Canada directly urging companies to adopt the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP) as a reconciliation framework and to apply its principles to corporate policy and operations involving Indigenous peoples, their lands and resources.
“Indigenous entrepreneurs and businesses are unique within Canada’s multicultural society as the government has a responsibility to uphold its signed treaties and due to the fact that federal policy forced Indigenous peoples out of the economy for much of the last 100 years.”
New membership in the CCAB is coming from sectors that have historically been less active in the Indigenous economy space. For instance, we now have members from finance and retail as well as giants like Apple, LinkedIn and Air Canada. So, we are starting to see a lot of other sectors that want to build relationships with the Indigenous community. This shift in corporate Canada is happening much quicker than I could have hoped.I had about 60 speaking engagements in 2018 in numerous sectors across the country and Australia. A lot of the hosts were non-Indigenous organizations that are putting Indigenous issues on their agendas, which they think will contribute to their overall success.
What are the role of the public and private sectors in terms of accelerating the growth of the Indigenous economy, and what key elements should be focused on?
The difference between the private and public sector’s impact on the Indigenous economy is huge. The federal government currently spends about 0.3% of its yearly $20 billion budget – which is about $65 million – on Indigenous economic development. In comparison, Suncor alone spends $600 million per year on our businesses. So, the federal government really needs to step up its support of the Indigenous economy. If all three levels of government were to set a target of 5% spending towards the Indigenous economy, this would equate to $11.2 billion, only a small percentage of which is currently included in the $32 billion estimate for the size of Canada’s Indigenous economy. In terms of the impact that could have, if the Federal government were to reach its target of 5% procurement spend on Indigenous companies, equating to $1 billion, it would save $50 million on training and education programs. In addition to public sector spending, if corporate Canada targeted 5% we estimate that the private sector could be contributing over $23 billion per year to the Indigenous economy. So corporate Canada’s role in growing the Indigenous economy is absolutely key. However, it is not just about spending money, it is about setting the right focus with the right targets. On this front, CCAB is very passionate about procurement and the Progressive Aboriginal Relations (PAR) program.
“If all three levels of government were to set a target of 5% spending towards the Indigenous economy, this would equate to $11.2 billion.”
Firstly, on the procurement front, the government has committed to a 5% Indigenous procurement target. However, there is a bias against Indigenous businesses within government and some companies. Many think that dealing with Indigenous businesses is more expensive or that there is a dearth of competitive Indigenous businesses to fulfill contracts. This is simply not true. There is a need to bridge that knowledge gap, which is where the CCAB would like to get involved. Our cutting-edge research proves that our Aboriginal businesses can supply 31% of government contracts. In addition, we have a database of over 11,000 Aboriginal businesses, but the total number of Aboriginal businesses across Canada is upwards of 60,000. There are over 1,900 Aboriginal businesses in the construction sector. So, how can the government or the private sector claim to not find competitive contenders for construction contracts? To help with this, the CCAB has also developed the Aboriginal Procurement Marketplace, which helps companies to identify where the Aboriginal businesses are.
Secondly, we need to get corporate Canada and Aboriginal businesses working together in the right way. Our PAR certification program helps companies hone in on a number of key issues that non-Aboriginal companies must consider to build valuable relationships with Indigenous businesses and communities. These include procurement, employment, engagement, or investment in Aboriginal businesses and communities. When companies and Indigenous communities work together, it results in a win-win situation wherein the community advocates for the company and the company maximizes its social impact. For example, Alberta’s Fort McKay First Nation community members earn an average of $73,500 a year, compared to the national average of $38,500 or the Albertan average of $50,500.
“If corporate Canada targeted 5% we estimate that the private sector could be contributing over $23 billion per year to the Indigenous economy.”
Another important point is that we need to invest in our Indigenous human capital to grow skills and entrepreneurship within Indigenous communities. It would be an interesting exercise to compare our expenditure per immigrant versus our spending towards an Indigenous youth’s development into a net contributor to the Canadian economy. It is great and important to attract talent and people from all over the world to contribute to our economy and our rich diversity. But right now, there are still a lot of youth and communities that struggle because we have not put in the same level of effort when it comes to Indigenous Canadians. Indigenous entrepreneurs and businesses are unique within Canada’s multicultural society as the government has a responsibility to uphold its signed treaties and due to the fact that federal policy forced Indigenous peoples out of the economy for much of the last 100 years.
What is the biggest challenge Indigenous businesses face today and what must be done about it?
There are three main pieces to Indigenous economic development: entrepreneurs, the wage economy and infrastructure. Research has identified access to capital as the biggest challenge for Indigenous entrepreneurs. We are always going to struggle with getting capital on reserve because of certain clauses in the Indian Act. We need to promote groups like the National Aboriginal Capital Corporations Association (NACCA) that are filling this financing gap. NACCA provides credit to Aboriginal businesses through its Aboriginal Financial Institutions (AFI) across the country.
“Research has identified access to capital as the biggest challenge for Indigenous entrepreneurs.”
Furthermore, companies that are working with Indigenous entrepreneurs need to take their contracts to the banks and help entrepreneurs access capital. Companies could also mentor Indigenous entrepreneurs to better navigate the financial ecosystem.
What would you identify as the most important change in mindset required to give the issue of Indigenous economic growth the recognition it needs?
Having worked at CCAB for six and a half years, the biggest challenge I have faced is in getting government, industry and even our own communities engaged in the importance of the Indigenous economy. Too often, policy, funding and government effort is understandably reactionary. There are limited resources for so many real issues in our communities like suicide, clean drinking water, education and infrastructure. Now, if I pitch procurement in that context, it does not make the priority list because it is not an immediate concern. But, investment in the Indigenous economy is a long-term measure, which could resolve many of the pressing issues Indigenous communities are facing.
Who are some of the main actors involved in Indigenous economic growth in Canada and what is “Indigenomics”?
CCAB has been promoting Indigenous economic development for over 36 years and the National Aboriginal Capital Corporations Association (NACCA) has also contributed tremendously in this journey. It is also great to see the First Nations Major Projects Coalition (FNMPC) come together to enable our communities to benefit from the large projects on their territories. The National Aboriginal Trust Officers Association (NATOA) represents over $2 billion in community trusts and is working to ensure Indigenous wealth is invested in ways that respect traditional values and contemporary goals, looking to move markets in ways that support communities and drive reconciliation.The Indigenomics Institute is a valuable new organization because it is bringing a $100 billion Indigenomics lens to the table. Indigenous people constitute 5% of Canada’s total population, so we should be able to generate 5% of Canada’s GDP, which is roughly $100 billion. This will help Canadians, Indigenous communities, businesses and governments set tangible targets and work towards them.
“Indigenous people constitute 5% of Canada’s total population, so we should be able to generate 5% of Canada’s GDP, which is roughly $100 billion.”
Indigenous people have always had an economy, even before the newcomers arrived. We had an economy based on natural resources, knowledge, innovation, trade and medicines. The Indigenomics Institute has found a way to express our economic worldview in a modern, capitalistic context. The resulting framework is a blended economic system. Senator Murray Sinclair said it perfectly during one of our conversations, “Even if the Europeans had not come over, our community would have still succeeded in the global economy. We would have found a way to develop our natural resources in line with our approach to sustainable development.”
Part of the Indigenous Economic Development Series presented by: