Report shows Aboriginal entrepreneurs face significant barriers in financial ecosystem
- EFN Staff | March 07, 2017
The National Aboriginal Capital Corporations Association (NACCA) and the Business Development Bank of Canada (BDC) commissioned a study of the financial ecosystem that provides support for Aboriginal entrepreneurship in Canada. Data detailed in the report highlights the important contributions made by investing in Aboriginal entrepreneurs. With each dollar lent under the Aboriginal Business Financing Program (ABFP), $3.60 is added to the Canadian gross domestic product (GDP). While the number of Aboriginal businesses continues to grow, with a combined household, business and government sector income estimated to be between $30 and $31 billion in 2016, barriers to financing hinder the progress of Aboriginal entrepreneurs and communities in reaching their goals.
The report addresses the question of how these ecosystem barriers can be removed to improve the flow of financing and expand the range of services that AFIs, NACCA, BDC and other financial institutions offer Aboriginal businesses. Aboriginal entrepreneurs in Canada face severe financial capability constraints that need to be addressed by concerted and collaborative action on the part of multiple governments and financial service providers – both Aboriginal and non-Aboriginal.
NACCA and its member Aboriginal Financial Institutions (AFIs) provide financing and support to Aboriginal entrepreneurs. The number of AFIs across Canada has grown to over 50 and include Aboriginal Capital Corporations, Aboriginal Developmental Lenders and Aboriginal Community Futures Development Corporations. In addition to BDC's mainstream financial services and advice, BDC's Aboriginal Banking Unit offers two specialized streams of financing for Aboriginal entrepreneurs including the "Aboriginal Business Development Fund," and "Growth Capital for Aboriginal Business."
Shannin Metatawabin, CEO of NACCA, commented that, "The undercapitalization of Aboriginal entrepreneurs has a dramatic trickle-down effect that affects all areas of the Indigenous economy. This could be addressed if the public and private sector can come together and agree to focus on improving the Indigenous economy, which leads to supporting the entire Canadian economy."
In terms of improving the financial ecosystem, the two broad areas of recommendations are to improve Aboriginal entrepreneurs' financial capabilities and to increase the capital available for lending. For example, exploring options for greater micro-loans; supporting efforts that work to mitigate the legislative and regulatory barriers brought on by the Indian Act and as stated earlier, increase funding for Aboriginal financial institutions so that businesses and our communities can thrive. These recommendations were drawn from the experiences of public and private sector entities, from NACCA and the AFI network, from BDC, and from the relevant research literature.
This series was developed by the Conference Board of Canada's (CBoC) Northern and Aboriginal Policy group. See the full report at: http://bit.ly/NACCA-REPORT
NACCA is a network of Aboriginal Financial Institutions (AFI) that provide financing and support to First Nations, Métis and Inuit businesses in all provinces and territories. NACCA works to build partnerships and develop economic growth for Aboriginal people in Canada. Learn more at http://nacca.ca