Indigenous businesses undermined by inequities, confirms the Bank of Canada | The Indigenous Economic Revolution

A first report from the Bank of Canada on Indigenous businesses confirms that they have much less access to credit from financial institutions than non-Indigenous businesses.

An unsurprising observation, according to two experts working on indigenous economic autonomy. These remind us that economic inequity and barriers to financing in communities are systemic and have been known for decades.

With this national survey, published on May 24, the central bank aimed to draw up an initial portrait of indigenous businesses in the country based on new reliable data.

To do this, she worked in collaboration with the Canadian Council for Aboriginal Business (New window) (CCAE), which lists approximately 20,000 Indigenous-owned businesses, to provide the largest statistical survey ever carried out on the subject.

More than 2,600 businesses from First Nations, Inuit and Métis communities in Canada responded to the survey on their expectations in terms of Source of financing, inflation and salaries, between May and September 2021. This data was then compared to those of other surveys carried out with non-Indigenous businesses.

And what emerges overall is that Indigenous businesses use credit from financial institutions less than non-Indigenous people.

For Atikamekw sociologist Karine Awashish, who specializes in indigenous economic autonomy, the investigation remains surface and lack of context. However, she welcomes the approach, given that there is little major research on the subject.

This report remains very general, but I congratulate the initiative. If there is awareness of indigenous economic issues, then that is already a big step. We must continue to try to understand each other and initiate dialogue

If the government ensures that this new data promote informed decision-making for Indigenous organizationsMs. Awashish believes instead that they will be useful to non-Indigenous actors who interact with these companies.

Above all, it is a reference framework that allows us to talk to each other and ask for concrete actions from the government in terms of public policies.she believes.

What the report says

It reveals that half of the Indigenous businesses surveyed in 2021 were located in an Indigenous community, which represents % of the indigenous population claimed to live in a community, during the last census of 2021″,”text”:”a high proportion if we consider that only 20% of the indigenous population claimed to live in a community, during the last census of 2021″}}”>a high proportion considering that only 20% of the indigenous population claimed to live in a community, during the last 2021 census, specifies the report. The greatest number of them were in Alberta.

Businesses located in indigenous communities were largely in rural areas and belonged to the primary sector (agriculture, forestry, fishing and hunting, and mining, oil and gas extraction), while those located outside indigenous communities were mainly in an urban environment. These were concentrated in the construction and retail sectors.

Barely half of Indigenous-owned businesses were legally incorporated, which is quite low compared to Canadian businesses (63%). A situation which does not facilitate the use of credits, mentions the report.

Businesses are more likely to obtain financing from banks when they have employees, higher turnover and are incorporated, explains the report. However, many Aboriginal businesses do not have employees and their turnover is low.

The report also notes that these businesses are more inclined to use government loans and grants than credits; personal savings being the second most cited Source of financing by the companies in the survey.

Only 6.3% of them used indigenous lending institutions as their main Source of financing.

Please note that this survey was conducted during the COVID-19 pandemic, which may have had an impact on the results.

Figures, but still…

That’s good, but now we have to go beyond the data to explain the complexity, nuances and indigenous realities, notes Ms. Awashish.

For example, what is missing from this report, according to her, is thatwe are not talking about cooperatives or social economy enterprises. […] We want more portraits, more testimonies, because it must be useful to us too.

Karine Awashish, who is originally from the Atikamekw community of Opitciwan, co-founded Coop Nitaskinan in 2015, a work cooperative which allows the development and implementation of collective projects on the territory of the Atikamekw Nation. She supports community members in their entrepreneurial projects.

This is also the case of management professor Émilie Fortin-Lefebvre, who established the Center for Studies on the Economic Autonomy of Indigenous Peoples in 2019, the objective of which is to bring together indigenous and academic expertise. to meet the needs of indigenous peoples.

Like Ms. Awashish, with whom she collaborates, Ms. Fortin-Lefebvre believes that this type of report should include a significant component of testimonies and interviews, and not just figures.

When we talk with people and ask questions about their desires, their challenges or the obstacles encountered, more things are shared. This is the limit of these quantitative surveys, which only offer figures and few answersexpresses Ms. Fortin-Lefebvre.

Major obstacles to financing

Bureaucratic jargon and cumbersomeness, endless delays, reluctance of structures to lend money, lack of guarantees or down payments, lack of knowledge of the indigenous context by donors, distrust of communities in the government… So many obstacles that slow down indigenous businesses, particularly in Quebec, according to the two researchers who are trying to shed light on the phenomenon.

And the major obstacle in the communities remains the Indian Act, which is also recognized as systemic barrier by another report from the Bank of Canada, published in October 2023.

Quebecers will put their house as collateral in order to obtain the liquidity necessary to finance their business. For First Nations people living in communities, this is not possible because homes cannot be seized under the Indian Act.

Banks are therefore reluctant to grant a loan, since they will not be able to initiate seizure in the event of non-payment.

Furthermore, loans intimidate many Indigenous businesses, who prefer grants or non-repayable amounts, explains the specialist. They also have difficulty determining the programs for which they are eligible, since they often do not meet the criteria, also specifies Karine Awashish.

Economic development is recent in the indigenous context. We don’t have a great history on this, we haven’t modeled capitalism. We are moving forward, but it is a whole capitalist mechanism that must be deciphered and understood, especially in large-scale development.

The researchers point out that banks lend to those who already have money in order to have as much guarantee as possible. However, in the majority of cases, as confirmed by the central bank report, indigenous businesses include more small and medium-sized enterprises (SMEs).

We’re not big players yet. We don’t have any big mines, no big hydroelectric power stations, it’s not in our history. Banks are first of all close to big firms.

According to the doctoral student, public policies must change, because the current culture of economics, its language, its ideology pose a problem. As an Indigenous person, she also considers that communities must learn to master this language in order to change it. Just like Émilie Fortin-Lefebvre, she works to build bridges.

Autonomy rather than reconciliation

The two researchers are unanimous on this point: the issue is less reconciliation than the economic autonomy of indigenous peoples.

I don’t do research on Indigenous people, but with and for themexplains Ms. Fortin-Lefebvre. I first try to find out what the partners I work with need. It is an approach to co-constructing knowledge and sharing.

The business management specialist reports that the desire of the indigenous entrepreneurs she meets is mainly to protect their culture and develop a form of entrepreneurship that is specific to them. There is a strong tendency to use entrepreneurship to give back to their communityshe emphasizes.

The ambition of Karine Awashish and her collaborators is also to work towards this autonomy, which aims for interdependence and reciprocity.

What is meant by reconciliation is above all conciliation. This is what must be highlighted. It is not friendship that we want, we want to decolonize structures, the legal approach and prejudices to establish a real dialogue between Nations.

And the doctoral student in sociology thinks that indigenous communities can participate in transforming this economic mechanism so that the whole society can change.

According to Ms. Awashish, money must remain a means and not an end. We want to prosper, we want good jobs, good salaries, but not just to get rich or keep it in our pockets. Money, like water, must circulate to benefit everyoneshe illustrates.