Investing in Indigenous Business in Canada: Key Opportunities and Challenges

Aboriginal business opportunities are arising at a revolutionary rate but the capacity (knowledge and experience) to take advantage of these opportunities is generally acquired on an evolutionary and generational basis. How do we reconcile the two?

Challenges

  1. Joint Venture Partnerships with domain-experienced companies can be one way to overcome capacity challenges allowing Aboriginal companies to take advantage of opportunities more immediately and the other joint venture partner to access business on a preferential basis. CAPE Fund (a grantee partner of the Johnson Scholarship Foundation) has found that at least in our country, Corporate Canada has been slow to react to these opportunities and when they do emerge, they are structured to flow cash to Indigenous communities with little opportunity for the transfer of business knowledge and the creation of Aboriginal employment.
  2. Cape LogoIn modern society, business is supported by a complex “ecosystem” which includes access to knowledgeable capital from a variety of sources, a well-educated and trained labor force, experienced management and governance resources and advanced infrastructure (IT, transport, power, water, education, health care, etc.). These are not a “given” in most Indigenous communities.
  3. Politics play a great role in the affairs of Indigenous communities. While many communities make great efforts to separate business and politics by establishing appropriate governance structures, the temptation to mix the two frequently leads to bad or uninformed decisions negatively affecting business. These complications are avoided when we invest in Aboriginal entrepreneurs as opposed to community-related businesses.
  4. For generations, Canadian federal law has encouraged the creation of structures, which encourage dependency and foster dysfunctionality in Indigenous communities. One example of this is the two-year election cycle mandated by the Indian Act for most First Nations’ chiefs and councils. When a First Nations elder was asked by a CAPE representative if a particular Nation would be committed to a project requiring five to 10 years of development and millions of dollars of investment, the response was “Yes, but can we abandon the project in two years if a new Chief is elected?”

Opportunities

  1. Aboriginal youth represent the fastest growing demographic in Canada. Over 50 percent of Indigenous people in Canada are under the age of 25.
  2. Canada is facing a labor shortage, which is forecast to worsen in coming years.
  3. It is now a legal obligation for corporations to consult and, where possible, accommodate our Indigenous peoples when their traditional territories are to be impacted by commercial development. This has given rise to impact/benefit agreements negotiated between developers and our Indigenous peoples, designed to mitigate environmental impacts and provide economic benefits including jobs, Native business creation and profit sharing.
  4. Sean_Manitobah_MukluksThe rise of successful Aboriginal business and Aboriginal entrepreneurs can lead to the creation of role models who can inspire and motivate Indigenous youth to stay in school, work hard, pursue an education in business and become productive members of their communities and Canadian society in general. One example of such an entrepreneur is Sean McCormick, CEO of Manitobah Mukluks, one of our most successful investments.

We are seeing the emergence of a number of successful Indigenous businesses in Canada, notwithstanding enormous challenges faced by our Indigenous peoples brought on by almost a half of a millennium of marginalization and abuse. Ultimately our goal should be to assist our Aboriginal brothers and sisters to find justice and substantially improve the quality of their lives in all respects. Business creation and growth is only one piece of a great puzzle representing the true holistic solution required. It is, nevertheless, an important vehicle for our Indigenous peoples to generate the wealth necessary to improve quality of life and provide meaningful employment opportunities for their benefit as well as our country’s at large.

Peter Forton is Managing Director of CAPE Fund (Capital for Aboriginal Prosperity and Entrepreneurship), a $50 million, socially responsible investment fund, established to encourage Aboriginal entrepreneurship and capacity building in Canada. The Fund is the vision of former Canadian Prime Minister Paul Martin and his son David and is backed by 18 of Canada’s leading corporations as well as three international foundations.

 

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