Path Forward – Capitalising on Opportunities
How can Indigenous people and communities capitalize on the economic opportunities ahead? Good governance, sharing of business resources, and astute asset management emerged as key themes in the IPSS 2023 conversation among three of the country’s top Indigenous financial leaders.
Alfredo Di Blasio, Bill Lomax, Geordie Hungerford and Sharon G.K. Singh at the 2023 Indigenous Partnerships Success Showcase.
Economic reconciliation holds the promise of empowering and enabling Indigenous people, communities, and businesses to prosper.
“UNDRIP (United Nations Declaration on the Rights of Indigenous Peoples) has this vast wealth that is finally being returned to the rightful stewards of the land, and that's our people,” says Geordie Hungerford, CEO, First Nations Financial Management Board.
Yet, many of the barriers historically faced by Indigenous peoples—lack of access to education and employment opportunities, difficulty accessing capital, lack of property security, and exclusion from profits generated on their territories—continue to exert an impact.
So, what can Indigenous communities and businesses do to take advantage of opportunities and manage their wealth?
Alfredo Di Blasio, Founder and CEO, Longhouse Capital Partners, thinks one of the first things to focus on is governance.
“It's one of the things that I think is critical so that dollars flow in. You nail the governance and capital will start to flow in materially … A trusted relationship has trust on both sides of the equation. And governance is what provides that trust between the parties. People know you're going to do things right and you're going to do the right thing.”
Also essential, says Hungerford, is ensuring that the back office administrative supports are well functioning.
“Is your Nation able to go and get a good accountant? Are you able to have controls in place? Are you able to organize your human resources? These are all issues that some Nations may have trouble with.
“We talk a lot about capacity building, and that is, again, a foundational element in to ensure that First Nations have a seat at the table and can take their rightful place as the stewards of the land and continue to make economic reconciliation a reality.”
Both Hungerford and Di Blasio say that partnering with others—be it with outside experts or with other Nations—can help communities and businesses pool resources to achieve the desired outcomes.
“We think there needs to be a focus on how to encourage Nations to think about working together with other Nations that are nearby to be able to get that kind of scale,” says Hungerford. “And we also see that with businesses as well, particularly micro enterprises. How can these enterprises achieve that scale and really start to take off as a business?”
Education is also crucial.
“Our elders were brilliant back in the ‘60s,” says Di Blasio. “They said, ‘Hey, we've really got to train our people in law to make sure we can understand the rules of the road and we can fight for our rights.’ And I see a similar issue taking place today in finance—increasing the level of financial literacy and financial acumen across the country and across First Nations peoples, so that we can actually manage that wealth in a way that aligns with our values and for the long term.”
He mentions that the team at Longhouse devotes a portion of their time to increasing Indigenous financial literacy through scholarship, internship, and mentorship programs.
Telecommunications connectivity remains an issue for many Indigenous communities, however, particularly in remote areas; as a result, their access to education is hindered. Di Blasio thinks that federal and provincial governments have a responsibility to ensure that connectivity is available to all at a reasonable price.
He also places an onus on the non-Indigenous business sector to ensure that company team members are educated about “the role of UNDRIP and free prior and informed consent and how businesses can participate in activity on traditional territory.” He mentions the Truth and Reconciliation Commission Call to Action 92, which calls upon the corporate sector in Canada to adopt UNDRIP as a reconciliation framework.
Di Blasio does see some companies taking appropriate steps to work fairly and justly with Nations. He also sees significant opportunities in some sectors. For example, he notes that there is a tremendous of capital required to meet the energy infrastructure gap between now and 2050. “And the good news for First Nations in Canada, in particular, is that we are sitting at the nexus of all of that activity and part of what's taking place across the country.”
He cites a large Ontario utility that has offered a 50 percent equity stake to First Nations on large scale transmission line projects.
“I think the corporate world is slowly realizing that, you know, spending 10 years in litigation and not getting transmission lines up and running is not a way to solve energy problems. And that rather than looking at First Nations as potential small beneficiaries, looking at them as equal footing partners in those solutions.”
Indigenous communities and businesses also have more opportunities now to access financing. Di Blasio says Longhouse Capital is raising a billion-dollar infrastructure fund, 50 percent of which will be deployed on First Nations lands across the country.
Hungerford notes that the First Nations Financial Management Board, under the First Nations Fiscal Management Act, is currently working with about 60 percent of the Nations in Canada, who have the opportunity, if they meet certain financial metrics, to borrow money from the First Nations Finance Authority (FNFA).
“That's an amazing opportunity for Nations. They're able to borrow at rates that are AA, commensurate with the government of Ontario.” He says that, collectively, Nations have been able to borrow about $1.8 billion through the FNFA.
He recommends that Nations consider partnering to have their own asset manager.
“The amount of assets right now that are being managed on behalf of First Nations, it's at least $25 billion in trust and probably much more outside of trust. My own Nation has about $125 million. And the returns that we got through how it was managed from 1993 until a few years ago was in the bottom percentile of returns. Just terrible. And, frankly, I don't want to see any other Nation have that kind of poor return. And we think that by bundling the Nations together, agreeing to create an Indigenous asset manager, that we can drive lower cost, in terms of the cost of management as well as get better risk adjusted returns. It's about communities working together to get bigger businesses and be able to go and leverage the power of big numbers.”
When it comes to assessing the best types of financing, Bill Lomax, CEO, First Nations Bank of Canada, advises Indigenous businesses to “(make) sure that you're matching the financing that you're getting with the lifecycle of the business that you're talking about. If you do a bond that just gives you kind of a blank check where you can go out and buy different businesses, but you're buying businesses that might last five or 10 years, and then need a refresh, that's probably not a good match for the kind of business you have. You probably want a different type of financing for that. You want something that's more like bank financing. So, when you think about the kind of business you're going to go into, that really should determine what kind of financing you're seeking.”
“UNDRIP has this vast wealth that is finally being returned to the rightful stewards of the land, and that’s our people. But with that massive wealth is a responsibility to manage it appropriately.”