Getting to Work
Increasing Aboriginal Entrepreneurship Rates in Canada
Historically, in Canada and around the world, Aboriginal people have experienced lower rates of entrepreneurship and have been an underrepresented population in terms of economic participation outside of their communities. Very few had access to the tools and resources that are necessary to support a small- to medium-sized business enterprise. Now, all of this is changing.
First Nations, Inuit and Métis people have made great strides in achieving economic security and, more importantly, self-determination. In many cases, they have achieved mainstream economic prosperity while respecting and staying true to traditional practices and beliefs.
The 2002 Aboriginal Entrepreneurs Survey (AES) shows that over a third or more Aboriginal-owned businesses had one or more full-time Aboriginal employees, with twenty-nine percent employing one or more part-time Aboriginal employees. Of the entrepreneurs in primary industries such as resource-based enterprises, seventy percent report having one or more full-time Aboriginal employees.
According to the data from that survey, 82,000 of those jobs were full-time, and 18,000 were part-time – significant numbers that have increased since. Aboriginal Affairs and Northern Development Canada credit Aboriginal-owned businesses with being a key driver of economic opportunity, as rates of participation have markedly increased, and a strong entrepreneurial spirit has been fostered.
Data from the 2006 Canadian Census indicates that over 34,000 Aboriginal people reported that they are self-employed, up from 27,000 in 2001. This twenty-five percent increase represents a growth rate three times that of non-Aboriginal Canadians between the 2001 and 2006 census records (changes to the long form census in 2011 are the reason for which data from the 2001 and 2006 censuses was used).
The Canadian Council for Aboriginal Business (CCAB) says that Aboriginal entrepreneurs are growing both in number and the diversity of their businesses. Significant increases in entrepreneurial participation have occurred in the primary, construction, professional, scientific and technical, education, health and social sectors as well as wholesale and retail trade, according to data from the 1996 and 2002 AES.
The CCAB’s ‘The State of Aboriginal Entrepreneurs’ summarizes: “Of the three Aboriginal groups, the Métis have the greatest self-employed population with 16,905 people (49.65%). First Nations are close behind with 15,245 people (44.78%) while the Inuit have only 630 people (1.85%) who declare themselves as self-employed.”
Canada’s northern people have a poor economic representation compared to the progress being made across the country leading to many initiatives to encourage development. Rates of Aboriginal entrepreneurship continue to grow, and the secondary economic benefits of that participation continue to reverberate outwards into communities across the nation.
In 2009, the Canadian government’s focus shifted from programs to legislation and partnerships in an attempt to increase the economic participation of First Nations, Inuit and Métis people in Canada. The new framework that was adopted was considered to be a comprehensive and modern approach to Aboriginal economic development although the programs prior to that time had experienced success.
The opportunity-driven approach that replaced the previous programs emphasized the building of strategic partnerships between Aboriginal groups, communities, the private sector and government entities. It is intended to maximize government investment and strengthen Aboriginal entrepreneurship, develop human capital and enhance asset values.
The Northern Aboriginal Economic Opportunities Program (NAEOP) is an example of a collaborative program that works to increase the participation of northern Aboriginal communities and businesses.It helps to secure economic development and opportunities through two streams: The Community Readiness and Opportunities Planning Fund and The Entrepreneurship and Business Development Fund.
NAEOP, which took effect April, 2014, brings together the Canadian Northern Economic Development Agency’s (CanNor) previous Aboriginal Economic Development Programs including its Community Economic Development Program, Community Support Services Program, Community Economic Opportunities Program and Aboriginal Business Development Program.
According to CanNor’s website, “CanNor works closely with Aboriginal Governments and organizations to understand and address the economic development needs of Aboriginal groups in accordance with the Federal Frameworks for Aboriginal Economic Development.”
Many other programs are administered through CanNor’s offices including the Aboriginal Business Development Program (ABDP), which is also geared towards maximizing Aboriginal people’s participation in the economy through business development. The ABDP also provides program support to Aboriginal entrepreneurs, Aboriginal financial institutions and Aboriginal development corporations.
Businesses and organizations that meet the eligibility requirements gain access to business planning and start-up support, financial assistance, business information, resources, materials and advice. CanNor will also help individuals and organizations find other possible funding sources and support mechanisms that are available.
Projects that meet program requirements can receive up to $99,999 worth of financing to assist with capital costs and operating costs, business acquisitions and expansions, marketing initiatives, new product or process development, the addition of technology or operational improvements, financial services, business support, business related training and mentorship opportunities.
The Aboriginal Entrepreneurship Development Program (ABED) program of Aboriginal Affairs and Northern Development Canada works with entrepreneurs to offer a range of services and supports to promote the growth of strong Aboriginal-owned businesses. Support varies based on client needs, available funding and resources, eligibility, project benefits and viability.
The program is similar in funding structure to ABDP, with similar business developments offered through program delivery partners (PDP) initiative. Aboriginal Affairs and Northern Development Canada works with Aboriginal financial Institutions to deliver funding, and it upholds responsibility for the management, distribution and administration of the equity fund.
A number of other programs and supports exist, including Growth Capital for Aboriginal Business, Aboriginal Banking Unit, Business Development Program, Community Futures Loan Program, and many others that provide access to funding, support, training, consultation and advice to Aboriginal entrepreneurs and related organizations.
Aboriginal youth have access to a number of entrepreneurial and internship opportunities. This population has experienced lower entrepreneurial growth rates over the 2001 and 2006 census periods, indicating a need for further support to teach financial literacy, instill greater confidence and support innovation and entrepreneurial development.
There are many government internships at every level of government and across a number of industries, to provide paid work experience and on the job training in participating sectors. The Aboriginal Youth Entrepreneurship Program (AYEP), part of the Martin Aboriginal Education Initiative (MAEI) makes efforts to improve elementary and secondary school education outcomes for Aboriginal youth. The entrepreneurship program teaches Aboriginal youth about business and entrepreneurship, earning grade 11 and 12 secondary school credits in the process.
The program uses innovative, hands-on activities to improve students’ proficiency in business mathematics, financial literacy, accounting, marketing, information and communications technology, social responsibility and leadership skills. It teaches students how to make a budget, spreadsheets and financial projections and develop the capacities that are essential for starting and operating a business.
In addition to resources and support, there is access to financial support, the ability to participate in business competitions, simulations, opportunities to hear guest speakers, gaining valuable mentorships in the process. Over 700 students have taken the entrepreneurship program, and there are now forty-six high schools across seven Canadian provinces and one territory that have incorporated AYEP into the curriculum.
One of the significant barriers to the entrepreneurial success of Aboriginal populations is limited access to capital. According to the data from the 2002 AES survey half of all Aboriginal-owned businesses reported that they did not borrow funds to start the business venture.
Alberta’s Indian Business Corporation (IBC) is very aware that access to capital is limited, so it has pioneered a new financial model designed to help offset the impacts of a decrease in loan approval rates. The IBC, collectively owned and operated by three treaty areas in Alberta, has adopted developmental lending, the evidence-supported approach to development. It offers financial services (primarily loans) to Aboriginal people who are unable to secure funding through mainstream lending institutions.
Loan applications are approved on the basis of average economic considerations, in addition to a consideration of the potential for positive social or community outcomes, as well as an evaluation of the long-term social results of the loan portfolio.
Using a similar approach to development, communities such as Osoyoos, British Columbia, continue to prove economic success and viability. Osoyoos has built a series of businesses, providing people with permanent jobs and increasing the economic security of tits people and its community as a whole. The band enjoys full employment during peak tourism seasons.
Osoyoos’ chief and those involved in economic development have secured economic prosperity by combining their traditions with modern economic development practices. Nk’Mip Cellars is the first Aboriginal owned winery in North America. Over 400,000 visitors a year come to visit the winery, its par-72 golf course and its 4.5-star resort, complete with a spa and other ancillary services and amenities.
Data from 2013 shows the band had an annual budget exceeding $17 million. The Osoyoos Indian Band Development Corporation (OIBDC) is ISO 9001 Certified and reported total revenue of $26 million for the fiscal year prior. The$2.4 million in profits extended benefits back into the community.
Growing rates of Aboriginal entrepreneurship are not only good for the communities in which the businesses operate, the rates are good for the stagnant Canadian economy as a whole. When census data from 2001 and 2006 was analyzed, over fifty-five percent of self-employed Aboriginals live in urban centers, while thirty-five percent reside in rural settings, with an even smaller proportion living on reservations.
Canada is experiencing below-zero economic growth rates. Innovation, entrepreneurship, and small and medium-sized enterprises are critical to national economic well-being. By using the available programs and working to eliminate barriers to success, Aboriginal populations are getting to work in Canada, leading a much needed entrepreneurial charge.