Aboriginal Growth Fund | A first private investor breaks the ice

Three million, for an investment fund, that may seem trivial. But not when it comes to an indigenous growth fund in Canada, set up a year ago with 150 million federal taxpayer dollars, and which this week welcomed its first private investor, Block, a tech company from San Francisco.

Karim Benessaieh
The Press

The enthusiasm is palpable, in any case, in the voice of Jean Vincent, chairman of the board of directors of the National Association of Aboriginal Finance Companies (ANSAF), which manages this growth fund. At the end of the line, the resident of the Huron-Wendat reserve of Wendake, in the suburbs of Quebec, dreams aloud.

The 150 million – now 153 – from the fund will be redirected to the 50 Aboriginal Financial Institutions (AFIs) established in Canada, including 5 in Quebec. Only one investment has been confirmed so far, $10 million advanced last March to the Nuu-chah-nulth Economic Development Corporation, an AFI located on Vancouver Island.

More numerous, more ambitious

The apparent slowness of the procedures does not worry Mr. Vincent. This trained accountant also chairs two Quebec AFIs, the Native Commercial Credit Corporation and the Native Savings Corporation of Canada. “We are talking about a limited partnership, it is still quite complex, with public and private partners. The demand is there, at some point it will explode. And it will go faster and faster once the institutions are qualified, they are going to advertise. »

The projects are extremely varied and affect almost all sectors of activity of the Aboriginal communities: natural resources, tourism, hotels, construction, convenience stores, service stations, supermarkets, both community and private projects, with “a few small businesses that relate to techno, but I would say that it is not our main sector of activity”, specifies Mr. Vincent.

The problem is that financing is very difficult to find for Aboriginal projects, which are increasingly numerous and ambitious. That it took almost a year to obtain 3 million from an American company amply demonstrates this. For example, in Canada in 2021, venture capital attracted $14.7 billion in investments in 752 deals, according to research by BDC Capital.

“We have a work of education to do with the financial markets,” sums up Mr. Vincent modestly.

Three hurdles

He recalls that the ANSAF made exemplary use of the 240 million granted by Ottawa for its foundation at the end of the 1980s. “We granted 50,000 loans for a value of 3 billion. The capital of 240 million still exists, it continues to grow. This story, we must tell it to investors, tame them, we must make ourselves known. »

The obstacles are well known. First, there is section 89 of the Indian Act, which establishes that the property of an “Indian” or a band established on a reserve cannot be seized…or be the subject of a mortgage. Renovating this antiquated law dating from 1876 is “a political headache”, summarizes Mr. Vincent.

The remoteness of indigenous communities, the extreme difficulties of physical access in some cases or the absence of the internet make obtaining banking services problematic, he notes.

Reducing the wealth gap between Aboriginal peoples and the rest of the Canadian population through investments is nevertheless “an initiative that goes in the direction of reconciliation,” he believes. He estimates at 200 billion the investments necessary “to bring the First Nations up to standard”. The Assembly of First Nations, last April, established that the needs of the 1.7 million Aboriginal people in the country were $44 billion over 10 years in terms of housing alone.

The organization was also sorry that the 2022 federal budget provided only $11 billion over 6 years for Indigenous priorities. The Trudeau government, on the other hand, estimated its investments at $28 billion.