The Next Generation: Innovating to Improve Indigenous Access to Finance in Canada
A well-functioning Indigenous-controlled and led financial system is essential to restoring Indigenous economic prosperity to promote investment, economic development and raise living standards in Indigenous communities. Much has been accomplished in recent decades to increase Indigenous access to finance, primarily by Indigenous-led financial institutions, but a new generation of institutions is needed to achieve the scale and coverage necessary to help attain economic reconciliation and self-determination, consistent with the recommendations of the Truth and Reconciliation Commission of Canada (TRC) and the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).
The current shortfalls of physical capital in Indigenous communities are staggering, amounting to hundreds of billions of dollars. The lack of physical capital, especially in infrastructure and housing, directly contribute to a poor quality of life in many Indigenous communities. This enormous capital gap cannot be closed by governments or intermediation by the largely non-Indigenous financial system in Canada.
Consequently, a new generation of Indigenous-led financial institutions has been proposed by the National Indigenous Economic Development Board (NIEDB), the First Nations Financial Management Board (FNFMB) and the National Aboriginal Capital Corporations Association (NACCA) Indigenous Financial Institutions: an Indigenous Development Bank, an Indigenous Investment Commission and the Yänonhchia’ Indigenous Housing Finance Network. These institutions would achieve the scale and coverage necessary to address the obstacles limiting Indigenous access to finance and significantly reduce three major gaps:
- the lack of finance for medium-to-larger enterprises and major projects;
- the Indigenous intermediation gap arising from the absence of a large-scale Indigenous financial institution to invest growing financial wealth in Indigenous communities and help meet Indigenous capital financing needs; and
- the lack of access to housing finance for Indigenous communities for private homeownership and community-owned social housing.
This new generation of Indigenous financial institutions would significantly increase access to finance by Indigenous communities and help achieve the goals of Indigenous economic prosperity and self-determination, with positive benefits for the rest of Canada. These institutions would eventually be self-sustaining and not reliant on government support.
More from this study
Subscribe to the Fraser Institute
Get the latest news from the Fraser Institute on the latest research studies, news and events.