The Game-Changing Potential of a National Indigenous Loan Guarantee Program
When the federal government releases its spring Budget, I’m looking for one thing above all else: a national Indigenous loan guarantee program. Momentum has been building for this initiative over the last number of years, and if the government gets the details right, it will be a game-changer for Indigenous communities.
First, some context: It’s currently very difficult for Indigenous entities to access the capital required to play a meaningful and equitable role in Canada’s economy—including to participate in major projects on their lands. There are a variety of factors which have led to this inequity for Indigenous people in Canada, most notably, the prohibition under the Indian Act from leveraging “on-reserve” lands and assets as security for debt. This prevents First Nation governments and individuals from leveraging their lands as security for loans, limiting their ability to start businesses, invest in projects, and even to secure traditional mortgages for their homes. This legal principle is one that has not been well known or understood outside of Indigenous circles.
A National Indigenous Loan Guarantee Program would be a meaningful step towards levelling the playing field, opening new doors for greater economic participation; but as they say, the devil is in the details. And the key details I’m watching for are twofold: first, whether the program will be sector agnostic; and second, whether the program will be designed to move at the speed of opportunity.
Respected advocacy organizations like the First Nations Major Projects Coalition describe a sector-agnostic program as “in the spirit of self-determination”, a move away from a traditionally paternalistic government attitude to Indigenous economic participation. Existing guarantee programs, like the program administered by the Canada Infrastructure Bank, limit loan guarantees to certain infrastructure projects in which the bank is also investing, such as clean power, broadband technology, and transportation. The big missing piece? Oil and gas projects. While it’s clear that some Indigenous communities are opposed to oil and gas development on their lands, others are eager to evaluate and participate in such projects. Where those projects make sense, and where there’s buy-in at the community level, a fulsome loan guarantee program should be accessible to Nations who wish to engage in such projects.
The big question that remains is whether the program will be designed to operate swiftly and efficiently to allow Indigenous communities to capitalize on opportunities. If not, the true value of the loan guarantee program will be lost.
The time is now for Ottawa to unlock much of the unrealized economic potential for Indigenous communities. In the next 18 months, the FNMPC estimates that its members could bring forward up to $500 million in loan guarantee proposals to become equity partners in projects impacting their Nations. FNMPC’s research indicates that over the next decade, 470 major projects will impact Indigenous lands—representing over $525 billion of capital investment and a need for $50 billion for Indigenous equity financing.
Just as important as the actual projects at stake, is how a national program will help to shift the perspective many Canadians continue to hold about Indigenous participation in the economy. Done right, a national Indigenous loan guarantee program will advance the broader reconciliation agenda, unlock endless economic potential for Indigenous communities, and foster a more just and equitable economic future for all Canadians.
