Evidence of meeting #39 for Indigenous and Northern Affairs in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was business.
A recording is available from Parliament.
Director, Corporate Development, National Aboriginal Capital Corporations Association
It's unique in that it's not an entitlement program. It's an activity/performance-based program, the first of its kind in AFI country. If you don't make any loans, you don't get any ADLA or program dollars.
Conservative
Kyle Seeback Conservative Brampton West, ON
Was it always this 8% loss? I forget the numbers. Are there not economies of scale? When you had $60 million to lend out, you still had an 8% loss, as you did with $25 million?
Director, Corporate Development, National Aboriginal Capital Corporations Association
It's an average of 8%, really, and some of these AFIs have capital of $2 million or $3 million, while some have capital of $8 million or $10 million, so it's a moving target. They're also improving on their capacity and learning. They've gained a lot of ground in terms of developmental lending cost. They've reduced losses over the years, but the 5% that we talk about is a five-year rolling average.
Conservative
Kyle Seeback Conservative Brampton West, ON
What's the largest component of what I described as overhead and you described as administration? Is that set salaries and benefits?
Director, Corporate Development, National Aboriginal Capital Corporations Association
Yes, and provisions for loss.
Conservative
Conservative
Mark Strahl Conservative Chilliwack—Fraser Canyon, BC
Just quickly, I wanted to get an understanding of how you deliver the programs on reserve.
Mr. Martell, do you have branch locations? Do you have people on the ground or is it a kind of virtual service that you provide?
Maybe this is for the AFIs as well. How are you delivering this to the entrepreneurs on reserve? Are they calling Ottawa or are they dealing with a real person in or near their community?
Chairman and Chief Executive Officer, First Nations Bank of Canada
We have eight full-service branches and four community banking centres. They're primarily in aboriginal communities or in centres where aboriginal business tends to congregate. The head office is in Saskatoon. We have a branch just outside of Meadow Lake in Mr. Clarke's riding. He was actually at our grand opening. We have real branches with real, physical people on the ground doing loans for personal and business purposes.
We also, of course, because of the business being spread out—it's a big country—have branches in every territory. We have branches in Yukon, Northwest Territories, and Nunavut. In many of those centres, we concentrate the commercial lending in a couple of commercial lending centres, but we have people who get out into those communities to do the work.
Chief Executive Officer, National Aboriginal Capital Corporations Association
There are 58 AFIs—aboriginal financial institutions—across Canada, so we cover almost all of Canada. NACCA has become the program manager on some of the government programs that were described earlier.
For instance, there's ADLA, the aboriginal developmental lending assistance program. We took that over last year. The AFIs will apply to NACCA. We will receive their financial statements over the last three years, and there are all the conditions that we require to provide the funding to see if they need it, and then we push that money out the door.
This year we're looking at the aboriginal business financing program, which is the equity program. It appears that NACCA will also be delivering that to the AFIs, which then work with the clients right across the country in providing them services.
Conservative
NDP
Carol Hughes NDP Algoma—Manitoulin—Kapuskasing, ON
I have just a couple of things.
You've said that there are things that work in some communities and that you basically have an idea of what's working and what's not. I'm wondering if you could forward that information to the committee. Or if it's that for certain communities this works, and for certain communities that doesn't work—because we know they're all very unique—I think that would be important for us to know.
I have a couple of quick questions. I'll leave them with you to answer, and then the committee can go on or choose to adjourn.
When the caisse populaire from Kahnawake came before us in June 2014, they talked about the fact that they have a procedure whereby the person uses “a trust agreement with trustees who are chosen members of our community, and transfers his or her immoveable property in trust to them”. I'm wondering if that is used under your purviews as well.
The other piece I wanted you to comment on is that when Acting Assistant Deputy Minister Andrew Beynon was before the committee, he talked about “[n]ew and innovative ways of unlocking existing capital” that could probably be pursued, and he referenced the “$1 billion in Indian moneys currently held in the consolidated revenue fund”. I'm wondering if you could comment on that as well.
Director, Corporate Development, National Aboriginal Capital Corporations Association
With regard to the model Kahnawake uses, no, they're the only AFI in Canada that I'm aware of that uses that model. I don't know if it's ever been challenged in court.
Chairman and Chief Executive Officer, First Nations Bank of Canada
Actually, Kahnawake uses that for housing loans. It's their mortgage system. Effectively, they put the control of the home, the mortgageable asset, in the hands of a trust, which is a local community, and it would allow transfer of ownership if there were a non-repayment of loan. That program—in that community only—is available for any FI, any financial institution. It's a model of ensuring.... Really, banks don't want to own homes. We never want to own somebody's home. We really just want someone to end up paying back the loan.
There's that model, and there's also the first nations market housing program. We have our own first nations housing program, whereby a community really does the same thing that Kahnawake does. It gets behind the homeowner and ensures that if that homeowner can't pay or doesn't pay, or if there's a marriage breakup—a lot of instances require home sales—they will have a transfer to a new owner. We work with those kinds of programs. Those programs do work.
The first nations market housing program is a good one. It was created by the government, and it's working quite well in a lot of communities that want to work with it.
Chairman and Chief Executive Officer, First Nations Bank of Canada
For the trust funds, those are the revenues, typically from non-renewable resources, that go into federal trusts. There are a number of lawsuits pending for a number of first nations who have.... Typically, the largest pools have about ten or twelve first nations, and it's mostly oil and gas revenue. Most of those have gone out to trusts managed by the communities; the larger ones are all being transferred out. That creates a legacy for the communities, as I mentioned. It does create a trust, and if the first nation manages it well and structures it correctly, it can be used as a vehicle to leverage the community's development, both the government development and the business development.
Our most successful customers are typically ones that have that kind of equity behind them. That's really what we're talking about here today. How do you build that equity, not just with those who have claims, but with the average first nation in remote areas or in northern Canada, or, even more importantly, with the average individual who lives in one of these communities and really wants to start a stake in a business and have it grow?
Director, Corporate Development, National Aboriginal Capital Corporations Association
Most AFIs use the model to gain access to security. They'll obtain a band council resolution that enables or empowers the business owner to establish the business on reserve, and the second part of the BCR will enable the AFI access to the reserve to recover against assets of the business in the event of default. That's proven successful in court.
Conservative
The Chair Conservative Blake Richards
Thank you very much.
That concludes our questioning for the day. I thank all of our witnesses for their help with our study. It's much appreciated.
We will suspend the meeting, because I do have one quick item of committee business. We'll have to clear the room in order to move in camera for that. Thank you.
[Proceedings continue in camera]