Hello, and thank you.
My name is Shannin Metatawabin. I am the chief executive officer of the National Aboriginal Capital Corporations Association. I'm also a member of the Fort Albany First Nation of the Mushkegowuk nation.
Thank you for the invitation to speak to you today regarding the impacts of COVID-19 on the indigenous businesses in Canada.
Before I start, I want to acknowledge that this call is being hosted on the unceded territory of the Algonquin people.
The National Aboriginal Capital Corporations Association, commonly referred to as NACCA, represents 59 capital corporations from coast to coast to coast. Our network of aboriginal financial institutions provides developmental lending to first nations, Inuit and Métis businesses. NACCA is also a program-delivery partner of Indigenous Services Canada. Our organization administers the delivery of the aboriginal business financing program on behalf of the Government of Canada.
Aboriginal financial institutions are an incredible success story. For over three decades our members have been on the front lines, working with our indigenous businesses to ensure that they thrive and contribute to the growth of Canada's economy.
Like mainstream businesses, indigenous SMEs have been negatively impacted by COVID-19. The Prime Minister's announcement on April 18 of stimulus support was welcome news: $306.8 million is being allocated to negatively impacted businesses. NACCA will deliver programming for emergency loans in partnership with the network of aboriginal financial institutions. I am pleased to inform you that I just signed a contribution agreement with Indigenous Services Canada on Tuesday, a full two months later than the mainstream programs, and funds will go out to our network members in the next two weeks.
For the past 30 years, aboriginal financial institutions have worked in a program partnership with the Government of Canada. With the help of modest federal subsidies, they have provided over 47,000 loans, totalling $2.7 billion, to first nation-, Inuit- and Métis-owned businesses. Each year, financial institutions make over $120 million in loans to 500 indigenous-owned start-ups and 750 existing businesses.
Indigenous businesses are key drivers of employment, wealth creation and better socio-economic outcomes for indigenous communities and people. Across the nation, at any time, businesses that have active loans with our aboriginal financial institutions employ over 13,000 people.
COVID-19 has hurt many of our businesses, something that our network expected. In mid-March, just as the potential impacts were coming into focus, over 95% of our members indicated that their existing clients would be negatively impacted. Shortly thereafter, various provinces and territories declared states of emergency, resulting in closures of many businesses.
The impact on indigenous communities has been even greater. All sectors have been touched by the response to COVID-19. In late April 2020, the indigenous business COVID-19 response task force, of which NACCA is a member, launched a survey. Of the over 900 indigenous businesses that responded, 92% stated that the pandemic's economic impact has been either very or somewhat negative on their operations.
The most significant impacts have been in tourism, accommodation, food services, hospitality, transportation services and retail trade, all sectors with heavy concentrations of indigenous businesses. We are also noticing various regional impacts, such as in the fisheries in the Atlantic provinces, and in oil and gas in Alberta. As one of the members put it, “No sector will be immune from this event.” This has been the case.
With the concerns of our members in mind, we have some key recommendations for your committee.
Number one, improve the current emergency response program. Indigenous businesses have been waiting and hoping for support throughout this crisis. Recently, we can confirm that the support is coming. The same $40,000 that was announced for the mainstream will be provided to our indigenous businesses, which includes a $30,000 loan and a $10,000 non-repayable contribution.
For indigenous businesses, the program could be drastically improved if the non-repayable enabler were increased. After all, COVID-19 is only the latest in a whole series of barriers that indigenous businesses have to overcome. Impediments thrown up by the Indian Act, remoteness, land tenure and poor socio-economic conditions on reserves are factors that non-indigenous business owners do not have to contend with. A larger non-repayable allowance would acknowledge those additional barriers.
Beyond this, the COVID-19 response task force survey found that 40% of indigenous businesses will be unable to take on new debt. They will generally need to make twice the effort in order to repay a loan, compared to an average Canadian business. As well, 46% of indigenous businesses in the same survey indicated needing more than $40,000 to survive longer than four to six months. These findings reinforce the need for additional non-repayable capital and support for larger and community businesses, which was absent.
Number two goes back to business strategy—