Good afternoon, everyone.
I want to begin by acknowledging that I'm speaking to you from the unceded Treaty 8 territory of my home, Fort Nelson First Nation, located in the northeast corner of British Columbia.
With me today is coalition executive director, Niilo Edwards, who leads our organization's service delivery to our members.
The coalition is a first nation-led, non-political, not-for-profit business capacity organization. Our mandate is to provide impartial and independent business capacity to our members and support their ability to make informed business decisions regarding their participation in major natural resource and infrastructure projects.
We have roughly over 70 first nations located across Canada that have become members of the coalition. Our services are active on five major projects, which represent a combined total capital cost of $7 billion.
We see a role for the Canada Infrastructure Bank to play in filling a critical gap concerning capital access to first nations and all indigenous people. Access to capital at competitive rates is a barrier to achieving broad-based economic participation by indigenous people in major projects. Capital markets require a certain level of equity to be placed at risk in order to lend at normal commercial terms. The requirement for at-risk capital is a barrier to most indigenous communities across Canada, which do not have the financial standing to meet the basic terms set by the capital markets.
For Canada, inaction poses a risk to the investment climate, in addition to the stagnation of economic growth that would otherwise see a boost from unlocking new activity. For indigenous communities, inaction means a continuation of the status quo, no increase to standards of living and no advancement towards achieving self-determination.
In 2019, the First Nations Major Projects Coalition put our tools to the test on a real-time commercial equity opportunity at the request of 12 first nations. From the beginning, the First Nations Major Projects Coalition supported our members' ability to form a limited partnership. We submitted a bid, formed a bidding partnership with two other institutional investors and conducted a commercial market sounding—all in a matter of five months.
This exercise resulted in an opportunity cost for the first nations when they were forced to forfeit their equity interest late in the project due to uncompetitive cost of capital. This result validates the coalition's position that capital markets remain a challenging place for first nations to raise competitive cost of capital without credit enhancements from the government or third parties.
We understand that the CIB was established in part to serve the financial needs of projects that are commercially viable, but which may not qualify for traditional financing through the capital markets. Canada has no national strategy to support indigenous capital access, so expanding the CIB'S mandate to include equity-style loans to support indigenous ownership of major projects would correct that gap.
Doing this does not involve setting up more government bureaucracy and it does not come at an increased cost to taxpayers. What does have a cost is the opportunity of not expanding access to capital for equity ownership by indigenous communities. Delays and increased costs of achieving the informed consent of indigenous people concerning major project development within their territories has an impact on the economic future of indigenous and non-indigenous Canadians alike.
A recent analysis by National Bank of four major projects concluded that the average increased cost per project was 28.5% and the average construction timeline was delayed nearly three years due to delayed timelines and various lawsuits.
At the same time, the way in which the world invests is changing. Sustainable investing with a focus on ESG standards is rising. Investors want to know what the socio-economic impacts of their investments will be on indigenous and non-indigenous populations before they decide whether they are going to invest or not.
Canada must act to support a national strategy on indigenous capital access. Not doing so will increase investors' risk in Canada and will lead to trends of capital flight and capital avoidance.
Our coalition finds that including indigenous nations as equity owners is a very effective way to get our informed consent while ensuring that we benefit from resource development and have control over environmental and social impacts.
The bottleneck right now is for our nations to access that capital. There is a natural role for the Infrastructure Bank to play that will remove that bottleneck and unleash economic growth.
I look forward to your questions.
Mussi cho.