Aboriginal Growth Fund | A first private investor breaks the ice

Three million, for an investment fund, may seem trivial. But not when it comes to a native growth fund in Canada, founded a year ago with 150 million federal taxpayer dollars, and which this week welcomed its first private investor, Block, a San Francisco-based technology company.

Posted at 06:00

Karim Benessaieh

Karim Benessaieh
The press

The enthusiasm can certainly be felt in the voice of Jean Vincent, chairman of the board of directors of the National Association of Aboriginal Finance Companies (ANSAF), who manages this growth fund. At the end of the row, the resident of the Huron-Wendat reservation of Wendake, in the suburbs of Quebec, dreams out loud.

photo provided by Jean Vincent

Jean Vincent, Chairman of the Board of the National Association of Aboriginal Capital Corporations

We had this first private investor in our sights. This fund, we’d like to increase it to 500 million, it could be even more than that. We want it to be well structured and institutional quality so that investors who put money into it see their capital paid back.

Jean Vincent, Chairman of the Board of the National Association of Aboriginal Capital Corporations

The 150 million – now 153 – from the fund will be channeled to the 50 Aboriginal Financial Institutions (AFIs) based in Canada, including 5 in Quebec. So far, only one investment has been confirmed: in March, $10 million went to the Nuu-chah-nulth Economic Development Corporation, an AFI on Vancouver Island.

More numerous, more ambitious

The apparent slowness of the procedures is of no concern to Mr. Vincent. This trained accountant also chairs two Quebec AFIs, the Native Commercial Credit Corporation and the Native Savings Corporation of Canada. “We are talking about a limited partnership, it is still quite complex, with public and private partners. The question is, at some point it will explode. And it will get faster and faster once the institutions are qualified, they start advertising. †

The projects are very varied and cover almost all sectors of activity of Aboriginal communities: natural resources, tourism, hotels, construction, convenience stores, gas stations, supermarkets, both community and private projects, with “a few small companies related to techno , but I would say it is not our main sector of activity,” explains Mr Vincent.

The problem is that it is very difficult to find funding for Aboriginal projects, which are becoming more numerous and ambitious. That it took almost a year to get 3 million from an American company is ample proof. In Canada, for example, venture capital attracted $14.7 billion in investments in 752 deals in 2021, according to research by BDC Capital.

‘We have an education work with the financial markets’, summarizes Mr Vincent modestly.

three hurdles

He recalls that the ANSAF made exemplary use of the 240 million Ottawa allocated for its founding in the late 1980s. “We have provided 50,000 loans worth 3 billion. The capital of 240 million still exists, it continues to grow. This story, we need to tell investors, tame them, we need to make ourselves known. †

The obstacles are known. First, there is section 89 of the Indian Act, which establishes that the property of an “Indian” or bond that is housed in a reserve cannot be repossessed … or can be the subject of a mortgage. Renovating this outdated 1876 law is a “political headache,” Mr Vincent sums up.

The remoteness of indigenous communities, the extreme difficulties of physical access in some cases or the absence of the internet make obtaining banking services problematic, he notes.

Aboriginal people have their culture, cultural differences that make things a little different. This creates the feeling among conventional financial institutions that this is a riskier market.

Jean Vincent, Chairman of the Board of the National Association of Aboriginal Capital Corporations

Nevertheless, reducing the wealth gap between Aboriginal people and the rest of the Canadian population through investment is “an initiative towards reconciliation,” he says. He estimates the investments needed ‘to bring the First Nations up to standard’ at 200 billion. The Assembly of First Nations last April determined that the housing needs of the country’s 1.7 million Aboriginal people in 10 years alone amounted to $44 billion.

The organization also regretted that the 2022 federal budget provided only $11 billion in six years for Indigenous priorities. By contrast, the Trudeau administration estimated its investments at $28 billion.

More information user manual

  • 100 million US
    Total amount of the “global social impact fund” established in 2020 by Block, formerly Square, an electronic payments company owned by Twitter founder Jack Dorsey

    Source: BLOCK.XYZ

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