By Joel Kranc

It’s never wise to paint any group with one brush. Within each is a diverse set of characteristics making them unique and on many levels. This is of particular issue when speaking about Indigenous groups. There is often a tendency to consider them as one group, but they are most certainly not that.

The Indigenous population in Canada, according to the 2021 Census, represents about five percent of the population. There are three main groups recognized, including the First Nations, representing more than 50 nations with 50 languages; the Metis, who originated from the intermarriage of European settlers with Indigenous women in western Canada; and the Inuit, who mainly live in the Arctic regions of Canada.

What does this have to do with investors? The contribution of Indigenous Canadians to the economy can be difficult to ascertain, given the availability of data, however, the 2021 Census shows that GDP of those groups was C$48.9 billion in 2020 or 2.2% of the country’s total GDP. But times are changing, and investment into and by Indigenous communities has moved more onto the front burner than in the past.

A report made by the Indigenous Sustainable Investment Conference, “Roadmap to Investing in Canada: Indigenous Inclusion in ESG,” notes that “both investors and Indigenous thought-leaders are observing a sea-change in the investment landscape when it comes to Indigenous-led equity investment. Concurrent with the ESG movement, Indigenous nations and peoples in Canada, and around the world, are accessing and deploying an increasing amount of capital and equity investment in major infrastructural and other projects.”

Unfortunately, according to the Assembly of First Nations, First Nations lack essential infrastructure — housing, clean water, schools, healthcare, and roads — available to most Canadians. The gap is the estimated C$349.2 billion investment needed to close these disparities by 2030.

A study with the Conference Board of Canada showing that closing the gap is an economic opportunity — generating C$635 billion in output, 2.4 million jobs over the next seven years, and C$87 billion in government revenue. But waiting until 2040 would increase costs to C$527 billion and increase the infrastructure gap for another generation.

How or what is being done to close the gap?

One important step is through the creation of investment vehicles that include Indigenous people that provide, not only capital, but also buy-in and local legitimacy of projects. For example, Ceder Leaf Capital is the first Indigenous owned and led investment dealer in Canada focused on fostering Indigenous participation in domestic capital markets. Scotiabank is one of Cedar Leaf’s shareholders with three Indigenous shareholders owning 70 percent of the company.

“Cedar Leaf Capital will actively seek to establish roles in dealer syndicates on new bond offerings, acting in broadly syndicated offerings with the ambition to grow into lead roles, said Cedar Leaf CEO Clint Davis. “In addition, we will seek to identify, attract and develop Indigenous talent, serving as a training ground for Indigenous young people who are considering a career in capital markets and finance. Cedar Leaf Capital will exemplify reconciliation in action.”

Other ways of increasing the Indigenous presence in Canadian investment projects is simply by taking that first leap. In Alberta, for example, a successful C$2.5 billion, 900-megawatt combined cycle power station project delivering about eight percent of power to the Alberta power grid was completed in August 2020.

With a C$93 million loan guarantee from the Alberta Indigenous Opportunities Corporation (AIOC), the Cascade Power Plant project, included an investment by a consortium of six First Nations and other investors. The six First Nations invested through a partnership with OPTrust, a major Canadian pension fund, and a holding vehicle owned by Alexis Nakota Sioux Nation, Enoch Cree Nation, Kehewin Cree Nation, O’Chiese First Nation, Paul First Nation and Whitefish Lake First Nation. This makes the First Nations material equity partners in a major Alberta-based power project, expected to lead the province’s transition away from coal-fired power.

“The investment into this important piece of provincial infrastructure will be transformative to the six First Nations involved,” noted Chief Tony Alexis, Alexis Nakota Sioux Nation. “The economic benefits will provide critical and tangible income for future generations.”

The fact that six First Nations have an equity stake in the Cascade Power Plant puts to rest the question of whether the First Nations want the project to proceed and succeed. Indigenous participation in projects via an equity stake means that they are co-proponents. Their equity involvement provides certainty that the project has met the UNDRIP (UN Declaration on the Rights of Indigenous Peoples) concept of Indigenous peoples giving their ‘free, prior and informed consent’.

Another provincial investment organization, similar to the AIOC is the Saskatchewan Indigenous Investment Finance Corporation (SIIFC). It was created to provide access to capital for Indigenous communities participating in natural resource and value-added agricultural sectors. SIIFC offers up to C$75 million in loan guarantees to support Indigenous-equity ownership of major projects in mining, energy, oil and gas, and forestry.

At a macro level, the Assembly of First Nations recommends the following:

  • Move away from a federal year-to-year, pay-as-you-go, approach to funding First Nations
  • Reform tendering policies and processes tied to funding First Nation projects
  • Promote a First Nations Asset Management Framework and fund capacity building programs
  • Transition community infrastructure planning, development, and operations control to First Nations with long-term sustainable funding
  • Make improvements to already-in-place financial supports and renew expiring successful programs
  • Look at innovative policy reform and co-develop Ministerial Recommendations for a First Nation Reconciliation Fund; and/or First Nation Infrastructure Bank; via Memorandum to Cabinet with Indigenous Services Canada

While the steps at both the provincial and federal levels are being taken, a volatile market and new priorities to fight trade wars, inflation and a possible recession, may slow down efforts for Indigenous investment. Canada’s natural resources, an obvious investment area for Indigenous communities, may take a more prominent role given the country’s desire to reshape trading partnerships. The benefits of increased investment in Indigenous projects may outweigh the obstacles, and with the market still in its infancy, will likely only grow from here.