Giving First Nations the power to flourish

Across Canada, significant projects have improved conditions in many communities, thanks to a funding model that demands accountability

Roslyn KuninFirst Nations have long been the stepchildren of the Canadian economy. But a funding initiative is changing that.

By measures like income, health, longevity, access to services and others, many First Nations people fall well below what are considered normal levels in the rest of Canadian society. The resulting problems rightfully disturb us all.

Insufficient and/or inadequate housing is widespread, especially in more isolated and smaller communities. Too many live in crowded houses with shoddy construction, mould and not enough heat. Communities often lack infrastructure to supply such basic services as water, transportation and power that urban dwellers take for granted.

These deficiencies are caused by and contribute to the lack of jobs and business opportunities. Without income, individuals cannot afford to improve their circumstances. Nor is there a tax base to allow local government to offer services.

When individuals and governments have no money, looking after the environment becomes an unaffordable luxury. This is especially painful to people whose culture puts great store in taking care of nature.

Making all of these conditions worse is poor governance in some communities, especially where educational opportunities have been limited.

Money is necessary but not enough by itself to solve these problems. Other levels of government don’t have endless money to give. And those who provide money tend to want a say in what is done with it. This conflicts with First Nations’ legitimate desires for self-governance. We know that the old dependency model did not work. But is there capacity among First Nations to deal with these issues and, if it does not yet exist in all nations, how can it be developed?

Across Canada, one can find many examples where the problems are being solved by First Nations.

At the Siksika Nation in Alberta, a mouldy old school built in 1968 is being replaced by a modern facility that will be the equivalent of any new school in the province. It uses state-of-the-art construction, is energy efficient and will have fast Wi-Fi. The school will make use of natural materials and the environment. And a central Culture Room will serve students and the community.

In the Peter Ballantyne Cree Nation in Saskatchewan, 52 houses have been built in the past year.

To generate employment and income, the Millbrook First Nation in Halifax is investing in a hotel, making the fast-growing travel industry part of its economic development strategy.

The Nipissing First Nation in Ontario is in the second phase of equipping buildings with solar panels and in the Lac St. Jean area of Quebec First Nations are contributing to the development of a billion-dollar wind farm.

These successful projects have one factor in common: all were funded by the First Nations Finance Authority (FNFA). FNFA raises most of its money in capital markets. It received $20-million from the federal government recently, but this is small part of its third and most recent $111-million bond issue. The bond issue is underwritten by major Canadian financing firms. This means that FNFA must offer competitive risk and return levels to all others in Canada’s capital markets. So far, they have succeeded. Their current default rate is zero.

For a First Nation to become an FNFA member and receive funding, it must demonstrate good management practices and a stream of its own revenue (taxes, royalties, business income, etc.) from which loans can be repaid. The money need not come from the project being funded. In this way, royalties or other income streams can fund social needs like schools or houses.

Currently, 197 First Nations across Canada are members of FNFA or working to join. They are motivated by the prospect of receiving 30-year funding at a fixed rate of interest (2.9 per cent now), for projects that they deem valuable.

Since the high standards for FNFA membership keep risk manageable, investors are willing to provide the capital and First Nations see the value in working to meet those standards.

FNFA may have found a solution that is win-win for all concerned.

Troy Media columnist Roslyn Kunin is a consulting economist and speaker. 

© Troy Media


first nations

The views, opinions and positions expressed by columnists and contributors are the author’s alone. They do not inherently or expressly reflect the views, opinions and/or positions of our publication.

You must be logged in to post a comment Login