The Indigenous economy is worth $30 billion and climbing. Why aren’t investors getting more involved?

Why It Matters

Indigenous women entrepreneurs are opening businesses at twice the rate of non-Indigenous women. As Canada looks to rebuild its economy, it’s more important than ever to back Indigenous entrepreneurs — but despite this, there're still significant barriers to funding, including to the $755 million Social Finance Fund.

Photo: The Native Women’s Association of Canada

This story is in partnership with Employment and Social Development Canada (ESDC). 

For Judy Hughes, senior director of business and economic development at The Native Women’s Association of Canada (NWAC), backing Indigenous women entrepreneurs represents a massive, and growing, opportunity. Not only is the Indigenous economy currently worth $30 billion — even during the pandemic, the number of Indigenous entrepreneurs has been increasing at five times the rate of self-employed Canadians. Of these entrepreneurs, Indigenous women are leading the way, starting business at twice the rate of non-Indigenous women

Despite this rapid growth, Indigenous entrepreneurs continue to face numerous barriers to funding, from systemic discrimination to lack of funding access. To tackle this, NWAC advances the social, economic, cultural and political well-being of Indigenous women, girls and gender-diverse people. One way they do this work is through their Women Entrepreneurship Strategies incubator project, hosting programs like the Indigenous Women’s Business Directory to build the skills and visibility of Indigenous women entrepreneurs. 

Even before the $50 million Investment Readiness Program (IRP) was launched, preparing organizations to take on social finance opportunities presented by the forthcoming $755 million Social Finance Fund, NWAC had been holding community engagement sessions with Indigenous women entrepreneurs around social finance. When the IRP launched in 2019, NWAC partnered with Employment and Social Development Canada (ESDC), helping to guide the IRP through its community knowledge and expertise. 


Change is sorely needed

From the start of the IRP, Hughes noticed that there were several barriers for Indigenous women entrepreneurs to access funding, such as the complex language around the program and federal Social Finance Fund. “Social finance, social innovation: those terminologies aren’t usually the way that we would speak in our communities — or anywhere else, for that matter,” she says. This meant NWAC “needed to give a little boost” to entrepreneurs, ensuring that they understood what was on offer.

As well as that, Hughes says that private investors need assets, which they accept as security for their loans. For “Indigenous people, especially if you’re on reserve, you really have no collateral,” Hughes says. “There are certain (sections) within the Indian Act that say you can’t purchase, you can’t own. For the most part, when a lot of the businesses start out, they have little or no credit, because they haven’t had to borrow before. If we don’t have a credit rating or credit standing, then that’s also a barrier.” 

Hughes says that this is a particular issue for First Nations women: “the home is not usually in (the woman’s) name, so they have a lot less collateral for loans” — leading to very clear systemic barriers to Indigenous women and gender-diverse entrepreneurs.  

The aim of social finance is to solve challenging social issues, while also providing financial turns — but without Indigenous women entrepreneurs accessing this money, many of those issues will continue into the future. 


Here’s what an IRP 2.0 should look like 

Organizations like Startup Canada and the Canadian Women’s Foundation acted as IRP partners, distributing funding to different organizations. To help these partners better support Indigenous women, Two Spirit and gender diverse entrepreneurs, NWAC held a series of eight online training sessions with different organizations.

The training sessions focused on First Nations, Métis and Inuit cultures and histories. “We talked about some of the colonial practices that the government has, like the Indian Act, residential schools. We also looked at how the Missing and Murdered Indigenous Women and Girls affect us,” Hughes says. “One of the biggest things the (National Inquiry into MMIWG) found was the social and economic marginalization against Indigenous women and gender diverse people, and how we need to work on that.”

As well as the sessions themselves, NWAC provided online resources, including a fact sheet outlining the top 10 things funders should know about Indigenous women and gender-diverse entrepreneurs. Hughes explains that, as well as running large businesses in everything from construction to agriculture, many Indigenous women run small or home-based businesses, to be able to “stay in our communities, generate the funds that we need for ourselves, for our families and also give back to the community.” She adds that “we all want to make some good funds, we’re not looking to generate millions of dollars.” 

Sometimes, Indigenous women entrepreneurs would receive more IRP funding than they had originally applied for, even receiving $10,000 when asking for $5,000. “(It’s) more than you need,” Hughes says. While she acknowledges that IRP partners have quotas to meet, “(they) need to start counting their numbers in different ways – instead of seeing how much money we can get out there, look at how many entrepreneurs we can help,” including those who are asking for smaller loans. 

NWAC’s fact sheet also included “understanding what kind of challenges we face as Indigenous women, especially if you’re in remote or Northern communities, where we often have poor internet connections or lack of computer access,” Hughes says. She re-emphasizes that, while many Indigenous entrepreneurs run large businesses on reserves, like lumber yards or construction, many are also home-based businesses. With restricted internet, this means some entrepreneurs are limited to selling their products or services to smaller, local markets. 

This can conflict with IRP activities, which goes towards things like evaluating organizational finances, creating marketing plans, forecasting sales projections — all activities that help prove a business will provide a return on investment. It’s important for social finance lenders to keep in mind that, with greater access to technology, social enterprises in urban centres can sell to bigger markets, making it easier to prove their scalability — and secure the IRP in the first place.

Another important improvement to the IRP, Hughes says, would be “what kind of alternative lending tools are possible. There’s micro-financing, there’s peer lending circles. Those might be better opportunities than the traditional financing tools (proposed by the Social Finance Fund).” 

Traditional social finance loans are term-based: an investor gives a business a set amount of money, and expects a return on that investment within a specific timeframe. This approach requires a social enterprise to prove that they have a stable stream of income that can grow.

Micro-financing, on the other hand, supports people who may not be able to access traditional financial services, with loans of under $5000 available — an amount that might be more suitable to the needs of Indigenous entrepreneurs with smaller businesses. While this service still relies on banking, peer lending circles are fully independent: a group of people regularly pool their funds together, and decide collectively how much should be loaned each month. With far fewer barriers to Indigenous women entrepreneurs, and with its community focus, Hughes says that peer lending circles are far easier for NWAC to support. 

Understanding cultural and historical context is vital to supporting Indigenous entrepreneurship. That’s why it’s also important to have Indigenous leaders involved in designing programs like IRP, to help “choose what should be put in a program, how they should write up the application form (e.g. using simpler, more accessible language), what kind of information they need (to collect from Indigenous women entrepreneurs) and what kind of supports are needed (e.g. alternative lending tools).”

This is not the end of the road

NWAC’s IRP training sessions had a positive impact for IRP partners, but it wasn’t always an easy journey. “What was found out was just how little knowledge people had of Indigenous history and culture, how little they knew about the Indian Act, residential schools and the Sixties Scoop, and how that impacted the way that we do our business, or the businesses that we want to set up,” Hughes says — such as being driven by social impact, or preferring to rely on community for financial support.

However, Hughes was encouraged by the IRP partners’ willingness to learn how to support Indigenous women and gender-diverse entrepreneurs. “(Knowledge) will help change stereotypes, racism, bias, suspicion about Indigenous people and gender diverse people,” Hughes says. “It will help (organizations) to see everybody as human beings.”

NWAC received a lot of positive feedback from IRP partners. “The participants are really interested,” Hughes says. “They really, really want to help.” However, when it comes to tangible differences IRP partners made as a result of the IRP training sessions, Hughes says that it’s too early to tell. “Changing processes take time,” she says. “That’s why this program is so critically needed and hopefully, the federal government will want to run it again.”

Hughes hopes the government will consider an ‘IRP 2.0’, but in the meantime, she says that NWAC will use the findings from the IRP training sessions to supplement other NWAC programs, including ones that equip both government funders and private investors with the information needed to better support Indigenous women and gender diverse entrepreneurs. As well as this, they will continue  “talking with different lenders and funders (about) our goals in terms of economic development.” 

During the IRP, NWAC received inquiries from thousands of Indigenous women entrepreneurs. “There are so many Indigenous businesses that are up high with all the other non-Indigenous businesses,” Hughes says. “There are a lot of very positive things that we want to be able to share with the rest of Canada, in terms of Indigenous people, and our strength and confidence.”

Reflecting on NWAC’s role in creating a more inclusive social impact sector, Hughes says the biggest take-away for IRP partners was to “remember that we offered our land and our space to everybody. We just want to be able to share that with everybody, and get more economic equality.”