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 domestic growth fund in Canada that started a year ago with $150 million in federal taxpayers’ money and that this week welcomed its first private investor, Block, a San Francisco-based tech company.

Posted at 6:00 am

Karim Benessaieh

Karim Benessaieh
The press

Certainly, the excitement is palpable in the voice of Jean Vincent, CEO of the National Association of Aboriginal Finance Companies (ANSAF), which manages this growth fund. At the end of the series, the resident of Wendake’s Huron-Wendat Reservation in suburban Quebec is dreaming aloud.

Photo courtesy of Jean Vincent

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

We had our sights set on this first private investor. We would like to increase this fund to 500 million, it could be even more. We want it to be well structured and of institutional quality so investors who invest money see their capital returned with a return.

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

The 150 million – now 153 – from the fund will be diverted to the 50 Aboriginal Financial Institutions (AFIs) established in Canada, including 5 in Quebec. Only one investment has been confirmed so far, $10 million donated to the Nuu-chah-nulth Economic Development Corporation, a Vancouver Island-based AFI, last March.

More numerous, more ambitious

The apparent slowness of the procedures does not worry Mr Vincent. This accountant by training also chairs two Quebec AFIs, Native Commercial Credit Corporation and Native Savings Corporation of Canada. “We are talking about a limited partnership, it is still quite complex, with public and private partners. The demand is there, at some point it will explode. And it will go faster and faster once the institutions are qualified, they advertise. »

The projects are extremely diverse and touch on almost all sectors of activity of the Aboriginal communities: natural resources, tourism, hotels, construction, convenience stores, petrol stations, supermarkets, both community and private projects, with “a few small companies involved in techno have to do , but I would say that this is not our main area of ​​activity”, specifies Mr Vincent.

The problem is that it is very difficult to find funding for Aboriginal projects, which are growing in number and ambition. The fact that it took almost a year to get 3 million from an American company shows this well enough. For example, venture capital in Canada attracted $14.7 billion in investments in 752 deals in 2021, according to research by BDC Capital.

“We have some educational work to do with the financial markets,” sums up Mr. Vincent modestly.

Three hurdles

He recalls that the ANSAF made exemplary use of the 240 million from Ottawa for its foundation in the late 1980s: “We issued 50,000 loans worth 3 billion. The capital of 240 million still exists, it keeps growing. We have to tell this story to the investors, tame them, we have to make ourselves known. »

The obstacles are known. First, there is Section 89 of the Indian law, which stipulates that the property of an “Indian” or a gang formed on a reserve cannot be confiscated or mortgaged. The renewal of this antiquated law from 1876 is “a political headache”, sums up Mr Vincent.

He notes that the remoteness of indigenous communities, extremely difficult physical access in some cases, or the lack of internet make it difficult to obtain banking services.

Aborigines have their culture, cultural differences that make it a little different. This makes traditional financial institutions feel like this is a riskier market.

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

Nonetheless, investing to narrow the wealth gap between Aboriginal people and the rest of Canada’s population is “an initiative that moves towards reconciliation,” he believes. He estimates the necessary investments at 200 billion “to bring the First Nations to the state of the art”. The First Nations Assembly last April found that the needs of the country’s 1.7 million Indigenous people over a 10-year period were $44 billion in housing alone.

The organization also regretted that the 2022 federal budget allocated only $11 billion over 6 years to Indigenous priorities. The Trudeau government, on the other hand, estimated its investments at $28 billion.

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  • 100 million US
    Total amount raised by 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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