Protests against Coastal GasLink will hardly stop the project. Instead, Chris Sankey warns that they will definitely make it harder for indigenous nations and entrepreneurs to access capital, become owners, and move communities toward self-determination in the future.
By Chris Sankey, December 17, 2021
Native economic development has shifted from power and benefit agreements to share ownership as the gold standard for industry engagement. Equity means that an indigenous nation is a shareholder in a project and is entitled to a share of the profits. It also means that we have more influence on how the projects proceed, e.g. in relation to its environmental performance. But because it is difficult for indigenous nations to get financing at competitive prices, we are often left out of projects, or they do not start at all.
A risk premium is the term for the extra costs that investors impose to compensate for a higher level of risk on a given project. They are usually in demand for projects in developing countries due to their political instability, negative government regulations or economic risks. But now, in Canada, they are regularly assessed on projects in native territories.
Why is a risk premium now being used, you might ask? Due to the systemic protests against the development of our local communities, which are almost exclusively organized by environmental NGOs from urban areas. Such protests are designed to delay projects and make them more expensive through legal challenges and work disruptions. Government regulations such as Impact Assessment Act, also makes resource development in our territories more risky by adding unclear or changed requirements for consultation of indigenous nations.
So imagine the frustration of original leaders and entrepreneurs – who do the hard work of attracting investment, qualifying for financing and building equity to create opportunities in their communities – when they see coordinated protests like #DefundCoastalGaslink taking place this week with December 20th. This “Action Week” will see environmental activists targeting banks and insurance companies willing to invest in larger projects in indigenous territories. And their goal is to make these banks regret it.
I do not think these protests will affect Coastal GasLink at all. But they will definitely make it harder for indigenous nations and entrepreneurs to access capital, to become owners, and to move our society toward self-determination in the future. It should be condemned for the discriminatory and harmful act it is.
These coordinated attacks do not happen for development everywhere. It is always the initial economic development that is politicized, and always our rights, that are being used as part of these campaigns. It is another obstacle in front of our people, and it is neither fair nor right.
Access to capital is one of the biggest barriers to indigenous prosperity. The nature of reserve soil, as defined by Indian law, has rendered it useless as security. The inability to own our own home in reserve has meant that most indigenous families do not have the opportunity to borrow against it to start a small business. Because of this, indigenous communities and entrepreneurs get shorter loans and higher interest rates than other Canadians when they even qualify for loans.
Many years of effort have been put into solving this challenge. Dozens of Aboriginal financial institutions have been established to provide easier loans and financing to indigenous communities and entrepreneurs. The First Nations Financial Authority and the First Nations Financial Management Board were established to improve our financial management capacity. And nations everywhere have been working hard to develop relationships with banks to access the financing they need to build infrastructure and grow their corporate holdings.
And now I see people who do not understand the consequences of their actions going out and sitting in the banks’ lobby to protest against projects in our territories – even when these projects have the support of the majority of our people and our leaders. It does not matter if their intentions are good. Such protests make the road harder and longer for indigenous peoples to get out of poverty and return to independence.
Protesters must stop putting a wedge between indigenous peoples and banks, and indigenous peoples and industry. We need capital just like everyone else to build infrastructure in our communities and participate in the economy. We need jobs and income to create opportunities for our young people.
We have enough barriers to get out of poverty. It’s time for protesters to stop adding them and help us start removing them instead.
Chris Sankey is a prominent native business leader, a senior fellow at the Macdonald-Laurier Institute and a former elected councilor for the Lax Kw’alaams Band.