Native community sees rapid income growth

WinnipegFreePress.com – business – Businesses enjoy fruits of success
Posted: 06/18/2011.   By: Martin Cash

A surprising new report has found that despite significant poverty, total incomes in the aboriginal community have been growing at almost twice the rate of the country as a whole.

The report Friday from TD Economics shows total combined income of households, businesses and government will be about $24 billion in 2011, double what it was in 2001. The number is predicted to grow to $36 billion by 2016.

“That’s larger than some Maritime provinces and half the size of Manitoba’s GDP,” said TD’s deputy chief economist, Derek Burelton.

The average annual growth rate of total aboriginal income has been about seven per cent, whereas the Canadian nominal GDP has been growing by about four per cent.

It may be the first time the data have been put together in such a way and it shows aboriginal consumers are becoming a force to be reckoned with.

The report notes the most significant growth is occurring throughout the business sector across a number of goods and services areas, but “they have been particular beneficiaries in the boom in the resource and construction sectors, particularly in Western Canada.”

Burelton said the growth in total aboriginal income is likely not enough to reduce the gap much between aboriginal per capita income and Canadian per capita income — which was about $31,000 in 2011 — but he said aboriginal income growth should continue to outpace the national average.

That’s partly because there has been strong growth in aboriginal participation in the resource industry.

“The medium term looks quite good because of the outlook for commodity prices,” Burelton said. “I don’t think there is anyone who thinks the recent momentum (in the resource sector) will not continue, at least into the medium term.”

In Manitoba, for instance, more than half the workforce at the newly reopened Bucko Lake nickel mine in Wabowden is aboriginal. Connotec Inc., a Winnipeg construction company specializing in northern resource and energy projects, has gone out of its way to grow its aboriginal workforce as it wins more contracts in northern Manitoba.

And there is a growing number of successful aboriginal entrepreneurs. TD found the business share of the total aboriginal market is $9 billion a year.

Over the last couple of decades, about $2 billion of that has come from about 60 aboriginal financial institutions, including Louis Riel Capital Corp., which makes high-risk development loans to Métis-owned businesses throughout Manitoba.

Started 19 years ago with an $8-million stake, it has turned that total over three times and is still able to lend about $1.5 million a year to about 30 businesses.

Paul Paradis, general manager of Louis Riel Capital, said not only are there more businesses applying for loans, the quality of those businesses is better.

Although delinquency rates have declined by 75 per cent over the past five years, they are still five or six times higher than at mainstream banks, he said.

“I worked at the TD Bank for 33 years and most of these companies the mainstream banks would never touch,” Paradis said. “Many of the people we have put into business might otherwise be on the unemployment line or welfare line.”

The TD Economics report incorporates some data produced in another report earlier this year from the Canadian Council for Aboriginal Business.

Clint Davis, CEO of that Toronto-based organization, said some mainstream business people familiar with the aboriginal community were aware of the opportunities that existed.

“But there has never been a real number attached to it,” said Davis.

“Typically, stories about aboriginal people concerning money… are often not necessarily in a positive light.”

He said those stories are usually about land claims, federal contributions or residential school settlement money.

But with some estimates that the aboriginal populations in Manitoba and Saskatchewan are about 20 per cent of the total, he said their consumer purchasing power is only going to grow.

martin.cash@freepress.mb.ca

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Aboriginal market income

2001 2006 2011(f) 2016(f)
Total aboriginal income* $11.66 $18.94 $24.33 $32.16
Total aboriginal income per capita $10,950 $16,204 $19,217 $23,412
Total nominal GDP per capita $35,722 $44,524 $50,224 $58,691

* total of personal, business and discretionary government revenues in billions

f = forecas

– Source: TD Economics

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