The federal government has promised to “build back better” from the pandemic. If that’s the case, one of the things it needs to consider is how to make banks more accessible to Black Canadians.
The Liberals recently announced a partnership with a number of financial institutions to create a Black Entrepreneurship Program worth a combined $221-million over four years to address systemic racism and help Black business owners recover from the pandemic.
Most of the funding will come in the form of credit, with Ottawa providing up to $33.3-million for loans worth between $25,000 and $250,000, and $128-million in commitments from Canada’s Big Six banks as well as two credit unions.
A small group of people from the Black Business Professionals Association in Toronto, the Canadian Black Chamber of Commerce, Groupe 3737, Côte Des Neiges Black Community Association and Nova Scotia’s Black Business Initiative helped structure the new program, which also includes $53-million for Black-led business organizations to build a better ecosystem of support for business owners and $6.5-million for data-collection to identify barriers to success.
While I admire the work of the Black-led groups involved and agree that prioritizing business issues facing Black entrepreneurs is crucial, I believe working with formal bankers who have a poor diversity record and complicated history with Black people is unsettling at best.
Ottawa has missed an opportunity to instead rethink banking and engage the informal co-operative banking systems that Black people, especially women, have always been using as a way to manage systemic racism. Targeted subsidies to these localized systems can help support a national network that offers a wider range of sources to access funding for business.
Over the years I have heard from many Black, racialized and Indigenous people across the country from Charlottetown to Calgary who have had traumatic encounters at all of our banks. Only occasionally do they make headlines, like when Haitian-Canadian Frantz St. Fleur was apprehended by police at a Scotiabank in Scarborough, Ont., for trying to make a deposit in 2014; or when Maxwell Johnson and his 12-year-old granddaughter, both members of the Heiltsuk Nation, were handcuffed while trying to open an account at a Vancouver Bank of Montreal last December.
Traditional banks don’t understand the risks and struggle racially marginalized groups have with credit history, credit rating and collateral issues. Credit unions are no better, either. Though they often claim to be different, they can be just as unappealing to Black people as commercial banks. In 2017, a study by the late University of Toronto professor Jack Quarter and his colleagues interested in equitable financing found that many of the credit unions in Toronto were located in the city core, with their limited branch network mostly in more well-off areas such as the Annex, or the Beaches.
It’s no wonder many Black people look for alternatives. As part of a diaspora social innovations project, I have conducted in-depth interviews with about 65 diaspora business owners, who hail from countries including India, Ghana, Nigeria, Pakistan, Somalia, Sudan, Sri Lanka and Jamaica. Those interviews included 142 women who lead informal co-ops. Collectively, they represent thousands of women who want to see banking done differently in this country.
Black and racialized people, and women in particular (who I call the “The Banker Ladies” in my work and documentary film), have been working in their communities for decades, creating alternative forms of finance, with little to no support from the government. These informal co-operatives are known as rotating savings and credit associations (ROSCAs) – grassroots initiatives operated largely by Black and racialized women who see a need to pool monies and provide social supports to people harmed by everyday indignities. The names of these voluntary co-operative banks are as diverse as the Africans and other diaspora who use them – “Esusu,” “Boxhand,” “Susu,” “Tontines,” “Sol,” “Partner,” “Ayuuto,” “Osusu” and “Sadooq”.
Groups such as Microcredit Montreal (formerly ACEM), Asset Community Fund and Black Creek Microcredit Program are locally rooted organizations who know how to reach immigrant women with limited access to banking services by drawing on informal co-operative systems that are known in the community. What is more, the methods are purposefully community-based and carried out by staff who have a shared lived experience.
The federal government has expressed interest in alternative-banking concepts and my research on access to finance and local innovations by Black Canadians is funded at the federal and provincial level, yet the perspectives of the hundreds of Black and racialized Canadians I’ve spoken to continues to be ignored.
A consortium of Black Canadians is in the process of requesting a licence for the first nationwide Pan-African credit union – beyond a short-lived operation in the 1990s – formed by The Jamaican Canadian Association, The Lions Circle African Men’s Association and the Canadian Black Chamber of Commerce, but they need to meet a capitalization requirement for credit unions, and political support has been absent.
If the government truly wants to dismantle systemic barriers, it should invest in a Black-run-and-managed co-operative bank that is reflective of its members. Having Islamic-compliant loan products, making outreach in Somali, Arabic and Haitian Creole and embracing greater awareness of niche business ideas among these communities would be important. At the same time, existing credit unions should support the development of credit unions for and by racialized people.
These kinds of collective banks are not new to Canada. Black refugees fleeing slavery in the U.S. who arrived in this country through the Underground Railroad drew on True Bands, an informal co-operative group, to resettle the refugees. Later in the 1900s, the Desjardins caisses populaire movement in Lévis, Que., created informal co-ops to reach French Catholics, who felt excluded. Today, the steady stream of Black immigrants are using ROSCAs. In 2017 at a community event held in Scarborough I met a Cameroonian woman who managed a “Janjui” made up of about 10,000 members across the country – as far as the Yukon – providing loans to one another.
Informal banks are operating all over cities in the Western world by immigrants because they believe in collective banks, which are rooted in community values. These groups have people who will vouch for one another and support each other in case of defaults. The group as a whole decides how to share in losses. Banking differently means moving away from commercialized “norms” of evaluating risky people, and it means valuing the social capital. It is the group’s members who decide on the potential of the business idea within a context without making judgments.
Far too often formal banks use a Western (read white) yardstick to decide if something has value. In a recent segment on CBC Radio’s Cost of Living, an Edmonton entrepreneur recounted the humiliation she endured when a white banker used a derogatory term, describing her beauty shop catering to Black hair as a “nappy hair business.” A community-based bank that understands the contextual reality would be less inclined to alienate creative ideas this way.
As the federal government looks for ways to rebuild from the pandemic, it should commit smart subsidies to localized banking systems that Black people trust, create a national ROSCA network and fund the hundreds of Banker Ladies who can expand the programs they are already running.
There is no use in partnering with existing bankers who need to work on internally diversifying their leadership, management and boards. Black Canadian women hold the key to innovative community driven banks and non-profits, where they are not only making money accessible but ensuring camaraderie among folks harmed by everyday racism.
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