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Dearth of aboriginal-owned businesses is bad for resource firms

Barrie McKenna logo.

Connie Saliwonczyk is a rarity in Canada – an aboriginal female entrepreneur and a firm supporter of the Northern Gateway pipeline.

Her endorsement of Enbridge Inc.'s pipeline is born out of naked economic self-interest. Her company, based in Alberta's Frog Lake First Nation, operates various oil patch service vehicles, including a vacuum truck for cleaning up small oil spills. She would be in line to bid for work if the pipeline gets built.

"As a businessperson, it would definitely benefit me," she said. "And it benefits people on the reserve because I hire First Nations people. For me, it's showing people that anybody can do it."

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Ms. Saliwonczyk notwithstanding, Northern Gateway now faces a potentially drawn-out legal fight with First Nations, primarily in B.C., that could stall or even block the pipeline, thwarting the dream of getting oil sands crude to the Pacific Coast and on to Asian markets.

Even the federal government, which conditionally approved the project last week, has acknowledged that Enbridge "clearly" has work to do to bring many First Nations on side.

It isn't just about consultation and winning support. Longer-term, governments and resource companies need to demonstrate to individuals in First Nations communities that they have a real economic stake in resource development.

And until there is a critical mass of aboriginal-owned businesses – ready and able to seize opportunities – securing First Nations buy-in on resource projects will continue to be a tough sell in Canada.

Too little has been done to build aboriginal businesses from the ground up – in part, because access to capital is so difficult. Banks are notoriously reluctant to lend to would-be aboriginal entrepreneurs, who are often short on experience, rarely have a credit history and can't put up real estate as collateral because direct home ownership generally does not exist in First Nations communities.

More typically, resource companies have worked to win support for their projects by dangling temporary jobs and cash for high-profile community investments, including hockey rinks and other local infrastructure. To its credit, Enbridge has offered First Nations a 10-per-cent share of the pipeline and up to 15 per cent of pipeline construction jobs.

If pipelines, oil projects, mines or logging operations are going to go ahead, First Nations must derive more enduring benefits. And the key lies in the thorny notion of ownership – of land, of resources and of the businesses that stand to gain from their exploitation.

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"If you want to affect a community, you have to do it at the individual level. Finance someone's purchase of a water truck or a welding machine, and suddenly you have affected eight people in that community," argued Rob Rollingson, general manager of Calgary-based Indian Business Corp., which lent money to Ms. Saliwonczyk when traditional lenders balked.

IBC, for example, created 27 years ago with seed money from the federal government, does development lending in First Nations communities similar to the way microfinance is done in poorer countries.

"You can't buy your way through [aboriginal communities] any more," Mr. Rollingson explained. "You have to offer real solutions and real value … It just can't be for a two-year project. It's a matter of what is sustainable after this thing is built and goes through."

Access to capital remains the "biggest constraint" to stimulating First Nations investment, keeping capital within the local economy and increasing long-term economic sustainability, according to a recent study of development lending by Toronto-based Impakt.

The Organization for Economic Co-operation and Development took a similarly long view of the challenge, warning that numerous projects could face disruptions unless Canada does more to help resource companies "engage with affected aboriginal groups so that projects bring long-term benefits to these communities."

Time isn't on the side of those seeking quick approval of Northern Gateway and other projects. Governments and resource companies are already decades behind in changing the economic reality for First Nations people.

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There are still too few entrepreneurs such as Ms. Saliwonczyk, who spent nine years building up her company, Connie's Oil Field Lease Maintenance Ltd., which now employs as many as 10 people in peak season.

"It was a long struggle," she said. "It wasn't easy."

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About the Author
National Business Correspondent

Barrie McKenna is correspondent and columnist in The Globe and Mail's Ottawa bureau. From 1997 until 2010, he covered Washington from The Globe's bureau in the U.S. capital. During his U.S. posting, he traveled widely, filing stories from more than 30 states. Mr. McKenna has also been a frequent visitor to Japan and South Korea on reporting assignments. More

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