Betty Ann Lavallée, national chief of the Congress of Aboriginal Peoples, calls for a national microfinance strategy to help alleviate poverty.
“A national microfinance program, with the support of the private sector and all levels of government, could be a game changer for many Aboriginal people living off-reserve,” she says. The congress was founded in 1971 to represent the interests of Métis and non-status Indians. Over 70 per cent of Aboriginals now live off-reserve in Canada.
Lavallée adds access to credit would be particularly helpful for women and youth who she says often have more difficulty getting loans from financial institutions. “The current investment mentality in Canada is that the banks will lend money to those who have it,” she says. “This way of thinking needs to change.”
“Microfinance is a start, and a good one,” to resolve poverty issues faced by many Aboriginals, says Lavallée.
Microfinance is an umbrella term for financial services offered to individuals who are unable to obtain chequing and saving accounts, loans or insurance policies. For multiple reasons, many Aboriginal Canadians are considered “unbankable” and have limited or no access to financial services. Also due to drug abuse, some are forced to rely on predatory financing with monthly interest rates as high as 20 per cent.
Internationally, around three billion people have limited or no access to regulated financial services. Most of them live at or below the international poverty line which is set at $2.50 a day.
Chief Isadore Day of Serpent River First Nation says, microfinance has to be looked at thru the lens of nation building.
“There are many things we can do [on the reserve] that we can’t do in the main stream because we have jurisdiction,” says Day. For example, he says microloans could be provided to moms wanting to save for their children’s education or to help a teen buy a computer. Serpent River Nation, located about 130 km west of Sudbury, Ontario, hopes to have a formal plan in place by 2015 to launch a microfinancing strategy in their communities.
In Vancouver, the credit union Vancity is working with First Nations to provide small loans to entrepreneurs. After completing an entrepreneurial training program designed specifically to benefit Aboriginal participants, loan applicants living within Coast Salish Territory (which includes Metro Vancouver and Victoria), can apply for a loans from Vancity of up to $35,000. No business plan is required for loans under $5,000.
The credit union also offers personal loans of up to $7,500 to individuals without much, if any, collateral. Such loans are often provided based on a general assessment of the applicant’s character and entrepreneurial spirit, says Stewart Anderson, manager of community investment and focused on Aboriginal communities.
The Toronto International Microfinance Summit is organized entirely by volunteers of diverse backgrounds and ages. This year the event was sponsored by organizations working in the sector, including Oikocredit and Alterna Savings. In partnership with the Summit, The MasterCard Foundation provided financial assistance for 100 students to attend.
Nandy Heule is a Toronto-based communications consultant who owns Heule Communications. She has been a long-term volunteer for Oikocredit Canada Central and her company is completing a short consulting contract with the organization.