First Nations Economic Development

Table FNED-1. The Kitsaki Companies
Canadian Plains Research Center
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In Canada and elsewhere around the world Indigenous peoples are struggling to rebuild their “nations” and improve their socioeconomic circumstances. Many see economic development as the key to success: this is certainly true for Indigenous people in Canada, who see participation in the mainstream globalized economy through entrepreneurship and business development as a path toward economic improvement and nation rebuilding. Aboriginal people want this participation in the mainstream, globalized economy to be on their own terms and for their own purposes. The Aboriginal approach to economic development can be described as a predominantly collective one, centred on the community or “nation” for the purposes of ending dependency through attaining economic self-sufficiency, controlling activities on traditional lands, improving socioeconomic circumstances, and strengthening traditional culture, values and languages. This approach is achieved by means of creating and operating businesses that can compete profitably over the long run in the global economy, forming alliances and joint ventures among themselves and with non-Aboriginal partners.

It is important to note two things about the Aboriginal approach to development: first, it involves active participation in the global economy on a competitive business-based basis; second, this participation - in terms of both process and objectives - has a distinctly Aboriginal character. Indigenous people in Canada are rejecting what is imposed on them from the outside, in favour of development strategies originating in the Indigenous community with the sanction of Indigenous culture. The key to Indigenous success lies in recognizing in each culture those forces conducive to development and in designing plans accordingly.

In 2004 a survey was conducted to try and determine how many First Nations businesses exist in Saskatchewan, how old they are, how big, at what market scale they operate, and which forms of ownership are prevalent. The research also explored those factors that might contribute to the capacity of First Nations communities to develop businesses: size, location with respect to urban centres, general geographic location, education level, presence of an economic development office, and approach to business development. In addition, the survey explored whether First Nations are adopting an approach oriented toward non-local as opposed to local markets, involving alliances and partnerships with others, or favouring community versus individual ownership. The survey found that out of a total population of 45,261 for thirty-four responding First Nations, 23,057 people live on reserve. The average size of each community is slightly less than 11,000 ha, with 85% of the communities located in the southern agricultural area of the province and 15% in the northern boreal forest. The total number of businesses owned by the thirty-four communities is 488, an average of 14.4 businesses per community; of this number, 142 or 29% are five years old or less. The businesses employ 1,969 people for an average of four jobs per business, or 57.9 jobs per community. Males account for 58.4% of the employees, and 85.7% of the employees are Aboriginal; 49% of the businesses serve the local market, 39% the regional market, and 8% have their focus on the international market. Privately owned businesses account for 34.4% of the total, community-owned (non-partnership) for 37.2%, and community-owned (partnership) for 4.3%.

There is great variation among Saskatchewan First Nations with respect to business activity. The five most active of the thirty-four responding First Nations accounted for 33% of the total businesses and 14.5% of total employment, while the five least active First Nation communities accounted for 2.6% of the total businesses and 2.3% of the total employment. However, it cannot be conclusively stated that there are specific capacity variables that explain the reason for economic growth in one First Nation over another. For example, both the top five and bottom five communities had similar averages for levels of education (15.2% and 16.1% respectively), defined as trade certificate or diploma, other non-university education with a certificate or diploma, and university degree. Similarly, there is no differentiation with respect to geographic location, as 80% of the communities are located in the southern portion of the province and 20% in the northern portion. The same holds true for relative proximity to larger urban centres.

The survey suggests, however, that the business development strategy of the most active and least active communities differed in several respects. The most active communities had a higher proportion of businesses that focused on the national and international market than the least active. The more active communities had 40% of their businesses targeting non-local markets, while 23% of the businesses located in the less active First Nation communities concentrated on non-local markets. As well, the largest businesses in the active communities are considerably larger relative to the larger businesses in the smaller, less active communities. The largest businesses in the most active communities employ an average of seventeen people, whereas the largest businesses in the least active communities employ an average of six people. However, the active communities both had a higher proportion of businesses in partnership with others than the inactive. Finally, the most active and least active groups showed a higher proportion of community-owned versus privately owned businesses.

A good example of successful Aboriginal business initiatives is offered by the Kitsaki Development Corporation (KDC), based in La Ronge. From its creation in 1981 the KDC's strategy for improving the socioeconomic circumstances of the La Ronge Indian Band (LRIB) has been to form sound, secure partnerships with other Aboriginal groups and successful world-class businesses in order to generate revenue for Kitsaki and employment for band members. Implementing this strategy, between 1981 and 2004 the KDC created a number of business ventures (see Table FNED-1). These businesses now employ almost 450 people (an average of thirty-eight per business) and have an annual payroll of almost $6 million. In addition, an estimated 300 LRIB members were paid $120,000 for picking wild mushrooms, and 200 other Aboriginal people were paid $80,000. As well, 300 LRIB members were paid $637,000 to harvest wild rice, and 200 other Aboriginal people were paid $275,000. Combining these payments with the payroll, the Kitsaki companies paid out a total of $7 million in salaries and contract payments annually.

The activities of the Kitsaki Development Corporation, now renamed the Kitsaki Management Limited Partnership, have made a decisive impact over the two decades from 1981 to 2001. With a 116% increase in the potential labour force and a 6.3% increase in participation rate, which together resulted in a 153% increase in the actual labour force, the LRIB unemployment rate fell by 2% and the employment rate increased by 5%; the number of LRIB people employed increased by 410. This is a considerable achievement, especially when compared to the figures for the neighbouring community of La Ronge for the same period. The La Ronge potential labour force grew by only 10%, while the actual labour force increased by just 7%. The numbers employed increased by only seventy, resulting in an increase of 1% in the unemployment rate and a 3% decrease in the employment rate. Several similar business success stories could be quoted as evidence of the changing nature of Aboriginal communities and of their growing importance in the economy of the province.

Robert B. Anderson

Further Reading

Anderson, R.B. 1999. Economic Development among the Aboriginal Peoples of Canada: Hope for the Future. Toronto: Captus University Press; Robinson, M., and E. Ghostkeeper. 1987. “Native and Local Economies: A Consideration of Economic Evolution and the Next Economy,” Arctic 40 (2): 138-44.