Canada should embrace the concept of “social enterprise” through regulatory and tax incentives that would encourage investment in areas that will be job creators, says Paul Martin.
During his recent visit to Vancouver, the former prime minister said that in a country with a recession-induced 9% unemployment rate and almost 16% youth unemployment rate (for ages 15 to 25), the problem can’t be solved in conventional ways
He said “social entrepreneurs” need to be given the same tools as business entrepreneurs.
“Our problem is youth unemployment in this country. It’s not just an aboriginal problem, it’s a problem for everybody.”
In a wide-ranging interview with Business in Vancouver, Martin spoke of Canada’s paradox: a high unemployment rate on one hand and a skills shortage on the other.
The challenge, he said, is determining how the country’s native peoples can fill that gap and how corporate investors, big or small, can tap into the aboriginal market, make a profit and leave economically empowered communities in their wake.
He cited the example of two Vancouver-based resource companies – Teck Resources Ltd. (TSX:TCK.A;B; NYSE:TCK) and Goldcorp Inc. (TSX:G; NYSE:GG) who are among 21 Canadian investors, including several banks, that have pooled millions of dollars in a fund run by CAPE Fund Management Inc., a private equity initiative of Martin and his son, David.
The $50 million fund’s sole investment focus is to partner with aboriginal groups and individuals to promote aboriginal business, entrepreneurship and ultimately prosperity by growing businesses and thereby generating social returns and risk-adjusted financial returns.
“Ours is a private-sector response to a public need,” Martin said at an earlier meeting with aboriginal and business leaders.
Each of the major corporations investing in the fund handed over $2.5 million, but Martin said much more could have been raised if smaller investors were tapped.
However, for that to happen, he stressed that there needs to be a system of social enterprise such as in the U.S., U.K. and Korea.
“Social enterprise essentially says that this is an investment that has a social return primarily and can have a financial return secondarily,” said Martin.
He added that business solutions could be applied to social problems.
On the B.C. coast, CAPE has partnered with Coastal Shellfish LP and is in the early stages of launching what Martin said could become a major scallop aquaculture operation. Three coastal First Nations – the Metlakatla, the Heiltsuk and the Council of Haida Nation – are participants in the project.
Another investment – One Earth Farms on the Prairies – has become Canada’s largest farming ranch in only three years after being created by Toronto-based Sprott Resource Corp. (TSX:SCP) to build a partnership between the private sector and First Nations.
“We started with three First Nations in 2009, 13,000 acres and three employees,” Fred Siemens, the company’s co-founder and vice-president, business development, said at the September 29 Canadian Council for Aboriginal Business meeting in Vancouver.
In 2011, the company is harvesting 113,000 acres in Alberta and Saskatchewan, has approximately 80,000 acres of ranch land and about 8,000 cows. It’s also looking to create an all natural First Nations beef product.
“We have attracted interest globally,” Siemens said of the 200-employee company, which draws 38% of its labour force and 17% management from First Nations.
Martin said once investors exit an investment, they’re asked to invest in another business or startup. He told BIV that First Nations continue to get short shrift when it comes to opportunities in schooling and jobs, and that a policy of affirmative action should be used to ensure that the approximately 10,000 aboriginal youth who can’t afford university education are provided with help to gain access. “But we’re doing reverse affirmative action when we under-fund grade schools and high schools for aboriginals in this country,” he said. “We’re sending aboriginal kids to grade schools and high schools that most Canadians wouldn’t send their children to. … That’s morally wrong, but it’s also dumb.
“We’re 34 million people, and we’re competing with nations like China and India. Well, we can’t afford to waste a single talent and that’s what we’re doing.”
Gary Merasty, vice-president of corporate social responsibility for Saskatchewan-based Cameco Corp. (TSX:CCO; NYSE: CCJ), one of the world’s largest uranium companies, told BIV the problem is exacerbated by a “perception” that the average Canadian believes that the culture of poverty in Canada is the culture of aboriginals.
That, he said, is furthest from the truth. “I’m First Nations myself, and I see such a high degree of entrepreneurialism,” he said. “I see such a high degree to move forward and do better.” •
