A recent change to the mandate of the Canada Infrastructure Bank (CIB) has opened a new avenue for Indigenous communities to get loans for equity buy-in on larger infrastructure investments.
“When we’re talking about linear infrastructure projects in our country—transmission lines, transit systems, projects that cut across land—they’re almost always going through traditional territories, and Indigenous communities have said really clearly, ‘We want a seat at the ownership table in these projects,’” said Ehren Cory, CEO for the bank.
With changes brought about in the 2023/24 federal budget, CIB, a Crown corporation, now has the ability to lend that money to Indigenous investors for equity stake.
Those loans would come at “much more favourable rates where we’re already working on the project, and that can help with that access to capital and ensure that the communities are able to get the returns that they expect from the project,” said Hillary Thatcher, who heads Indigenous investments for CIB.
Thatcher, who is Métis, leads a team of six, three of whom are Indigenous. She agrees with Cory that Indigenous communities see the benefit of equity ownership.
“Being in the equity box means they’re an owner of the infrastructure project and ownership comes with many things,” she said, noting that what a community wants will depend on the capacity of that community.
Ownership can mean receiving revenue generated from a project. It ensures that impact assessment benefits are honoured, provides good jobs for community members, and guides development around important wildlife habitat or burial sites.
“Equity is really important” as private sector is, in many cases, offering ownership stakes. Still Indigenous communities have to be able to buy in.
“Equity is that risk capital and so many communities don’t have access to capital,” said Thatcher.
The push for cleaner energy may be one reason that Indigenous communities want equity. Green energy is an opportunity for Indigenous communities to bring down their own high energy costs, as well as support their values for sustainable forms of energy, says Cory.
“It’s not the only thing we’re focused on, but it’s what we’re seeing probably the most interest and uptake in early on,” he added.
The equity loan program is being “fine-tuned” right now, says Thatcher, but already CIB has had a number of communities that have expressed interest.
“We’ve got a pipeline of some pretty significant projects where we know Indigenous communities are at the table. They’re part of the negotiations of the debt financing on those projects. We know that they’re also looking to access capital for their equity contributions,” she said.
CIB’s equity loan program provides opportunities for Indigenous investment in electricity, telecom (broadband), trade infrastructure, public transit and water infrastructure.
CIB will continue to work with First Nations institutions like the First Nations Financial Authority (FNFA) and the First Nations Bank of Canada, says Thatcher.
“We’re always looking to make sure that we’re not crowding out Indigenous investment. So if FNFA can make the investment and we’re not needed, you know we want it to be FNFA to get those investments. But if there’s risk associated with an investment and they can’t do the whole thing, we could come in and help to de-risk it with some of our capital,” said Thatcher.
Cory sees the CIB’s equity loans as another “helpful tool in the toolkit.”
“This is a way to get some of those infrastructure projects built faster.” He said it may also allow communities to focus the more traditional kinds of public dollars and grant monies on social infrastructure, the things that can’t pay for themselves in the same way.
Equity loans build on a lending program that CIB launched two years ago. With the CIB designed to invest in $200 million to $300 million capital projects, with a minimum loan of $100 million, it left a gap when it came to supporting smaller Indigenous projects.
The lending program closed that gap, allowing the CIB to invest in Indigenous projects that required much smaller loans, anywhere from $5 million to around $10 million.
“There’s an opportunity for us to right-size our investments so we can target what is typically the investment size of infrastructure in First Nations, Métis and Inuit communities,” said Thatcher.
While Thatcher admits that infrastructure needs in many Indigenous communities are numerous and expensive, she says CIB finances each project separately to keep the debt down to ensure a community has the “right revenue streams to service the debt on that specific project.”
CIB has seen success through its lending program. According to the bank’s 2022-23 year-end statistics, 27 Indigenous communities have benefitted as part of nine projects.
Investment from CIB in Indigenous infrastructure included $8.1 million in ATG Technology Group to provide new broadband services to 20 Indigenous and four rural communities in Alberta, and $7.9 million towards critical infrastructure of electricity, water and broadband required for commercial and residential development on the Netmizaaggamig Nishnaabeg Reserve in Ontario.
CIB has an overall allocation of $35 billion for infrastructure projects with $1 billion set as a goal to support Indigenous communities. Cory points out that infrastructure projects in partnership with Indigenous communities are usually carried out on a smaller scale, but “if we spend the first billion, we’re willing to go beyond that.”
“The CIB is meant to be a new way for the government of Canada to support those nations in their ambitions. Our aim is to be great partners to them,” said Cory.
By Shari Narine, Local Journalism Initiative Reporter, Windspeaker.com
Original Published on May 02, 2023