In Budget 2024, the Government of Canada announced a new initiative: the Indigenous Loan Guarantee Program. This program aims to support Indigenous investment in the natural resource sector—giving them a greater role in projects on their lands.
What is the Indigenous Loan Guarantee Program?
The Indigenous Loan Guarantee Program aims to prioritize economic reconciliation and self-determination for Indigenous communities. It helps Indigenous communities gain better access to capital to invest in large-scale natural resource projects like mining, oil, and gas.
The government plans to launch this program within a year, providing up to $5 billion in loan guarantees. They will back these loans, making it easier and cheaper for Indigenous groups and First Nations to borrow money for investment.
Who Can Use the Program?
The program is open to Indigenous governments and their wholly owned and controlled entities. These groups include Indigenous governance structures across Canada, such as First Nations, Inuit, and Métis. By focusing on Indigenous-led organizations, the program ensures that the benefits directly support these communities.
What Can the Loans Be Used For?
The loans guaranteed by this program can go toward many natural resource projects, including new projects and legacy assets (existing projects). Indigenous groups can invest in projects that best support their economic development and community well-being.
NRCan and CDEV's Involvement
Multiple organizations will help manage and implement the Indigenous Loan Guarantee Program, including:
Natural Resources Canada (NRCan): This department will be responsible for intake and capacity building. They will handle applications and help communities prepare to apply for loans.
Canada Development Investment Corporation (CDEV): A CDEV subsidiary will provide due diligence on applications, ensuring the projects and applications meet criteria, and manage the loan guarantees.
Financial Support and Capacity Building
The government has allocated $16.5 million over two years to support this program, of which $3.5 million is for investment advice and due diligence. This support helps communities navigate the processes of these types of investments. However, some advocates believe more funding is needed to fully support these activities across all communities.
Why is This Program Important?
Historically, Indigenous communities have faced many barriers to securing capital due to the Indian Act and colonialism's legacy. These barriers have made it difficult for Indigenous groups to invest in and benefit from the natural resources on their lands.
The Indigenous Loan Guarantee Program aims to address these challenges by providing fair access to affordable capital to support economic development and self-determination in these communities.
Empowering Indigenous Communities
The Indigenous Loan Guarantee Program is a step forward in supporting Indigenous communities' participation in Canada's natural resource sector. As this program rolls out, it promises greater economic independence and growth for Indigenous communities.
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