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Indigenous-owned businesses in Canada: confronting challenges, forecasting growth

January 17, 2023, 11:00 a.m. (EST)

The 2021 Census of Population counted 1.8 million Indigenous people, accounting for 5.0% of the population in Canada.

The Indigenous population is 8.2 years younger on average than the non-Indigenous population, and nearly two-thirds (65.1%) were working-age (15 to 64 years).

Moreover, just over 1 in 6 (17.2%) working-age Indigenous people were considered close to retirement (55 to 64 years), compared with 22.0% of the non-Indigenous population.

Analysis conducted by Statistics Canada and Indigenous Services Canada indicates that in 2020, gross domestic product attributable to Indigenous people was $48.9 billion, up from $41.7 billion in 2012.

More recently, the Canadian Survey on Business Conditions asked businesses about plans, challenges and expectations for the fourth quarter (October to December) of 2022—including data about Indigenous majority ownership.

There were 17,417 private businesses with majority ownership by First Nations people, Métis or Inuit in the fourth quarter, representing 1.7% of the 1,011,474 private-sector businesses operating in Canada. This represents a slight decline from the first quarter (January to March) of 2022, when the 23,530 Indigenous majority-owned businesses made up 2.3% of all private-sector businesses.

Rising inflation was the top obstacle expected over the next three months by close to three in five (58.4%) private-sector businesses in the fourth quarter, slightly higher than for those majority-owned by Indigenous people (56.7%). Close to half (49.5%) of all private-sector businesses reported rising input costs as the second most expected obstacle, higher than the 43.1% of Indigenous majority-owned businesses.

Meanwhile, 3 in 10 (30.0%) Indigenous majority-owned businesses reported a labour shortage as an obstacle in the fourth quarter, compared with over one-third (35.8%) of all private-sector businesses.

About 1 in 10 (10.7%) Indigenous majority-owned businesses or organizations planned to restructure over the next 12 months, compared with 7.4% of all private-sector businesses or organizations.

Despite the challenges, there were also some positive signs.

Roughly equal proportions of all private-sector businesses (6.4%) and those with Indigenous majority ownership (6.5%) planned to expand the current location of their business or organization in the next 12 months.

A total of 1.5% of Indigenous majority-owned businesses or organizations planned to close over the next 12 months, slightly less than the 2.3% of all private-sector businesses. And a lower percentage of Indigenous majority-owned businesses (0.7%) compared with all private-sector businesses (3.5%) planned to invest in other businesses or organizations.

There were wider differences in short-term liquidity. Roughly two-thirds (66.3%) of Indigenous majority-owned businesses had the cash or liquid assets required to operate in the next three months, compared with over three-quarters (76.1%) of all private-sector businesses. However, among businesses that did not have the required amounts to operate in the next three months, Indigenous majority-owned businesses were almost twice as likely to be able to acquire them (10.0% vs. 5.1%).

Debt levels for over 1 in 10 Indigenous majority-owned businesses (11.9%) and private-sector businesses (11.2%) were below what they were prior to the start of the COVID-19 pandemic, while levels were about the same as they were just prior to the pandemic’s onset for over one-third (36.6%) of Indigenous majority-owned businesses and 4 in 10 (40.1%) of private-sector businesses. Close to one-fifth (18.0%) of Indigenous majority-owned businesses and nearly one-quarter (23.2%) of all private-sector businesses had greater debt levels compared with the start of the pandemic.

Things appear to be looking up for the coming year, according to the majority of both Indigenous majority-owned businesses and of all private-sector businesses, who reported a future outlook for the next 12 months that was either very optimistic (37.2% and 22.0%) or somewhat optimistic (33.1% and 47.1%).

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