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Business and Reconciliation (92)

‘Buy Indigenous’ shift could add $1B to their economy

May 9, 2024

Canoes are stacked for the winter as the sun rises on the Fort Hope First Nation in northern Ontario. An eSupply Canada analysis of the total revenue spent on materials and supplies by Indigenous businesses found that Ontario had the third-highest average among provinces at 8.67 per cent.

Toronto Star: First Nations in Canada could add as much as $1 billion to their collective economy if they prioritized buying materials and supplies from within their own communities, according to a recent report.

Of the more than 630 First Nations communities across the country, the 396 surveyed spent $504 million on materials and supplies for their businesses in 2023. However, the March report by eSupply Canada, a First Nationowned business and distributor of office, janitorial and industrial supplies, found most of the money went to non-Indigenous suppliers, causing economic leakages.

The severity of the leakages — defined as income within a local economy that flows out of the region — ranges from 25 per cent in West Nipissing to 77.5 per cent among First Nations in Saskatchewan. However, many communities lose up to 90 cents of every dollar.

“It’s unfathomable; imagine $0.90 of revenue just leaving Toronto because you don’t have proper businesses there,” said Steven Vanloffeld, founder and CEO of eSupply Canada. “That really makes it a challenge to participate in the economic development opportunities that are happening within Indigenous territories. It keeps many communities economically depressed.”

Through its analysis of the total revenue spent on materials and supplies by Indigenous businesses, the report found that Ontario had the third highest average at 8.67 per cent. Nova Scotia took top spot with 9.96 per cent, followed by Northwest Territories at 9.05 per cent.

“Within many Indigenous communities, there were few businesses who were able to keep the flow of capital circulating and generating income,” said Vanloffeld, a member of Saugeen First Nation. “So as a result, you have to go outside of the community to purchase the supplies to operate.”

In assessing which materials are being sourced from outside suppliers, as well as how to take advantage of partnerships with developers within territories, Vanloffeld found that a “Buy Indigenous” strategy would help retrieve the loss of capital by highlighting Indigenous communities as a place to to source materials and suppliers from community members.

The report suggests that of the $504 million spent on materials and supplies in 2023, the move to buy Indigenous could add between 1.5 and two times that amount back to the economy, or as much as $1 billion, due to a multiplier effect — defined as changes in spending leading to an even bigger change in income.

“This is money government could use to invest in education, health care, food and beverage stores, and other social infrastructure,” the report said.

Despite establishing his supply business in 2019, Vanloffeld has since curated eSupply Canada to make the buy Indigenous strategy more accessible and beneficial for businesses, with 10 per cent of the initial expenditure returning to the community.

The biggest challenge since introducing the strategy, he said, is weaning businesses away from suppliers with whom they’ve developed a working relationship over the years — despite not always getting the best price.

In addition to getting involved with for-profit initiatives, buying into the community is what led Evan O’Leary, general manager of Sagamok Development Corporation, a non-profit in Sagamok Anishnawbek First Nation, west of Sudbury, to recently partner with eSupply Canada.

Although they are currently in the “testing phase” with the online distributor, O’Leary is confident in the partnership considering the corporation is looking to improve its operations, while providing key services and open-source revenue to the community.

This comes as the drop-ship model, a method allowing businesses to forward online orders to a thirdparty supplier rather than keeping inventory in store, is now available to Sagamok Development after previously not being an option due to its complexity. This means it would not have any of the office, janitorial and industrial supplies being sold on its online storefront in stock. Rather, the products belong to local entrepreneurs who would ship products when ordered.

The online marketplace provides an opportunity to keep revenue in the community, in addition to bringing local businesses together.

“Honestly, if I was to do this organically, it would take me another five years, I think,” O’Leary said.

The goal, he added, is to be as competitive as large retail suppliers, but acknowledges results won’t be seen until 2025.

Vanloffeld already has 10 First Nations communities signed on to take part in the buy Indigenous strategy, with the hope of inspiring more to do the same.

“You can call this (buy Indigenous strategy) the ‘lowest hanging fruit’ to solve the major economic leakage problem, although it oversimplifies things,” he said. “But it really is.”