First Nations communities in Canada hold substantial economic power, generating $13.6 billion in revenue in 2019 alone. However, a significant portion of these funds is lost to economic leakage as they are spent on goods and services from non-Indigenous businesses. To counter this, the "Buy Indigenous" strategy aims to redirect First Nations’ spending on materials and supplies (M&S) to Indigenous-owned businesses, fostering local economic growth, job creation, and a self-sustaining economy.
The Scale of Economic Leakage
Economic leakage happens when money spent within a community flows out to external suppliers, diminishing economic power and growth opportunities. This issue is particularly pressing for First Nations. A study of 396 First Nations communities revealed that their average expenditure on M&S was around $1.3 million, with the majority going to non-Indigenous businesses. For example, in Saskatchewan, $9.3 million out of $12 million in First Nations spending occurred off-reserve, highlighting the magnitude of lost economic opportunities.
The Multiplier Effect of “Buying Indigenous”
The potential for economic growth through a “Buy Indigenous” strategy is immense. When First Nations purchase goods and services from Indigenous-owned businesses, the money remains within the community, generating a multiplier effect. For every dollar spent locally, the income within the First Nations economy could increase by 1.5 times or more due to the cumulative re-spending of funds within the community.
Platforms like eSupply Canada, a First Nation-owned procurement service, exemplify this approach. eSupply Canada offers a revenue-sharing model that returns 10% of expenditures back to the purchasing First Nation. For instance, a $907,470 M&S expenditure would yield a $90,700 return, which could be reinvested in vital community services like education, healthcare, and infrastructure.
Indigenous Buying Group: A Solution for “Buy Indigenous”
The Indigenous Buying Group presents a promising solution to the challenges of implementing a “Buy Indigenous” strategy. This initiative centralizes procurement for First Nations communities, enabling them to purchase from Indigenous-owned businesses more efficiently and retain more spending within their communities.
The Indigenous Buying Group pools the purchasing power of multiple First Nations, securing better pricing and terms from suppliers and ensuring that more funds are directed towards Indigenous-owned businesses. This collective approach overcomes barriers like limited access to Indigenous suppliers and the high costs of small-scale procurement.
How the Indigenous Buying Group Works
The Indigenous Buying Group offers two primary options for First Nations communities. The first is a subscription-based model, providing access to a centralized digital ordering portal with over 200,000 supplies. Members receive a 10% rebate on their purchases, which can be reinvested into the community.
The second option is an equity ownership model, where communities can buy into the Indigenous Buying Group at a higher tier. This model not only provides purchasing benefits but also allows communities to share in the profits generated by the Buying Group. This profit-sharing approach enables First Nations to benefit from their spending and the collective spending of all member communities.
Amplifying the Impact of “Buy Indigenous”
The Indigenous Buying Group is more than just a procurement tool; it is a vehicle for economic empowerment. By centralizing purchasing and directing it towards Indigenous-owned suppliers, the Buying Group amplifies the multiplier effect of “Buying Indigenous.” As more communities join, the collective purchasing power increases, leading to greater economic benefits.
For example, a $1 million expenditure through the Indigenous Buying Group could return $100,000 in rebates, with additional economic impact due to the multiplier effect. This approach addresses systemic barriers such as limited access to capital and infrastructure, making it a scalable solution for diverse community needs.
A Vision for the Future
The Indigenous Buying Group represents an innovative approach to economic development in First Nations communities. By leveraging collective Indigenous procurement, it provides a practical, scalable solution to the challenges of “Buying Indigenous.” As more communities join, the economic impact will grow, creating a ripple effect that strengthens the entire First Nations economy.
In conclusion, the Indigenous Buying Group is set to transform First Nations economic development, offering a concrete way to implement the “Buy Indigenous” strategy. By keeping more money within the community, creating jobs, and building capacity, First Nations can reduce economic leakage and move towards a more prosperous and self-sustaining future.
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