Financial Capacity as Part of Economic Development Plan
A well-publicized report commissioned by the Indian Resource Council was released this June: First Nations Engagement in the Energy Sector in Western Canada. This evidence-based report is well-worth the read, as it encourages open discussion on economic development topics – a welcome change from many other reports. Here is a link to the full report
The report discusses past success and failures of indigenous groups in their push to become more than bystanders to their region’s economic development activities. Full economic integration is not easy. The crown spent over a hundred years trying to prevent economic success on-reserve and it is going to take a long time to unwind those bad policies and create new ones. Most indigenous groups have fought for many generations to be at the negotiating table with the Crown and large corporations – to have a voice on what happens on their lands.
A future success pathway for nations is more than ownership shares and measured impacts – it also involves the question of how those benefits are delivered (i.e. through revenues? Through equity?) and how those benefits reach membership. It is important that positive impacts are felt by the most people in the shortest amount of time. There is no cookie cutter pathway for what a “deal” should look like. Instead, all nations should be working towards creating full financial capacity in the nation: from leadership, down through to its youth.
At Forward Vision Games we define financial capacity as a person’s (or nation’s) ability to turn assets and opportunities around into the wealth and prosperity, as defined by the community. We do not tell people where they are going; instead, we help build a pathway to get there.
Financial capacity at the personal level can be the ability to manage the change from a subsidized income to one that is much higher but inconsistent (like trades people often get in the resource sector). It can be the ability to use online banking properly and avoid costly “payday” style lenders. For a business, it can be knowing when to pay for a new vehicle and when to fix the old one. For leadership, it can be understanding when taking an equity position in a resource project is best and when to ask for a revenue share.
Financial capacity is not built overnight, but changes can be felt quickly and impacts are shared easily. Financial decisions that feel small actually add up quickly both positively and negatively. Negative results are felt when a youth is away at school and he or she runs out of money in February and drops out of college without finishing. Positive effects are felt when a young person knows how to save money consistently and shares that knowledge with siblings and cousins who can then emulate the positive behavior. Financial knowledge is unique, because everyone can relate to it. Every person is engaged in financial activities in one way or another – so conversations about financial topics happen naturally. This is what makes financial capacity something that proliferates easily in a community setting: once one person gains some knowledge, it is immediately passed on to those around them in an organic way.
Financial capacity is the tool needed by communities to take economic gains and turn them into positive household impacts that affect social prosperity. Financial capacity is not just financial expertise. Communities and businesses can hire accountants to create financial statements. People can’t hire someone to make every single decision for their household or business.
Real, prolonged financial success occurs when a solid foundation is created through learning so that people can begin to make informed financial decisions for themselves. Such self-reliance allows people to make decisions more quickly and accurately, and with confidence. For leadership, financial capacity is a foundation that creates more financial pathways and choice, with the confidence to execute on decisions that provide full, corporate-style financial market access, quickly and efficiently. External advice becomes a tool to use when needed, not a permanent fixture that guides community direction. This is key to the creation of long-term, sustained growth and prosperity.
by Meaghan Daly, Forward Vision Games