Canada needs to attract private investment in infrastructure – and Indigenous communities hold the key

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From Pierre Poilievre’s “national energy corridor” and promise to fast-track permits for Ontario’s Ring of Fire to Mark Carney’s promised $5-billion for trade infrastructure, major projects are receiving all-party recognition as crucial components of Canada’s long-term economic stability.

This prevailing national consensus suggests that if Canada is going to be a strong leader on the world stage, it needs to reliably deliver on big-ticket natural resource and infrastructure projects – something it has struggled with in recent years.

At the same time, Indigenous participation in major projects is accelerating. RBC estimates that the Indigenous equity opportunity in energy and resource sectors could amount to $100-billion in the next 10 years. Greater numbers of Indigenous groups are securing equity ownership in projects, often leveraging concessionary capital such as loan guarantees backstopped by the federal government. These loan guarantees allow Indigenous communities to borrow at below-market interest rates and can be repaid as projects begin to generate regular cash flow.

Championing these programs has been a cornerstone of Indigenous advocacy for years, and Canada has recently seen positive support for these policies from both Liberals and Conservatives. Unfortunately, while loan guarantee and concessionary capital programs – which nationally amount to approximately $14-billion – are a great start, these funds are insufficient to support Indigenous inclusion across all the projects the country needs to put into action. Some reports indicate that Canada will need to invest $200-billion “above and beyond” what’s currently anticipated by 2030.

This matters because Indigenous partnerships are essential to cultivating a stable investment environment. Equity participation inherently helps derisk major projects and strategically attract the global investment Canada needs to build more, faster. Such partnerships provide clarity and certainty for investors, with Indigenous communities working alongside industry partners as co-owners with a tangible interest in the success of projects on their land.

Furthermore, enhanced collaboration among all partners – including industry, government and Indigenous leaders – fosters operational constancy, avoiding delays and disruptions by securing community support. Indigenous expertise can also help accelerate alignment on social and environmental impact assessments, reaching productive agreements that remove the bureaucratic bottlenecks and frustrating delays that have continued to plague projects in Canada.

When projects are derisked in this way, it not only sets up Indigenous communities for long-term success but also creates an attractive investment environment by boosting business stability and long-term revenue predictability.

There’s no question our country needs to attract new infrastructure investments to enhance productivity, and it’s clear that Indigenous communities can expedite this investment through equity partnerships. The remaining challenge is securing the capital that First Nations and other Indigenous groups need to launch these crucial partnerships. With insufficient concessionary capital on hand, policy-makers need to attract new partners to the table, empowering private lenders to do their part to help Canada meet its infrastructure and productivity demands.

Expansions to concessionary capital programs and loan guarantees are limited by ratings agencies’ risk and liability considerations. Market-rate capital, while more flexible, is too expensive for many Indigenous communities. The natural solution is to integrate these two sources – mobilizing market-rate, private investment in Indigenous equity financing through strategic public investments to offset investment risks.

Integrating market-based and concessionary capital to fund equity investments in infrastructure creates a powerful synergy that plays to the strengths of both funding sources. This “blended capital” makes use of private lenders’ underwriting discipline, attracting greater investment partners for future projects. Correspondingly, government-led Indigenous loan programs prioritize benefit for Canadian economic growth as well as social and environmental objectives.

Blended capital also lowers the weighted average interest rate to fund the loan – using the preferred rate of concessionary capital to lower the cost of debt and allow communities to leverage capital across a range of projects.

If federal politicians and leaders are serious about meeting Canada’s infrastructure needs, it’s time to find creative solutions. Innovative policies like blended capital have the potential to enhance economic reconciliation efforts and drive major projects ahead more efficiently, while also attracting investment in Canadian projects in a time of global uncertainty. Similarly, Canadian financial institutions, insurance companies, pension funds and private capital firms should be stepping up their efforts with strategic investments that will drive returns while also protecting the economy from outside threats.

Indigenous partners and organizations such as the First Nations Major Projects Coalition stand ready to collaborate with these partners. It’s time to come together to build the projects Canada needs to secure a prosperous and resilient future.

Mark Podlasly is a member of the Nlaka’pamux Nation and CEO of the First Nations Major Projects Coalition, a national non-profit that works to convene First Nations, investors, industry partners and government to advance major projects in Canada. FNMPC will hold its annual conference in Toronto from April 27-29, exploring the theme of valuing reconciliation in global markets.