A recent study was undertaken of Miziwe Biik (MB) with the aim of evaluating the organization’s use of microfinance as a tool to help marginalized Aboriginal communities find more sustainable and empowered lifestyles. Miziwe Biik Aboriginal Employment and Training Centre was established in 1991 by the Aboriginal community of Toronto to address the community’s unique training and employment needs. A staff of 15 offer a range of employment programs, services and resources to approximately 1000 clients each month. To encourage the economic development of the community, the Miziwe Biik Development Corporation was launched in 2004. Then, in 2007 the Aboriginal Business Resource Centre (ABRC) was established to provide entrepreneurs with access to business training, skills development and microloans, the latter which began with a pool of $60,000 from Miziwe Biik and the RBC Foundation.
Now for a bit of a background. Over one million Canadians, about 3.8% of the total population, identify themselves as Aboriginal. Younger than the general population (median age 27 vs. 40), the Aboriginal population is growing at a faster rate, is less educated (50% with post-secondary school vs. 67%) and faces higher levels of poverty and unemployment (8% adult unemployment vs. 5.4%). Many are urbanizing too, with the GTA experiencing a 31% increase in its Aboriginal population since 2001, making it the fourth largest in Canada.
Challenges facing Aboriginal communities
The obstacles faced by Aboriginals continue unabated – from racism, stereotyping and band-governance issues to businesses facing limited or no access to capital, an inability to use property or land on reserve as collateral, prohibitive legislation and inadequate business skills development. Considering these complex challenges and the growing belief in the value of microfinance in elevating people and communities, a microfinance program for the Aboriginal community in the GTA seemed a valuable proposition.
Typically, microfinance programs—designed to support entrepreneurs— are associated with developing countries where a high proportion of citizens have difficulty meeting basic needs for shelter, food, education and healthcare. There are Aboriginal communities here in Canada that face the same struggles as people living in developing countries.
Having the opportunity to run a successful businesses does more than put cash in the hands of Aboriginal entrepreneurs. Success means bridging the socioeconomic gap between the Aboriginal and non-Aboriginal populations. It’s estimated that Aboriginal businesses have created approximately 61,500 full-time jobs and 13,500 part-time jobs for Aboriginal people in Canada. Yet, not unlike disadvantaged groups in less developed countries, access to capital remains a major obstacle for Aboriginal entrepreneurs, particularly in urban settings in Canada.
Unique microloan program is launched
Miziwe Biik was the first microloan program of its kind to target financial needs of urban Aboriginal entrepreneurs. Its loans (to individuals, not groups) are between $1,000 and $5,000 at 2% above prime, with a repayment plan of 12 equal monthly installments. The MB microloan program has a number of unique features to its name, demonstrating it doesn’t adhere to traditional lending practices.
For one thing, as can be seen by its repayment options—which sit at a fixed rate—the emphasis here is on outcomes other than profit. As one staff member of MB stated in an interview, “People know what the payments are going to be every month and for how long; we make a few hundred dollars per loan, but we aren’t in it really for the money…we do look at…how does this business fit in the Aboriginal community…is it going to enhance the life primarily of the entrepreneur, but will it contribute to the overall life of the Aboriginal community in terms of economic development.”
Establishing social connections and building community are seen as equally important to profitable goals. Miziwe Biik also employs a more collaborative approach in its application process than mainstream lenders, with the result a higher rate of accessibility for Aboriginal entrepreneurs. What’s important to MB goes beyond successful applicants. Increasing their knowledge and capacity is key. Similar to other microcredit programs in Canada, the MB program emphasizes skills development and training.
Before getting into the results of that case study, it is worth commenting first on the unique methodology used by the researchers. There’s been plenty of research conducted on Aboriginal communities in Canada but very few incorporate techniques and instruments that respect the practices, histories and experiences of the Aboriginal community. This one did. For one thing, researchers partnered with the Aboriginal community. For another, they consulted an Aboriginal Elder by the name of Cat Kriger who offered insight into traditional teachings, practices and Aboriginal ways of looking at the world. It was through that lens that the research, analysis and conclusions were established.
So what about impact? How does this program effect Toronto’s Aboriginal community? Does it meet is mission? Since its start, $43,500 has been loaned to nine Aboriginal entrepreneurs in arts and crafts, food services, health and wellness and consulting services. In total, $25,035 (including interest) has been repaid, representing a financial success rate of about 50%. Of the borrowers, four were able to earn a living wage, become self-sufficient and repay their loans, though two missed at least one payment.
Using its unique Aboriginal lens, what the researchers found was overall success. The MB program has been proven to connect with and support the Aboriginal community through an understanding of their particular needs and challenges and by focusing on outcomes that are communal and developmental. Plus, there’s an emphasis on resources needed to attain success beyond the initial microloan, such as access to further infusions of capital, the development of business skills like marketing, human resources, finance and accounting, and supports for family and community.
Within the theme of balance and interconnectedness, loan applicants are able to balance the start-up requirements of the business with other financial pressures in their lives. The program, moreover, has proven significant for those who lack trust in and feel stigmatized by the mainstream. As one subject explained, “We’ve not been well-served by institutions and there is a reluctance…to have to do it. As a result, I think people do shy away from approaching some of the big financial institutions.”
Loan holders also mentioned the importance of integrating broader cultural elements into the microlending experience, something they don’t find in mainstream business practices. The MB microloan program has found to increase individual self-esteem, financial independence and confidence through the establishment of a credit rating and many reported feeling a stronger connection to their Aboriginal community and their roots.
Looking to the future
The program could still be strengthened, though. Entrepreneurs, for example, mentioned wanting increased support from the broader Aboriginal community and its institutions. And the repayment rate of 50% should be improved. But, for many, the impact goes well beyond the numbers. As one employee stated emphatically, “We have made a positive difference. I know that half the people have launched businesses that they likely would not have done so if it had not been for us.” Though the future of MB is uncertain, due to staff turnover and the need for greater support from the Toronto Aboriginal community, the indications seem strong that, should it continue in the same vein, lasting impact will result.
This article is part of the The Social Economy Series, focused on research, findings and case studies by the Social Economy Centre of the University of Toronto.