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Lack of Access to Capital Limits Economic Growth in Indian Country

6/30/14 under




Only half of all Native Americans 16 and older, who live in or near tribal areas, have jobs, and an estimated one-fourth of all Native American families in the U.S. in 2010 earned income below the poverty line, according to the 2013 American Indian Population and Labor Force Report.

Additionally, a lack of access to investment capital is still a primary reason for poor economic growth on reservations, according to the U.S. Senate Committee on Indian Affairs.

Chairman Jon Tester (D-Mont.) held a hearing on economic and business conditions in Indian Country on June 25. He noted that during the past few months he’s highlighted the need for better education for Indian children.

“However, better learning opportunities will go for naught if tribal economies are struggling – forcing children to take their skills and find good jobs elsewhere,” Tester said. “We can’t let that happen. Our First Americans should not have to choose between making a good living away from their family and homelands or living in poverty,” he said.

Kevin J. Allis, executive director of the Native American Contractors Association said there is still a tremendous amount of work to be done in making positive and sustainable benefits for Native communities.

“The communities which Native enterprises serve remain some of the poorest and most underserved groups in the United States,” Allis said.

Indian Land Capital Company President Gerald Sherman (Oglala Lakota) outlined the challenges. Sherman is also the founding director of the Lakota Fund, the first Native Community Development Financial Institution (CDFI) in the U.S., located on and serving the Pine Ridge Indian Reservation.

“Native communities experience substantially higher rates of poverty and unemployment than mainstream America and face a unique set of challenges to economic growth,” said Sherman.

He cited several challenges that Native entrepreneurs, homebuyers and consumers face “and must overcome.” These include the lack of physical, legal and telecommunications infrastructure, lack of access to affordable financial products and services, and limited workforce development strategies.

Native American Financial Services executive vice president of KeyBank William Lettig said that despite notable progress over the recent years, there still remains private sector uncertainty about whether Indian Country is a good investment.

“This uncertainty, which I believe is based on lack of information and understanding about Indian Country, has a chilling effect on capital markets’ appetite for investing in Indian Country,” Lettig said.

Tester focused on programs that have shown results in Indian County such as the Treasury Department’s Community Development Financial Institutions Fund (CDFI) and the Department of the Interiors’ Indian Loan Guarantee Program, which, when well-executed and properly funded, are attracting investment into tribal communities.

“There are success stories out there,” Tester said.

Acting director of the CDFI Fund Dennis Nolan said its work in Indian Country is born of an awareness that Native communities all across the nation continue to face extraordinary economic challenges that limit access to capital.

Since it was launched in 2001, the Native American CDFI Assistance Program has provided awards totaling more than $93 million to help Native CDFI’s deliver financial services and products to their communities. What started with just a few Native CDFIs 10 years ago has now grown to 68 headquartered in 21 states.

President and CEO of The National Center for American Indian Enterprise Development Gary Davis said what does not work well is the “square peg – round hole” approach of federal programs and dictating how assistance must be delivered and to what size of business.

“The more successful federal business development programs are those that are specifically designated to help startups and larger companies in Indian County,” Davis said.

Tester vowed to continue to examine solutions to unlock potential investment and development in Indian Country.

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