A PRESENTATION TO THE MNC ECONOMIC DEVELOPMENT CONFERENCE Economic - - PowerPoint PPT Presentation

A PRESENTATION TO THE MNC ECONOMIC DEVELOPMENT CONFERENCE

Economic Development Strategy subsequent to Budget 2016

Background

• Economic self-sufficiency for Métis citizens, Métis

communities and the Métis Nation—as a whole— within Ontario is a goal set out in the MNO Statement of Prime Purpose

• Initial attempts by the MNO to pursue economic

development proved unsuccessful

• This experience led to the development of a

principle based economic development strategy that saw MNO design a model based on ‘best practices’ and obtaining policy, legal and tax advice

Principles

• Efforts are institution based

– promotion of citizens’ self-sufficiency is the primary focus of MVDF – promotion of collective self-sufficiency is the primary focus of Infinity Investments

• Institutions have operational independence

– Separation of business decisions and political decisions – Appointment of directors on a qualifications basis

• Implementation appears, thus far, to have been successful

– Infinity is profitable and with an asset base exceeding $ 80M – MVDF is the largest Aboriginal Financial Institution in Ontario and the fastest growing in Canada with arrears and bad debt substantially below AFI norms

Institutions in the MNO framework

• While operational decisions are made independently the
• pportunities facing Infinity Investments and the opportunity to

create and support MVDF arise from the MNO

• Through government policies or duty to consult related

engagements, there are unique business opportunities only available to Métis communities and the MNO; this is the class

• f opportunity that Infinity Investments seeks to capitalise

upon for the collective Métis benefit

• Correspondingly the opportunity to secure capitalisation for

MVDF to invest in Métis businesses also derives from the government policies or duty to consult related engagements

• MEDS is a prime example

MEDS considerations

• Worth noting that no First Nations, Inuit, or pan-

Aboriginal approach for capital was successful

• The source for capital requirements for MVDF and

Infinity are different

• For MVDF

– Developmental lending economics preclude capital growth – Volatility can impair the capital base, which leads to a negative cycle – If lending limits are to raise with inflation then, given concentration risks, the capital base must rise – Demand for capital in the resource sector alone has proved sufficient to fully engage MVDF’s capital

MEDS considerations

• For Infinity

– Without capitalization, where Infinity captures an opportunity it must borrow equity – This either limits the return or precludes investment – Where a guarantee is sought form the governing body to satisfy collateral requirements a poor investment can significantly impair the financial health of the governing body – MNO made the explicit and difficult decision to defer dividend payments to build Infinity’s balance sheet – This also serves in the start-up period to promote success where dividend payments will almost certainly not cover operating expenses

MEDS proposal

• MNO asked the institutions to balance their needs and to

come to a joint recommendation for the MEDS funding and to jointly develop a proposal

• An equal split has been proposed
• Initial 50% to Infinity

– Operating funding on a declining basis – Majority of funding to capitalization – Rationalize capital structure and permit further larger scale ventures

• Final 50% to MVDF

– Successful in resource sector, however, capital is insufficient to meet general demand – New product development, e.g. capital leases and hybrid debt/equity products