Tribal-Citizen Entrepreneurship What Does It Mean for Indian Country and How Can Native Nations Support It? Manley A. Begay, Jr. Native Nations Institute (University of Arizona) and Harvard Project on American Indian Economic Development Association of Cooperative Educators Conference Hotel Depot Minneapolis, Minnesota July 29, 2009

American Indian Economies (Reservation and Trust Lands) Transfer Sector Productive Sector  Nation-owned enterprises  Citizen entrepreneurship (private sector) …and Non-governmental/Non-profit sector

American Indian Economies (Reservation and Trust Lands) In general, the transfer sector is shrinking; the productive sector is growing Within the productive sector, emphasis has been on nation-owned enterprises

The Indigenous Private Sector is Growing Census Bureau estimates of Indigenous-owned firms  1997: 197,300 (includes nation-owned enterprises)  2002: 206,125 (excludes nation-owned enterprises) But these businesses have been overwhelmingly urban That’s beginning to change… Why Does This Matter?

What Is Tribal-Citizen Entrepreneurship? Businesses started and owned by tribal citizens—individuals or families—on the nation’s own lands

What Citizen Entrepreneurship Does 1. Generates jobs 2. Builds reservation wealth 3. Increases reservation multipliers 4. Helps build a tax base 5. Diversifies the nation economy 6. Sends important signals to citizens 7. Retains talent locally 8. Improves the quality of life 9. Broadens the development effort 10. Strengthens tribal sovereignty

The “Thick” Economy of a Strong Native Nation The nation’s people, society, & culture Nation-Owned Enterprises Mines Factories Land Enterprises Forestry Wildlife Recreation Fishery Casino Resort Bank Industrial Park Utilities Shopping Mall ??? Citizen-Owned Enterprises Grocery Auto Repair Hardware Clothing Ranching/Farming Car Dealer Computer Services Building Contractors Restaurants Arts/Crafts Cooperative Lawyers/Accountants Dentists/Doctors/Vets Insurance Office Supply ???

So Why Don’t We Have More of It?

Obstacles Shared with other rural settings  Limited markets  Limited opportunities  Limited financing  Limited skills and training Distinctive to much of Indian Country  Cultural concerns  The governance environment

Cultural Concerns (in some cases) Fit with Indigenous values (for example, some nations are less tolerant than others of individual entrepreneurship) Questions about appropriate uses of nation resources In some cases, a culture of dependency that has sapped individual initiative (For outsiders) Strong community commitments on the part of entrepreneurs

The Governance Environment (in some cases) Lack of institutions that are taken for granted in other settings (independent courts, commercial codes, zoning, etc.) Political interference in business permitting, site leases, nation court decisions, etc. Overly complex regulatory regimes Slow or culturally inappropriate or dysfunctional bureaucracies Lack of infrastructure

Results Instability and unpredictability Higher business costs Exit

Case 1 – Big Nation Need and Opportunity  high unemployment  large internal market but relatively few on-rez businesses  many would-be entrepreneurs  but most dollars spent off-rez  fit with Indigenous values

Case 1 – Big Nation Need and Opportunity  high unemployment  large internal market but relatively few on-rez businesses  many would-be entrepreneurs  but most dollars spent off-rez  fit with Indigenous values Governance Problem  most land is nation-held, but nation site- leasing process has more than 100 steps and on average takes more than a year to complete  in a nearby, off-rez city, a new business can be up and running in less than 30 days

Case 1 – Big Nation Need and Opportunity  high unemployment  large internal market but relatively few on-rez businesses  many would-be entrepreneurs  but most dollars spent off-rez  fit with Indigenous values Governance Problem  most land is nation held, but nation site-leasing process has more than 100 steps and on average takes more than a year to complete  in a nearby, off-rez city, a new business can be up and running in less than 30 days Results  massive brain drain as young people with ideas and energy go somewhere else  hundreds of jobs lost

Case 2 – High Plains Nation Need and Opportunity  major social problems including extreme unemployment  multiple communities that need to buy goods  significant tourism possibilities  determined and committed entrepreneurs  cultural support for entrepreneurship

Case 2 – High Plains Nation Need and Opportunity  major social problems including extreme unemployment  multiple communities that need to buy goods  significant tourism possibilities  determined and committed entrepreneurs  cultural support for entrepreneurship Governance Problem  politicized business permitting system  politicized nation court  nation legislature efforts to raise cash through increased site-lease rates

Case 2 – High Plains Nation Need and Opportunity  major social problems including extreme unemployment  multiple communities that need to buy goods  significant tourism possibilities  determined and committed entrepreneurs  cultural support for entrepreneurship Governance Problem  politicized business permitting system  politicized nation court  council efforts to raise cash through increased site-lease rates Results  high business start-up costs, political game-playing  a struggling entrepreneurial sector that could thrive under changed conditions  but also an organized effort by entrepreneurs to support each other and promote constitutional reform

Case 3 – Lake Nation Need and Opportunity  lack of on-rez retail sector  high dependence on gaming for jobs, revenue  substantial gaming revenue

Case 3 – Lake Nation Need and Opportunity  lack of on-rez retail sector  high dependence on gaming for jobs, revenue  substantial gaming revenue Governance Response  nation uses gaming revenue to support entrepreneurship  nation provides training, technical assistance, and low-interest loans to would-be entrepreneurs  loan access depends on passing strict business tests  politics kept out of loan decisions

Case 3 – Lake Nation Need and Opportunity  lack of on-rez retail sector  high dependence on gaming for jobs, revenue  substantial gaming revenue Governance Response  nation uses gaming revenue to support entrepreneurship  nation provides training, technical assistance, and low-interest loans to would-be entrepreneurs  loan access depends on passing strict business tests  politics kept out of loan decisions Results  more than thirty new businesses in first four years, with high survival rate  reduced costs  jobs, services, pride

So How Do You Increase Tribal-Citizen Entrepreneurship?

What Indigenous Nations Can Do Attitudinal Changes  Sovereignty mind-set  Strategic thinking Investments  Small business services (such as education, technical advice)  Financing  Strategic planning Institutional Changes  A capable nation bureaucracy  A sensible regulatory environment  A commercial code  A genuinely independent nation court

Key Questions To Indigenous Nations Do you want to include citizen entrepreneurship in your development strategy? Will the community benefit from and tolerate citizen entrepreneurship? Do you have a governmental structure in place that will support—not penalize—citizen entrepreneurship?

American Indian Economies Nation-owned Enterprises For some Native nations, nation-owned enterprises may be all the development strategy they need or desire

American Indian Economies Nation-owned Enterprises Citizen Entrepreneurship But for others, citizen entrepreneurship can be a key building block in a sustainable Indigenous economy

American Indian Economies Nation-Owned Enterprises Citizen Entrepreneurship And for others, nation-owned enterprises, citizen entrepreneurship, and non-governmental/non-profit sector can be the building blocks in a sustainable Indigenous economy Non-Profit Sector

But if the second and latter strategies are selected, then nation government carries much of the responsibility for making the strategy work… …by putting in place an environment of stable rules and other supports that encourages citizens to invest time and energy at home.