This article is part of a series that explores Five Big Ideas for economic development in the Cowichan region.
Every year, Canadians invest billions of dollars in the global economy through private pension funds, mutual funds, stocks, bonds and other forms of investment.
In British Columbia alone, more than 734,000 residents – or 22 per cent of the province’s tax filers – annually contribute $4.7-billion to their registered retirements savings plans (RRSPs).
Based on provincial averages, Cowichan residents may be contributing upwards of $80-million per year to their RRSPs.
Yet only a fraction of our savings and other investments are re-circulated in our local economies – perhaps as little as one per cent – with the lion’s share leaving the community and finding its way to the world’s major financial centres in New York, Hong Kong and Toronto.
Meanwhile many local businesses face real obstacles in securing financing and raising capital, global corporations continue to grow in power and influence, and ordinary working people struggle to make ends meet.
Imagine for a moment if half our RRSP contributions were re-directed away from Wall Street and Bay Street and instead injected into our local economy.
What could $40-million in new investments do for the Cowichan region? Think of the possibilities.
Do we need a community investment fund that could provide local entrepreneurs with the financing to start their own firms, and businesses close to home with the capital necessary to expand their operations and invest in new technology?
In other parts of Canada, community investment funds are well-established with a proven track record.
In Nova Scotia, Community Economic Development Investment Funds (CEDIFs) allow regular people to pool capital and re-invest it in local businesses. The provincial government encourages CEDIFs through a 35 per cent non-refundable credit, and there are now 40 such investment funds across Nova Scotia pooling over $50-million in funds.
The most well-known example was established by New Dawn Enterprises, which operates a range of social enterprises in the Cape Breton region and is known as one of Canada’s most successful community economic development organizations.
New Dawn’s investment fund has directed $9.4-million into local economies during the past 10 years, targeting a range of businesses and activities and with returns historically between three and 4.3 per cent.
The success of the Nova Scotia model has inspired other provinces, including New Brunswick, Prince Edward Island, Manitoba and Alberta, to introduce community investment funds of their own.
In British Columbia, the Social Planning Council of Greater Victoria recently established the Vancouver Island Community Investment Co-op (VICIC) to raise capital for affordable housing projects, increase investment in locally owned businesses and contribute to job creation.
The current regulatory environment presents challenges for establishing community investment funds in British Columbia, however, VICIC has developed a policy paper calling upon the province to update existing legislation and regulations and to create a community investment strategy that would enable citizens to contribute to the health and prosperity of their communities. Recognizing that there may be a delay in British Columbia following the lead of other provinces, VICIC is also exploring innovating partnerships with local credit unions that could facilitate expanded community investment, even within the current framework.
VICIC has already met with several CVRD directors and other local leaders to discuss the investment opportunities in the Cowichan region, and will be presenting its ideas at an upcoming CVRD board meeting, There is also the possibility that VICIC could collaborate with Community Futures Cowichan, a local economic development organization that provides loans, training, planning and advisory services to entrepreneurs and small businesses in the region, as part of a national economic development program.
Could the CVRD’s economic development function – currently under review and in need of a shift in direction – play a role encouraging community investment in the Cowichan region? Could the CVRD work with the BC Municipal Finance Authority, which provides financing and investment management to local governments, to direct investment to the local economy?
We argue these ideas are worth pursuing, and feel that mobilizing local capital through community investment funds and other tools should be part of the economic development function’s new mandate.
Far too much of our retirement savings and other investments are leaving the community and being re-directed to distant financial markets. We hold more power over the economy than we realize.
Let’s start using it.
Stay tuned for next week’s installment, where we will explore what role the CVRD, Economic Development Cowichan and other local organizations could play in providing small and medium-sized businesses with the supports that would give them a competitive advantage in the global market.
Rob Douglas is a councillor for the Municipality of North Cowichan and director for the CVRD. Roger Hart is a member of the CVRD’s Economic Development and Environment Commissions. The views expressed here are their own and do not necessarily reflect those of the CVRD, its commissions or the Municipality of North Cowichan.