Northerners want economic development lending tap turned back on

Hey there, time traveller!
This article was published 21/09/2022 (729 days ago), so information in it may no longer be current.

At a meeting of the Northern Manitoba Tourism Advisory Committee earlier this month, members enjoyed the catering services of Pickled Loon Kitchen, a Flin Flon experiential tourism operator that prepares food that includes foraged plants, roots and trees harvested locally from the boreal forest.

The Communities Economic Development Fund, the provincially funded organization that has been around since 1971, helped Pickled Loon owner, Lyn Brown, with marketing, the creation of a business plan and accessing other business services.

But what CEDF could not do — which it had been doing for the most of the previous 50 years — was provide any debt financing to Brown (regardless of whether she needed any or not).

Its loan function has been suspended for more than three years since the province appointed CEDF as its economic development agency for the North charged with implementing some of the action recommended by the Look North task force of a few years ago.

At the time that its business lending program was halted and the CEDF board was asked to provide a detailed review of its loan program to make sure it fit in with the rest of the province’s loan programs.

(The CEDF, a provincial Crown corporation, would borrow money from the province and then lend it to its clients. Over the past 10 years it loaned out about $57 million and returned about $80 million to the province.)

Chris Thevenot, the CEO of CEDF for the past year, was diplomatic in answering questions about the market demand for a resumption of lending.

“We’re the lead entity for the Look North action plan,” he said. “We have a multi-pronged approach like support for tourism and workforce development. It’s not like the organization has been put on hold.”

In fact, CEDF’s staff has grown in size, but Thevenot did acknowledge that its previous lending activity filled a gap in the market.

Denys Volkov, the executive director of the Association of Manitoba Municipalities, was more direct.

“For several years Northern municipalities have been calling on the province to remove the loan moratorium on CEDF to help small and medium-sized enterprises to establish and grow,” he said.

A resolution from the Town of Churchill at AMM’s last annual meeting stated, among other things, that “this loan moratorium is having a negative effect on the creation of businesses within communities,” and asking AMM to lobby the government to remove the loan moratorium to allow small to medium size enterprises to establish and grow.

Doug Lauvstad, president of University College of the North, based in The Pas, is the chair of CEDF’s board.

“There have been a couple of reviews. We’ve certainly briefed the government about what is going on and the board has expressed its desire that the moratorium be lifted. It’s in the hands of government. We have certainly not had any negative feedback,” he said.

Chuck Davidson, the CEO of the Manitoba Chambers of Commerce who co-chaired the Look North task force and is a CEDF board member, said it has been frustrating.

“It has been almost four years that the loan component is not there and we are not getting any clarity one way or the other,” he said.

Businesses used to be able to borrow as much as $2 million from CEDF and it was active across the economic spectrum of the North, lending to sectors including tourism, construction and forestry.

The one vertical market it has not had to suspend is its lending activity in the commercial fisheries.

In 2016, CEDF approved 36 loans totalling about $5.8 million, of which about $4 million went to fisheries-related enterprises. Other than fisheries, it has not approved any business loans since 2018. In 2021, it approved $1.8 million to the fisheries industry.

Cliff Cullen, the province’s minister of economic development, investment and trade, said CEDF is an important piece of his government’s overall economic development strategy. He said the loan pause was instituted so as to do an overall review of loan programs the province manages — including the Manitoba Industrial Opportunities Program and the Manitoba Mineral Development Fund.

CEDF officials help clients access other funds like the First People’s Economic Growth Fund and the federally-funded Community Futures.

Cullen said the determination on the future of the CEDF’s loan is being made in collaboration with many of his cabinet colleagues.

“Since I came into this role, we have had a real important lens on economic development and one of the pieces of the puzzle is what we should be doing in terms of loans… and the potential to add additional loan capacity,” he said.

Cullen said it is his hope that a decision about the CEDF’s loan program will be made soon.

martin.cash@freepress.mb.ca