Understanding the strategy to realization

April 19th, 2021

In a previous InBusiness article, we discussed the potential impacts of the NL election results on Labrador’s businesses. In this article, we’ll take a step back to look at Canada’s vision for rural economies. This is important as a vision is achieved by the implementation of strategy and the allocation of resources. For small businesses and Indigenous entrepreneurs, aligning with this vision can be mutually beneficial and result in improved quality of life for communities. Although the Rural Economic Development Strategy was released June 27, 2019, we believe it is still relevant today as Budget 2021 will be presented later today, and understanding the strategy will be important in understanding what is included or excluded from the budget.

High-Speed Internet and Wireless Connectivity

As we outlined in our previous article, high-speed internet is important for small businesses and is lacking in coastal Labrador. The Federal Government acknowledges that current internet speeds are too slow for the cloud-based economy. As a result, the Federal Government has set a goal for universal access to 50 mpbs download and 10 mpbs upload speeds for all Canadians by 2030.

These speeds are considered necessary to operate in the digital age. Accessing the Federal Government’s National Broadband Internet Service Availability Map and zooming in on various Labrador communities confirms that most communities are still operating at speeds of 5 mpbs download and 1 mpbs upload or below. The Federal Government has stated that 95% of Canadians will have this improved connectivity by 2026 and the hardest-to-reach will have it by 2030. As many coastal communities would be considered hard-to-reach, we do not expect coastal Labrador to benefit from this initiative until the later part of this decade.

Although we do not expect to see major connectivity changes happen at the Provincial or Federal level, private companies such as SpaceX’s Starlink may offer high-speed, low latency broadband internet in the near future. In early January 2021, a prototype SpaceX Starlink Ground Station was observed in St. John’s. From examining the SpaceX website, coverage for Labrador is expected to be available by late 2021. Users can apply for beta access to this internet by paying $700 in hardware fees and $129 a month for the service. Based on these numbers, for approximately $9 million, the Federal Government could cover the beta hardware costs of all Labrador households.

With access to high-speed internet through private companies happening in the near future, we believe this presents an opportunity for Indigenous entrepreneurs to start imagining new cloud-based technologies that could benefit from this infrastructure or to start learning more about bringing businesses online. Planning and developing wireframes now will allow businesses to capture growth faster once high-speed internet becomes available.

Regional Economic Growth Through Innovation

The second strategic initiative identified in the federal strategy is the use of economic development funds to foster innovation and business development. For Labrador, the regional fund is administered by the Atlantic Canada Opportunities Agency (ACOA). ACOA is a boon to small businesses and entrepreneurs alike – offering business information services, funding, and other support to stimulate the economy. While eligibility criteria for some programs remain rigid, ACOA has played a pivotal role in the development of Indigenous businesses in the region – particularly through their support of Indigenous business service centres such as the NunatuKavut Business Centre and Innu Business Development Centre.

As a further part of this strategy, there is also mention of multiple other funds such as the Federal Fishery Fund, the Indigenous Forestry Initiative, and the Destination Employment Fund.

Within the Federal Fishery Fund there is $400 million for the Atlantic Fisheries Fund aimed at innovation, infrastructure, and science partnerships within the fisheries sector. The Indigenous Forestry Initative had a budget of $13 million over three years – from examining a list of initatives none of this money went to Labrador. The Destination Employment fund is for newcomers in Canada to gain valuable experience in the hospitality sector. This initiative seems particularly important as it supports newcomers moving to rural areas and  the development of the tourism industry. There are many more funds and programs than are listed here, but each one is important in diversifying Labrador’s economy. The main challenge is that being aware of and keeping up to date with these funds is not easy for most people – especially individuals running a small business.

We believe all of these initiatives offer valuable opportunities for Labrador’s Indigenous entrepreneurs. In Budget 2021, we will be looking to see if the Federal Government increases the budget for similar funding programs.

Furthermore, we would want to see the long awaited Social Finance Fund become reality. This fund has investors front the money for projects to address social problems, and then the Government will provide retroactive funding based on data and actual outcomes. Although this fund has the capability of greatly enhancing communities and individual well-being, it still requires investors to take a risk. As a result, solving some of the toughest problems (and therefore the riskiest) will likely not happen. Instead, a fund that provides a portion of the grant upfront and once results are achieved may better balance the risk for both investors and the Government.

Other Components

The rural strategy also touches on the key areas of infrastructure, climate change, and skills development. All of these are important topics for communities and businesses in Labrador; however, due to the length of this article, we will not go into each of these topics in detail.

As part of the “Investing In Canada Plan” infrastructure plan, the Federal Government committed $180 billion dollars over twelve years (ending in 2028) and to date $90 billion has been spent. An interactive map shows that Labrador has benefitted from approximately 71 of these projects with a combined value of approximately $70 million – this is based on a September 23^rd, 2020 data update of the map.

The amount of money spent in Labrador is closely proportional to Labrador’s population – as a result, we do not believe Labrador has been underrepresented. In fact, Labrador’s businesses have benefitted in a magnitude of ways – such as improved child care services and highway improvements. Furthermore, communities have benefitted from large investments in green projects. Our major concern with this initiative is that it has a high burn rate – in Budget 2021, we hope that the amount of funds are increased so that other large infrastructure projects can continue.

Overall Thoughts

The strategy was developed from discussions with rural areas across Canada, and as a result, the strategy focuses on real challenges faced by rural communities. The strategy goes into more detail than we can offer in this article and there are several off-shoot sub-strategies that go into even further detail. These strategies are well written and are reflective of Canada’s diverse rural populations. However, these strategies have their shortcomings too. Overall, strategies are good, but the execution is better. Without execution, a strategy is only a roadmap to a vision that is never realized.

So what are the main roadblocks to executing the strategy?

First, it is not easy for individuals to find funding information or for the Government departments to find projects to fund. Easy to use databases are a great solution and step forward – such as the Business Benefits Finder or, for Agriculture, AgPal. Both databases allow business owners to identify potential funding sources. However, the next key step is to also create a database of business ideas that investors can use to identify businesses that they wish to invest in.

Second, this leads us to a lack of ownership. There are a lot of stakeholders involved from the Federal Government, Provincial Government, Local Governments, and Community level. Entrepreneurs need to work with each stakeholder, and this leads to inefficient and frustrating communications as questions can be passed to many stakeholders without receiving an answer. There is also an onus on entrepreneurs to develop solutions that fit into the strategies – we believe a mixed approach is better. In addition to entrepreneurs developing solutions, Local Governments should outline and prioritize what challenges they see in communities. These challenges should be posted in an open forum where entrepreneurs can discuss possible solutions and form partnerships with others in the Community.

Third, funding eligibility criteria can stifle ideas before they have a chance to prototype. We understand that organizations such as ACOA want to be efficient with their resources; however, not every idea will be a unicorn or a leap forward in innovation. Often, rural communities need simple, low-scale ideas that serve the role of creating jobs and preventing population decline. Once population has stabilized, it is more likely that an economic gamechanger will be discovered because there will be more people to have big ideas and they will be more likely to stay in Labrador with their ideas.

From Budget 2021, we hope to see more funds dedicated to these rural initiatives and with that, we hope to see access to funds broaden – especially for Indigenous entrepreneurs. Ultimately, we want to see the creation of an easy-to-use one shop portal for entrepreneurs. Once Budget 2021 is released, we will be providing a high-level overview of its implications on Labrador’s businesses.

Your Thoughts

Let us know your thoughts on this article – do you believe this strategy has impacted your business? What do you hope to see in Budget 2021?

This is the second article in a series focusing on rural economic development. In the next article, we will look at another country for lessons on rural economic development. Please subscribe to stay up to date on our InBusiness insights.