Business Case For Investment in the AFI Network

Transcription

1 Business Case For Investment in the AFI Network NACCA Presentation to the NACCA Annual General Meeting June 21, 2017

2 Rationale for Business Case AFI success a well kept secret Need to articulate a compelling performance story and provide assessment of need Budget 2016 and Budget 2017 missed opportunities INAC focus - social and education/community infrastructure Public sector interest in supporting social finance Timing is critical Government approaching mid term on mandate National Aboriginal Capital Corporations Association SLIDE 2

3 Objective Assess the adequacy of the capital base across the AFI network and develop a business case that supports an increased investment Consider various capitalization options, examine impacts for related AFI programming, and forecast expected outcomes and results Determine the scope of new financial products and services being made available to support Aboriginal business development Prepare a competitive analysis to determine the relative strengths of the AFI network Document two success stories - one for an AFI and a second for a business project that has benefitted from the services provided to them by an AFI National Aboriginal Capital Corporations Association SLIDE 3

4 Methodology Document review literature review Interview NACCA Analysis of previous 5 years of AFI data Competition review AFI interviews Mix of ACCs (6), CFDCs (4), Dual (2) and ADL (2) Forecasting model Business Case AFI profile National Aboriginal Capital Corporations Association SLIDE 4

5 Growing Demand Growing demand for loans Number of small businesses is growing Growing and young Aboriginal population Significant growth in the number of entrepreneurs Size of loans Higher project costs (inflation) More sophisticated clients National Aboriginal Capital Corporations Association SLIDE 5

6 but Limited Capital Capital needs by AFI type: ACCs no reliable access to additional capital greatest need for funding risk aversion ACFs and ADLs generally still receive support through regional funding sources indicated less need for additional loan capital growth capital would help access larger deals National Aboriginal Capital Corporations Association SLIDE 6

7 AFI Capital Cannot Keep Up National Aboriginal Capital Corporations Association SLIDE 7

8 ACC Loan Growth Projection (high and low) 180% 170% 160% 150% 140% 168% 147% 130% 120% 110% 100% 90% F 2018F 2019F 2020F 2021F National Aboriginal Capital Corporations Association SLIDE 8

9 Cash Flow Model Example (All ACCs) Cash Flows Opening Cash & Equivalents 57,010,681 44,381,803 48,524,977 43,843,121 56,534,536 25,512, ,246 (19,986,988) (41,802,948) Cash Inflows F 2018F 2019F 2020F 2021F Working Capital (3,633,699) 555,522 (2,137,324) 5,356,178 (5,193,302) (386,985) (150,006) (621,639) (41,277) Cash Unavailable for Lending Loan Revenue Loans repaid in year 34,805,076 37,973,064 39,544,126 33,665,564 35,772,447 40,641,555 44,643,274 50,932,460 53,158,591 Interest on loans & investments 8,174,552 8,714,596 9,030,645 9,605,839 10,264,464 11,244,386 11,983,747 12,506,240 12,821,163 Other Cash Inflows 15,638,758 36,489,977 33,215,665 38,340,962 36,642,205 37,279,779 37,928,447 38,588,402 39,259,841 Total Inflows 54,984,687 83,733,159 79,653,112 86,968,543 77,485,814 88,778,735 94,405, ,405, ,198,317 Cash Outflows Capital Assets (net depreciation) (476,589) 407, , , , , , , ,941 Loans Provided 43,336,782 39,734,416 45,272,902 38,427,740 56,669,567 59,249,470 60,249,508 64,393,766 64,668,948 Other income statement expenses 24,753,372 39,447,714 38,790,342 35,692,495 51,555,063 53,951,453 54,650,554 58,528,915 58,774,374 Total Outflows 67,613,565 79,589,985 84,334,968 74,277, ,508, ,489, ,193, ,221, ,747,263 Calculated Net Change in Cash (12,628,878) 4,143,174 (4,681,856) 12,691,415 (31,022,491) (24,710,799) (20,788,234) (21,815,960) (18,548,946) Closing Cash 44,381,803 48,524,977 43,843,121 56,534,536 25,512, ,246 (19,986,988) (41,802,948) (60,351,893) ABFP ,780,002 37,413,740 39,117,015 39,777,249 42,513,324 42,695,001 Status Quo ABFP ,780,002 28,658,336 29,511,243 29,378,201 30,787,636 31,536,440 Incremental ABFP ,755,405 9,605,772 10,399,048 11,725,688 11,158,562 Cummulative incremental ABFP ,755,405 18,361,176 28,760,224 40,485,912 51,644,474 ADLA 0 0 3,142,628 3,501,684 5,149,973 5,394,427 5,480,699 5,859,928 5,885,161 Status Quo ADLA 0 0 3,142,628 3,501,684 3,955,504 4,073,225 4,054,862 4,249,396 4,352,748 Incremental ADLA ,194,468 1,321,203 1,425,837 1,610,532 1,532,413 National Aboriginal Capital Corporations Association SLIDE 9 Cummulative incremental ADLA ,194,468 2,515,671 3,941,508 5,552,040 7,084,452

10 Cash Balance Projections High Scenario National Aboriginal Capital Corporations Association SLIDE 10

11 The Ask Incremental Budget Cost over 5 years Scenario Loan Capital ABFP ADLA ACDP Total Low Midpoint High % funding increase for AFI programming National Aboriginal Capital Corporations Association SLIDE 11

12 GR Strategy Budget Cycle July: Central Agencies start to work with departments to develop strategies and options for the Minister of Finance to consider as part of the Budget Consultation Process September: Preparation of Departmental Budgetary Priorities Department of Finance starts to prepare the Budget Consultation Papers October: Pre-Budget Consultations by the Standing Committee on Finance begins with provincial finance ministers, the general public and stakeholders December: Tabling of Report on Pre-Budget Consultations by the Standing Committee on Finance February: Presentation of the Federal Budget March: Tabling of Main Estimates - sets out the allocation of resources to departments and programs National Aboriginal Capital Corporations Association SLIDE 12

13 GR Strategy - Engagement Key Federal Departments AFI relationship with senior public servants at INAC is longstanding Federal decision-makers to be targeted include INAC, ISED, ESED, Dept of Finance, Treasury Board, PCO and PMO Members of Cabinet Committee on Diversity and Inclusion Standing Committee on Finance Indigenous MPs Others AFIs key to engaging MPs and Provincial Ministries in specific regions National Aboriginal Economic Development Board Other Indigenous organizations National Aboriginal Capital Corporations Association SLIDE 13

14 Next Steps Finalize Business Case Present final Business Case NACCA Board Develop presentation and supporting materials Finalize GR/Engagement strategy and tactics Ensure INAC Support Implement Engagement Strategy Support AFIs in their engagements at the regional level as required Engage Assess Follow Up National Aboriginal Capital Corporations Association SLIDE 14