For Ninth District Indian reservations, economic development means independence and self-reliance

David Fettig | Editor

Published July 1, 1992  | July 1992 issue

There are over 150,000 American Indians living on or near 45 reservations in the Ninth District—and reservation populations are on the rise. Those reservations, ranging in size from 1 square mile to over 4,200 square miles, comprise a total of about 33,000 square miles, roughly the size of Indiana and about 8 percent of district land. Taken together, the reservations would seem to pack a powerful economic punch.

But the reservations are not joined, neither by geography, economy nor, necessarily, by culture. Geographically, Ninth District reservations range from the sparseness of the Plains states to the bucolic lands surrounding the Great Lakes. Economically, while some reservations rank with the poorest areas of the country, others have virtually wiped out poverty since the advent of gambling casinos, and still others are operating multi-million dollar manufacturing plants.

Also, the assumption that one tribe is culturally the same as another tribe simply because they are both American Indian is like assuming that Spaniards are the same as Germans because they are both European, says Karl Stauber, vice president at the Northwest Area Foundation, a St. Paul-based philanthropic organization that is active in Indian economic development issues. He says that northwestern America, inclusive of the Ninth District, contains more than 70 different Indian cultures.

New SBA office formed to promote American Indian economic development

An informal sampling of reservations in the Ninth District found that most are discussing ways to encourage private entrepreneurship in addition to increasing and expanding tribal ventures. To that end, Pete Homer Jr. hopes he can be of assistance. Homer was appointed earlier this year to direct the Native American Affairs Office of the Small Business Administration (SBA) in Washington.

The newly formed SBA Native American office is the first time SBA has opened an office explicitly for Indian business, and Homer says that as well as serving as a resource and planning center for Indian business, he wants his office to work as an advocate of Indian economic development. "I want it to be known around the country when a business gets a loan and is rated," by SBA, Homer says. "That's a heck of an accomplishment," he says, considering the agency's extensive approval process.

Homer is infectiously upbeat about the future of economic development on the nation's reservations, which, after years of almost exclusive government dependency, have been making relative strides into the business world. He lists tribal construction and ownership of a new hotel in Santa Fe, resort ownership by tribes in the Northwest, tribal manufacturers in Montana and North Dakota and, of course, casino gambling.

Homer views casinos as a means for future economic development and he hopes that development is based on a new measure for success: profits, not necessarily jobs. Too often, he says, many reservations understandably have immediate job creation as their main goal. But because many reservation businesses are operated by tribal governments, the goal of job creation is sometimes politically motivated, he says. More important than jobs is the long-term financial viability of a business; the jobs will follow, he says.

One of the long-standing economic development issues that tribes and individual Indians have had to contend with is the scarcity of capital for reservation investment, and Homer hopes his SBA office can be of assistance in that regard. "I know a lot of Indians out there that want to go into business. They've got the experience, but they don't have the capital."

Financial institutions are often reluctant to lend on the reservation because much reservation land is held in trust and it cannot be used as collateral. Also, because of jurisdictional questions, non-Indian businesses often cannot collect on bad debts within reservations. The Lakota Fund, a micro-enterprise loan fund developed on the Pine Ridge Reservation in South Dakota, was formed to address the problem of capital inadequacy.

Private development encouraged, with emphasis on cultural values

Lack of capital is part of the problem, acknowledges Sherry Salway Black, vice president of the First Nations Development Institute, a private organization based in Virginia that is working to promote and expand economic development on the nation's reservations. But beyond capital, another major concern for tribes is the ownership status of reservation land.

Between 1887 and 1934, in an effort to open reservation lands to development, Congress—under the Dawes Act—allowed non-Indians to purchase reservation land that was not specifically allotted to an individual Indian. Also, non-Indians were allowed to purchase Indians' allotments, and many were sold unwittingly. Because of that era, about 80 percent of the nation's reservation land is "fractionated," according to Black; that is, the land is owned by both tribal members and non-Indians, as well as by many of the descendants of the original purchasers, making development almost impossible because of multiple ownership.

"The Dawes Act is the most devastating piece of legislation that still affects us today," Black says. Reservation land consolidation is at the forefront of First Nations' efforts. Other First Nations' projects include numerous funding and marketing plans for reservations throughout the Ninth District, as well as sponsorship of a graduate business program through the Carlson School of Management, University of Minnesota. Under the program, students are required to work for a reservation following completion of the degree program.

This spring, students sponsored by First Nations presented a panel discussion on the issue of Indian women in business. One member of the panel, Gae Veit, owner of Shingobee Builders of Loretto, Minn., said one of the biggest reasons for her success was an informal network of Indian-owned businesses that met regularly to provide support and information. That network grew to become the Minnesota American Indian Chamber of Commerce, and Veit now serves on its board of directors.

One element that all panel members discussed was the importance, both for Indian individuals and for their businesses, to retain their sense of cultural identity. First Nations adheres to that philosophy, according to Black. The Institute, which—as part of its mandate—receives no federal funding, was founded in 1981 on the principle of local vs. federal control and cultural values over purely economic considerations.

A recent survey by First Nations of America's tribes revealed that most prefer a "holistic approach to development, which is culturally appropriate and ecologically prudent and which encourages human development as it fosters capital development," according to the Institute's Business Alert. For example, while the Bureau of Indian Affairs (BIA) wants to use toxic herbicides to control leafy spurge, a noxious weed that has taken over a large section of productive range land on Montana's Fort Belknap Reservation, local tribal officials want to use the tribe's sheep to eat the plant and reduce its threat.

This move to greater local autonomy of reservation business has been occurring over the past 10 years as tribes try to distance themselves from traditional BIA control, Black says. And that desire for local autonomy, with its emphasis on tribal values, is more than just a nod to cultural preservation, it is the foundation for economic independence, according to Terry Anderson, professor of economics at Montana State University in Bozeman and senior associate with the Political Economy Research Center (PERC), a Bozeman-based institute of public policy analysis.

PERC recently published a series of papers on the subject of property rights and Indian economic development, and research shows that there is a link between cultural values and successful economic development efforts. One paper, by Stephen Cornell and Joseph Kalt, from PERC's Property Rights and Indian Economies, shows that many of the most economically developed Indian reservations are those that have retained their historical tribal organizations and values.

Traditional studies of Indian development by non-Indians have "tended to view cultures other than Western cultures as obstacles to development," the authors write. But a study of American Indian cases shows that culture is a critical factor of success, according to the authors. "This suggests that tradition and culture can't be ignored," Anderson says.

In addition to capital formation and fractionated land, another development hurdle for many reservations is their geographic location, according to Michael Bongo, director of Community Outreach for Grand Metropolitan of Minneapolis. This is especially true of many Upper Midwest reservations, he says.

Bongo, a member of the Leech Lake Indian Reservation in northern Minnesota, led a group of Grand Met officials to the reservation late last year to discuss the feasibility of a food processing plant on the reservation. Eventually, despite the tax breaks that the reservation could give because of its sovereign status, Grand Met had to forego plans for a plant because of high transportation costs, Bongo says. Raw materials would have to be shipped long distances onto the reservation, and the finished product would be far from a major retail or transportation center.

But despite this failed attempt at reservation development, Bongo, who directs Grand Met's training efforts for low-income, inner-city workers, believes that there is much hope for reservation economies—and the key will be improved training and education on the reservation. Bongo recalls that in his youth, training often meant learning a trade or skill that had little application on the reservation. Today, tribal colleges are offering broader training, including emphasis on business and entrepreneurism.

First Nations' Black also says that tribal colleges are crucial to American Indians' future. "They are the most important social change element on the reservations," she says. Black is especially complimentary of the many tribal colleges that lie within the Ninth District, adding that they will not only lead their own reservations in the future, but their expected successes will likely impact reservations across the country.