Tribal Lending and the Economic Diversification of Reservations
Over the past decade, the United States has seen migration patterns focus heavily on urbanized areas and megaregions. Between 2010 and 2014, rural areas lost an average of 33,000 people each year. As it stands, 72% of America’s land area is only inhabited by 14% of its people. In the western states, where the majority of Native American reservations and tribal communities are located, 89% of people live in metropolitan areas, a rate of urbanization that equals the Northeastern U.S. (89%) and outpaces the Midwest (70%) and South (73%). Higher concentrations of people equate to higher concentrations of jobs in urban areas. In Washington State, half of all jobs are located in two counties that help make up the Seattle-Tacoma-Bellevue metro area.
What few jobs remain in rural areas are not helping to grow and sustain their communities. Many rural counties out West have experienced negative or limited job growth over the past decade. Poverty levels on reservations are among the highest in the nation, and the unemployment rate often far exceeds the national average. Educational attainment also lags far behind major urban population centers. Studies link poor economic outcomes with an increase in mental health issues. For a group that reports alcohol and substance abuse problems at higher rates than the national average, improving economic productivity in tribal communities is vital to the financial and physical health of tribal citizens.
While most any type of economic development would be welcome in tribal communities, it is important that tribal leaders encourage and promote responsible and sustainable industries on tribal lands to ensure productivity and resiliency for future generations. Native Americans possess a deep connection to our homelands; younger generations feel compelled to stay on the reservations and help the community. Freely moving from city to city in search of jobs is simply not an option.
The permanency of tribal communities and growing need for jobs echoes the importance of building diversity into reservation economies. Just as biodiverse ecosystems bring enumerable benefits to the environment and humans, diverse economies can adapt to fluctuating markets and build a varied job pool for candidates with different levels of skills, education, and experience. Unlike municipal and state governments, tribal government possess a unique advantage in economic development efforts: the tribal government can create and operate its own enterprises, allowing profits from those ventures to be used directly for government services and programs.
Indian casino revenues now reach almost $30 billion annually. Unfortunately, less than half of the 567 federally-recognized tribes in the United States operate casinos, and an even smaller percentage turn any meaningful profit. In order to lift up tribal nations and insulate communities from industry downturns, more economic diversity is needed in Indian Country.
Financial services offer an excellent opportunity for tribes to expand their business holdings, add jobs and fund government activities. Tribal lending entities (TLEs) encompass a wide array of services- customer service, underwriting, collections, operations management- each with their own unique employment needs and requirements. Further, TLEs that follow the business creation and regulation model outlined in NAFSA’s Best Practices are establishing the types of governmental regulatory consistency necessary for entrepreneurial growth in tribal communities. NAFSA members are helping build more resilient and sustainable economic development opportunities in Indian Country.