Manitoba Liberal Leader Dougald Lamont announced today a Manitoba Liberal government will create a publicly-owned Manitoba Business Development Bank (MBDB) as the cornerstone of their economic growth strategy.
Lamont said the MBDB is needed because many businesses and entrepreneurs in Manitoba have trouble getting access to capital and have to take out costly loans instead or even have to mortgage their house to secure financing.
While the business community has been calling for action on improving access to capital, but the Pallister government has frozen and cancelled programs instead.
“A Manitoba Business Development Bank is one of the simplest and most powerful ways we can take our economy to a new level,” said Lamont. “Manitoba has incredibly talented inventors, innovators and entrepreneurs, and the MBDB is the key to unlocking their full potential.”
The MBDB will:
– Provide investments in growth-focused Manitoba businesses, including start-ups, scale-ups, co-ops, social enterprise, and farming;
– Include microfinance ($2,000-$5,000) up to larger investments in the $10-million range;
– Provide equity investments as “patient money” over a 10-15-year time horizon, to encourage true innovation;
– Be politically independent;
– Be province-wide and available to entrepreneurs whether they are in Winnipeg, rural or northern Manitoba, or on a First Nation.
Lamont said there are many examples of successful publicly-owned banks. North Dakota has its own bank, and Alberta has ATB. The bank currently being established by Scotland could also serve as a model for Manitoba.
The start-up costs would be $78 million in the first year. The goal is that in the medium term, the MBDB will be self-financing from return on investment.
In addition to loans with interest, the MBDB will also focus on patient, long-term investments to help Manitoba businesses grow and innovate. This will be achieved by providing “equity investments” – buying shares in a company, instead of always making loans.
Liberals said providing equity provides multiple benefits to entrepreneurs, the economy, and the public. For the entrepreneur, equity means they do not face monthly interest and debt repayments, reducing risk and making success more likely, while also making it easier to raise further investment. If the business is successful, the bank gets paid in dividends or can sell the shares at a profit so the public gets a direct return on their investment.
For that reason, the MBDB is an alternative to the “corporate welfare” that governments often engage in where grants, tax cuts, and tax credits worth millions are handed out without clear benefits or return to the public.
Lamont pointed to the Pallister government’s decision to offer $1.7 billion to Amazon as an example of everything wrong with Manitoba’s economic impulsive and directionless development strategy.
“Imagine if Pallister were willing to invest that kind of money in Manitoba, instead of offering corporate welfare to the world’s richest man,” said Lamont. “We see the MBDB as a form of grassroots economic development. It is about stronger Manitoba businesses, better Manitoba jobs, and creating an economy that works for everyone.”