Western Economic Diversification Canada
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Program Impact Medium-term: Assistance with Development and Diversification
To the extent that CF resources allow, CFs have been involved in assisting with the development of community strategic plans and there is evidence that CF assisted businesses are active in a diverse range of economic sectors.
Assistance with Development
CF involvement in community strategic planning is meant to have an impact on development and diversification in the communities where CFs are active. CFs can either lead the planning or offer their advice and expertise to the planning process. All WD Program Managers and CF representatives interviewed agree that the CFs are involved (to some extent) in strategic planning activities within their communities. Through the case study, it was determined that the number of community planning events varies from one CF to the other. The case studies found that on average, CFs participate in 2 to 4 sessions annually. Interviewees reported that the level of involvement varies from one CF to the other and the role of the CF is dependant on the needs of the community. The CF survey demonstrates that the level of reported involvement does vary from CF to CF with the largest percentage (45%) of CFs reporting involvement in 1 to 4 activities over the last 5 years while others report being involved in more than 15 strategic planning activities over the same time period (see Figure 24 below).
Figure 24: Percent of CFS who Reported Planning, Leading or Facilitating Strategic Planning Activities over the Past 5 Years
91% of interviewees believe that the level of involvement of the CFs in community planning is appropriate given CF resources. Several individuals indicated that their CF was doing as much as they could with their current resource levels; more resources would result in greater involvement
Only a small percentage (14% = 155 respondents) of Client Survey respondents reported being knowledgeable about strategic planning in their community. They offered the following insights into CF involvement in strategic planning:
- 37% reported that their local CF was involved in the development of community strategic plans. 32% reported that the CF was not involved and 32% were unsure.
- 31% indicated that their local CF lead the development of the plan, 47% said the local CF did not lead the development and 22% were unsure.
- 58% thought the level of CF involvement in the development of strategic plans was appropriate, 23% thought it was not appropriate and 19% were unsure.
Based on the small number of clients who responded to this question, it is difficult to draw definitive conclusions but there is some indication that CFs are involved in strategic planning in some communities but not in others. When CFs are involved, they tend to lead the strategic planning and in the majority of instances (58%), the level of CF involvement is deemed appropriate. In some cases (23%), the level of involvement is not deemed appropriate but it is not clear from the survey whether more or less involvement would be appropriate.
The majority of WD program managers and CF representatives interviewed believe that there is a good level of implementation of the community development plans. However, several persons indicated that they were involved in the development of the plan but were not involved in the implementation phase; making it hard to assess the level of implementation.
84% of CFs surveyed indicated that they are sometimes or often involved in assisting with the development of community strategic plans. CFs reported being involved in 85% of the strategic planning activities that have occurred in their communities. CFs reported that 59% of the community strategic plans are implemented (see Figure 25 below). As part of the administrative data, WD tracks the number of planning activities where CFs are involved but does not track whether or not the plans have been implemented.
Figure 25: CF Reported Level, Involvement and Implementation of Strategic Planning
top of page95% of CF survey respondents think that CF organization activities are aligned with their community's strategic plans. 71% of Client Survey respondents think that their local CF activities support the community strategic plans. A small percentage (7%) of clients think that CF activities do not support the community strategic plan and 22% are unsure.
Diversification
Based on interviews and focus groups conducted, as part of the case studies, there is a general consensus that diversification occurred (i.e. number of industry sectors) as well as an increase in home businesses. Examples of new sectors include: alternative energy, film industry, information technology, pharmaceuticals, tourism and agri-tourism, and hospitality. However, the degree of contribution to economic diversification varied widely among CFs.
Client survey respondents reported being active in a diverse range of sectors. The highest concentration (15%) reported being involved in retail and trade and "other" services. The sectors in which businesses report being active range from accommodation and food services, to finance and insurance to oil and gas extraction (see Figure 26 below).
Figure 26: Sectors in Which CF Supported Businesses are Operating
When 2006 Statistic Canada percent participation rate for rural businesses by industry is compared to the percent of CF supported companies that are active in various industries, it is apparent that companies that have been involved with the CF program are more active in: retail trade, other services, professional/scientific and technical services, and accommodation and food services than other companies in rural areas of the West. Particularly noteworthy is the fact that 10.6% business that have been involved with the CF program are active in professional, scientific and technical services industry as compared to the Statistics Canada rural average of 4.14%. Having proportionately higher activity in this industry would suggest that the CF program is helping to support greater diversification and WD's innovation mandate. Further support is the companies that have been involved with the CF program are proportionately more active in information and technology and cultural industry and proportionately less active in traditional industries such as agriculture, forestry, fishing and hunting; and mining, oil and gas extraction sectors.
| Client Survey % Industries | Statistics Canada % participation* | |
|---|---|---|
| Retail Trade | 15.5 | 10.94 |
| Other Services (except Public Administration) | 14.9 | 5.05 |
| Professional, Scientific and Technical Services | 10.6 | 4.14 |
| Accommodation and Food Services | 9.5 | 6.96 |
| Construction | 7.6 | 8.55 |
| Manufacturing | 7.5 | 7.86 |
| Agriculture, Forestry, Fishing and Hunting | 7.2 | 9.88 |
| Arts, Entertainment and Recreation | 5.6 | 1.82 |
| Information Technology and Cultural Industries (e.g., media) | 4.8 | 1.33 |
| Transportation and Warehousing | 3.2 | 5.02 |
| Health Care and Social Assistance | 2.1 | 9.8 |
| Finance and Insurance | 1.9 | 2.51 |
| Educational Services | 1.8 | 6.55 |
| Mining and Oil and Gas Extraction | 1.7 | 5.25 |
| Wholesale Trade | 1.5 | 3.37 |
| Administrative; Support; Waste; Remediation Services | 1.3 | 3.24 |
| Management of Companies and Enterprises | 1.1 | 0.09 |
| Real Estate and Rental and Leasing | 0.9 | 1.61 |
| Other | 0.9 | |
| Utilities | 0.4 | 0.83 |
* Source: Statistics Canada- 2006 Census.
Long term census data, specific to the areas served by CFs in the four provinces, on labour force utilization by industry sector (Table 18 below) provides further indication that CFs may have contributed to economic diversification in their respective regions. For instance the percentage of labour force utilization in traditional sectors such as "agriculture and forestry", "retail", and to some extent "accommodation and food services" has been generally declining in all four provinces. This decline has occurred while the percentage of labour force utilization of the construction sector has been increasing in all the four provinces.
| MB CFs | SK CFs | AB CFs | BC CFs | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 1996 | 2001 | 2006 | 1996 | 2001 | 2006 | 1996 | 2001 | 2006 | 1996 | 2001 | 2006 | |
| 11 Agriculture, forestry, fishing and hunting | 17.1 | 14.8 | 13.5 | 25.3 | 22.8 | 18.8 | 13.1 | 10.6 | 8.3 | 9.0 | 7.9 | 6.9 |
| 21 Mining and oil and gas extraction | 1.7 | 1.6 | 1.6 | 3.1 | 3.9 | 5.1 | 6.8 | 7.0 | 9.7 | 1.6 | 1.3 | 1.8 |
| 23 Construction | 5.7 | 6.0 | 6.3 | 4.7 | 5.5 | 5.7 | 7.4 | 8.5 | 9.4 | 8.0 | 6.8 | 9.2 |
| 31-33 Manufacturing | 8.4 | 9.3 | 9.2 | 5.2 | 5.1 | 5.1 | 6.7 | 7.2 | 6.4 | 11.4 | 10.6 | 9.7 |
| 41 Wholesale trade | 4.1 | 3.5 | 3.2 | 4.2 | 3.5 | 3.3 | 4.4 | 3.8 | 3.8 | 3.5 | 2.8 | 3.0 |
| 44-45 Retail trade | 10.5 | 9.7 | 9.9 | 10.5 | 9.7 | 10.2 | 11.7 | 10.4 | 10.3 | 12.8 | 11.9 | 11.8 |
| 48-49 Transportation and warehousing | 5.1 | 5.3 | 5.4 | 4.3 | 4.7 | 4.7 | 4.9 | 5.3 | 5.0 | 4.5 | 5.1 | 4.9 |
| 52 Finance and insurance | 2.1 | 2.5 | 2.4 | 2.3 | 2.7 | 2.7 | 2.0 | 2.3 | 2.3 | 2.1 | 2.5 | 2.5 |
| 72 Accommodation and food services | 6.2 | 5.9 | 5.8 | 5.8 | 6.0 | 5.7 | 6.8 | 6.9 | 6.2 | 8.6 | 8.7 | 8.3 |
| 54 Professional, scientific and technical services | NA | 2.1 | 2.3 | 1.9 | 2.5 | 4.2 | 4.7 | 4.0 | 4.6 | |||
* Source: Statistics Canada 1996, 2001, and 2006 Censuses data specific to the areas served by CFs in the 4 provinces.
It is also important note that there are discrepancies in the definition and understanding of rural diversification by some CFs and by WD. According to some CFs, supporting any business to provide a service or a product that did not exist in the community before is considered diversification; while this may not be true according to WD vision of diversification (e.g. value-added industries; innovation, high technology etc.). In both situations, the above results indicate that CFs have, to some extent, contributed to economic diversification. However, the degree and nature of contribution differed from one CF to another.
Program Impact Intermediate Community Capacity
CFs believe they are active in strengthening community capacity. There is some evidence to support this (increase in # of partnerships) but some evidence against (decrease in volunteer hours).
99% of CF survey respondents agree that the CF Program helps strengthen community capacity. Over half of the clients surveyed (53%) believed that their local CF has been somewhat or very successful in strengthening community capacity; a number reported that they did not know (38%). The case studies reveal that the degree of involvement in community capacity building varies across the 10 CFs that were reviewed and that, generally speaking, CFs played a greater role in more rural and/or remote areas. Participants at the 10 focus groups indicated that CFs are the thread that ties the community together in both strong and weak economic conditions. The case studies also provides examples of initiatives where CFs helped enhance community capacity by partnering with several organisations, including educational institutions, to support and/or develop a variety of programs and training workshops.
External Stakeholders, WD program managers and the CFs sample believe that CFs are active in strengthening community capacity. WD senior managers were less convinced. The following are stated as ways in which community capacity is strengthened:
- Through building successful partnerships with partners in the communities;
- Through assisting SMEs in many of their projects through loan and/or training;
- By supporting and planning a variety of development projects (i.e. strategic planning exercises; feasibility studies; marketing tools for the region for the purpose of business and tourists attractions); and
- By creating business plans that result in successful applications.
As noted in previous sections, there is evidence that: the CF program is helping to build partnerships with persons in the communities; CFs are assisting SMEs with loans, referral and counselling services that clients find useful; and, CFs are involved in supporting and planning a variety of development projects. Evidence is lacking to support the fact that CFs are assisting with business plans that result in successful application due to the fact that the CFs are not collecting this information in their performance measurement system.
The level of volunteerism was defined by the evaluation's national advisory committee as a proxy indicator related to community capacity building. The degree of correlation between community capacity building and the number of volunteer hours has not been established. Volunteer hours are primarily a reflection of the amount of time board members and other partners from the community spend on CF related work. The administrative data reveals that the total number of volunteer hours has dropped from a peak in 2004/05 of 116,000 hours to 73,304 hours in 2007/08. BC has noted the most significant drop in reported volunteer hours over this period of time. WD believes that this decrease is associated with an increased level of scrutiny of administrative data rather than an actual decrease in number of volunteer hours. Although decline was observed before the new system was introduced (see Figure 27 below).
Figure 27: Reported Number of Volunteer Hours in Administrative Data
Program Impact Long-term
There is a general belief that the CF activities have had positive long-term outcomes on the clients and communities they serve; including having an impact on the survival rate of businesses and the viability of communities. There is limited data available to support this belief.
In general, WD senior managers and program managers could express their opinion on the long-term impacts but were unable to refer to evidence to support their beliefs. Their impressions are as follows:
Survival of businesses assisted by CFs - Senior Managers all mentioned that survival rates of businesses are not tracked, making it difficult to determine the level of impact. Program Managers agree that is it not tracked but they do think this is an area where the Program is having an impact.
Sustainable communities - Senior Managers and Program managers all had varied interpretations of sustainability (some have an environmental view whereas other have a broader view). Inconsistent answers were provided because of this.
Diversification and development of local rural communities - Senior Managers are less convinced that the CF Program is having an impact in this area due to the size of the program. WD Program Managers believe the CF Program is having an impact in this area.
Economic growth and stability - Strongest agreement that this is an area where the CF Program is having an impact
Clients and CFs were asked, using a 5-point scale (where 1 = strongly disagree and 5 = strongly agree), to what extent they agree that the CF program is having an impact on the long-term outcomes of the CF program. CFs had a greater tendency to agree or strongly agree that CF program was having an impact than did clients (see Figure 28 below).
Figure 28: CF and Client Belief that CFs
Contribute to the Long-term Outcomes of the CF Program
Focus groups discussions conducted in 10 CFs further corroborate these findings. Participants at the 10 focus groups indicated that CFs have played a significant role in enhancing the sustainability of their communities as well as contributing to economic growth and diversification in local communities.
The evidence presented in the short-term and medium-term impact sections of this report would suggest that there is reason to believe that the CF program could be having an impact on the long-term outcomes; particularly as it relates to diversification of local communities (Figure 25 and tables 17 and 18)) and community economic development (Section 4.1.5). It is reasonable to believe that the loans, advice and support provided to new and existing businesses is increasing their survival rate but administrative data is lacking to corroborate this expectation.
An analysis of Statistics Canada labour market data reveals that on key economic indicators (rates of unemployment, labour participation rates, and average household income) rural communities continue to lag slightly behind provincial averages (Tables 19, 20, and 21). The exception is AB, where rural rates of unemployment are slightly lower (Tables 19), reflecting the booming of the oil and gas extraction industries in rural Alberta. Similar to the provincial average, unemployment rate in the rural areas served by CFs dropped significantly during the 1996-2006 period (Table 19).
In terms of participation rate, rural areas served by CFs followed similar trends to those of the province (i.e increase in MB, SK, and AB and decrease in BC during the 1996-2006 period).
Overall average household income in rural areas served by CFs is lower than that of the province average. However, the average increase over the 1996-2006 period is significantly higher in rural areas served by CFs than that of the province, except in Saskatchewan where the average increases are very comparable.
| Rural* | MB | SK | AB | BC |
|---|---|---|---|---|
| 1996 | 7.5 | 6.9 | 6.7 | 11.2 |
| 2001 | 6.6 | 6.1 | 4.9 | 10.6 |
| 2006 | 5.9 | 5.8 | 4.1 | 7 |
| Period Average | 6.7 | 6.3 | 5.2 | 9.6 |
| Average % change | -11.3 | -8.3 | -21.6 | -19.7 |
| Province | MB | SK | AB | BC |
| 1996 | 7.9 | 7.2 | 7.2 | 9.6 |
| 2001 | 6.1 | 6.3 | 5.2 | 8.5 |
| 2006 | 5.5 | 5.6 | 4.3 | 6 |
| Period Average | 6.5 | 6.4 | 5.6 | 8.0 |
| Average % Change | -16.3 | -11.8 | -22.5 | -20.4 |
* Rural means average for communities with a CF
| Rural | MB | SK | AB | BC |
|---|---|---|---|---|
| 1996 | 65.9 | 66.1 | 72.8 | 65.7 |
| 2001 | 66.2 | 66.7 | 73 | 64.2 |
| 2006 | 66.2 | 67.3 | 74 | 64.1 |
| Period Average | 66.1 | 66.7 | 73.3 | 64.7 |
| Average % Change | 0.2 | 0.9 | 0.8 | -1.1 |
| Province | ||||
| 1996 | 66.3 | 67.3 | 72.4 | 66.4 |
| 2001 | 67.3 | 67.8 | 73.1 | 65.2 |
| 2006 | 67.3 | 68.4 | 74 | 65.6 |
| Period Average | 67.0 | 67.8 | 73.2 | 65.7 |
| Average % Change | 0.8 | 0.8 | 1.1 | -0.6 |
| Rural | MB | SK | AB | BC |
|---|---|---|---|---|
| 1996 | $40,632 | $40,310 | $49,787 | $46,879 |
| 2001 | $44,640 | $46,243 | $58,730 | $51,297 |
| 2006 | $55,356 | $55,145 | $81,997 | $60,943 |
| Period Average | $46,876 | $47,233 | $63,505 | $53,040 |
| Average % Change | 16.9 | 17 | 28.8 | 14.1 |
| Province | ||||
| 1996 | $50,943 | $42,685 | $58,165 | $58,738 |
| 2001 | $50,756 | $49,068 | $64,199 | $57,593 |
| 2006 | $60,242 | $59,455 | $84,368 | $67,675 |
| Period Average | $53,980 | $50,403 | $68,911 | $61,335 |
| Average % Change | 9.2 | 18.1 | 20.9 | 7.8 |
Any changes to these economic indicators cannot be directly attributed to the CF program particularly with so many complimentary organizations active in these rural communities. What the labour market data can reveal is whether in general rural communities are remaining economically viable, improving or declining. A sharp decline or increase in disparity between rural and provincial averages would suggest that the suite of programs being offered is not effective or having the desired impacts.
The labour market data does not indicate that there are any noteworthy differences between rural and provincial averages. It is therefore implied that the suite of programs active in rural communities is having the desired impact. In the needs section of this report, it was noted that CF program clients expressed a strong need for this program. The case studies found that the program is particularly useful in more rural and remote areas. On average rural communities are relatively viable. However, there are individual communities that are not. For example, there are some rural communities where the unemployment rates are above the provincial average and are as high as 29.5% in MB, 26.8% in AB, 17.7% in SK, and 15.6% in BC (2006 census data). Similarly, there are some rural communities where participation rates are as low as 36.4% in MB, 51.8% in AB, 53.8% in SK, and 55.5% in BC (2006 census data). Average household incomes in some rural communities are as low as $25,035 in MB, $35,962 in AB, $45,340 in SK, and $47,645 in BC (2006 census data). It is probably in these communities where the CF program will continue to have the greatest impact.
It is also important to highlight that, as some CF managers interviewed indicated, the strong provincial economy does not benefit all CFs in the province equally. In fact, most of the growth occurs in cities (e.g., Calgary, Edmonton) and specific rural areas (e.g., Fort McMurray). The same source further indicates that, in some instances, strong economic growth is detrimental to some CFs due to out-migration from the community in search for higher paid-jobs. This trend creates a severe labour shortage and endangers the sustainability of the community as a whole. Hence, there is a need for CF services in these affected communities to support business and community economic development to create jobs, reduce out-migration and contribute to sustainability of the community.
Program Impact Long-term - Unintended Benefits
Persons interviewed were asked to explain whether anything unexpected has happened as a result of the CF program. A number of unintended benefits were described.
The following is a list of the some of the positive outcomes:
- Great level of collaboration with partners, provinces, etc.;
- The positive degree of volunteer support;
- Positive response/great level of trust from the community;
- The level of success of businesses assisted by the CF Program;
- The increase of knowledge with regards to the Aboriginal world;
- The positive significant impacts on local tourism;
- The great impact on community leadership;
- The increase in "regionalization";
- The level of emotional impact that the program has on people;
- The level of impact on young professionals;
- The program has given the federal government the opportunity to develop working relationships with thousands of volunteers in rural communities. The program is a powerful window into rural Canada; and
- The continued relevance of the Program after 25 years.
Some of the unintended benefits identified in the case studies included:
- CF being contracted to deliver other federal programs and initiatives (i.e. Softwood Lumber; Pine Beetle; Service Canada programs);
- Large and diverse partnerships with the province, federal government, municipalities and in some instances with schools;
- High success rate of the businesses (start ups) funded through CF (about 90% success rate-quite high as compared to national average)17 . As CFs are considered high risk lenders (high risk loans) the success rate speaks to the competence and knowledge of the local board and staff;
- Attraction of larger retail and departmental stores such as WalMart;
- Support of new sectors such as pharmaceuticals and high technology; and
- Changing the mindset of the communities with enhanced coordination and collaboration.
Unintended negative impacts mentioned in the case studies include: the reluctance of some communities to collaborate; and a rise in the cost of living in communities that experience economic growth that makes the community unaffordable for some residents.
RECOMMENDATION 5:
WD needs to further define the indicators associated with the long-term outcomes (particularly sustainable communities and survival of businesses assisted) of the program and ensure that data is being tracked against the established indicators.
RECOMMENDATION 6:
Subject to WD preparing a plan to implement the other recommendations in this report, WD should continue its support and long term commitment to the three services provided by the CF program
