Entrepreneurship on Tribal Lands

by Elsie Meeks, Executive Director, First Nations Oweesta Corporation

The Lakota Prairie Ranch Resort, under construction near Kyle, South Dakota, is the first motel on the Pine Ridge Reservation.

The Pine Ridge Indian Reservation in southwestern South Dakota, home to the Oglala Lakota (Sioux), is one of the most hauntingly beautiful places on earth. Its varied landscape ranges from rolling grassy hills to deep, forested canyons, to the castle-like peaks, gullies, buttes and wide prairies of the Badlands. The reservation covers an area of 3 million acres, roughly the size of Connecticut.

However, it is also one of the poorest places in the United States. The decimation of the great herds of buffalo in the late 1800s was followed by confinement to the reservation by federal policy. Although much of the Lakota culture and sense of ancestry remains, this effectively ended the Lakota peoples’ lives as a self-sufficient nation. As a result, the Oglala Lakota people have one of the lowest life expectancies of any group of people living in the United States. Fifty-two percent of Pine Ridge’s 30,000 residents live below the poverty line, compared with 13 percent statewide. Of the various government experiments attempted over the past 100 years to build the economy of the Lakota people, not one has succeeded.

In 1985, tired of the government’s top-down approach, Lakota people from across the reservation decided to take things into their own hands. During an economic development planning summit, ideas to address unemployment and the lack of private businesses on the reservation began to emerge. Out of this summit, the Lakota Fund, the first Native community development financial institution (CDFI), was born with the mission of creating a private-sector economy through financing and capacity-building for entrepreneurship development. Aided by the First Nations Development Institute’s Oweesta Program, the Lakota Fund began lending in 1986.¹

Myriad challenges

The challenge was much greater than anyone expected. After several years of lending, a study revealed that 85 percent of the Lakota Fund’s borrowers had never had a checking or savings account; 75 percent had never had a loan; and 95 percent had never owned a business. Added to this was a complete lack of business experience. Since there were only a few private businesses on Pine Ridge when the Lakota Fund was started (and most were owned by non-tribal people), few people had even had the chance to work in a business.

The Lakota Fund itself faced organizational challenges as it undertook difficult programs without local networks of support and without the ability to hire the experienced, knowledgeable staff that might be found in an urban setting. It had to begin with baseline development of not only staff and board, but also with an introduction of private sector business principles to the Lakota community. Most of the people who wanted to start a business were first-generation entrepreneurs.

Indeed, when the Lakota Fund first started, people found themselves wondering if being in business meant that they were forsaking their culture. Business ownership had not been a part of their history, as Lakota people had been nomadic hunters and gatherers. There also was a perception that businesses should be owned by the tribal government instead of by individual entrepreneurs. This perception persisted even though all of the tribally-owned businesses at Pine Ridge had failed.

In addition to the ambivalent perception of business ownership, there was a need to teach people about credit and the importance of repaying loans. Because of the grant-welfare mentality and poor performance of Bureau of Indian Affairs credit programs, people had to adjust to the knowledge that loans must be repaid. Changing mindsets about the role of private business ownership on an economy, and the accountability of borrowers, became the Lakota Fund’s first goal. The second was to teach simple financial literacy.

Despite these enormously challenging circumstances, during its 20 years of operation the Lakota Fund has approved approximately 600 loans, mostly in the range of $1,000 to $75,000, for a total of over $3 million. It also has provided countless hours of technical assistance, training and marketing services to more than 1,600 arts and crafts microentrepreneurs.

The Foodstop Café in Kyle, S.D., grew with the help of loans and technical assistance from the Lakota Fund. Carol and Buzzy Ferguson are pictured.

The June, 2003 South Dakota Business Review noted that since 1985, real per capita personal income growth in Shannon County (encompassing the Pine Ridge Reservation) outpaced that of South Dakota as a whole, with growth rates of 80 percent and 44 percent, respectively. Growth in real per capita earnings for Shannon County was 92 percent, compared to 73 percent for the state. Shannon County’s employment growth of 80 percent during the 1990s was the second fastest of all South Dakota counties.

These changes came about one small business at a time. Crazy Horse Construction grew from one part-time subcontractor to a multi-million dollar company. Big Bats Convenience Store also has over $1 million in revenue. Both of these businesses have contributed significantly to the decline in unemployment, but there are numerous other smaller businesses that together have made a tremendous impact.

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¹The First Nations Development Institute is a policy, research, grantmaking and lending institution. Its Oweesta Program, which became the First Nations Oweesta Corporation in 1999, works with Native financial institutions and financial education providers to provide capital for Native development efforts.