An independent review of the Northwest Territories' Business Development and Investment Corporation (BDIC) has concluded that the organization has too many managers and spends too much money delivering its programs.
The BDIC was established ten years ago to promote small business development in the Northwest Territories through loans and investment. A review of the Government of the Northwest Territories' corporation was completed in March 2013 by Yellowknife accounting firms Biswanath Chakrabarty & Co. CGA and Mackay LLP, as well as Toronto-based Cathaxis Consulting.
The government was critical of the initial review, saying it incorrectly compared the BDIC to commercial, rather than government institutions; and that it didn't include a large enough sample of BDIC clients. It ordered a second review that ended up being less critical.
However, others say the initial review accurately reflects how bloated and ineffective the corporation is.
The first review described BDIC operating costs as "extremely high." The corporation spent between 26 and 57 cents for every dollar it loaned to small businesses. In addition, the costs per job created by subsidiaries of the BDIC has climbed fairly steady since it was created — up to $43,498 per job in the last year.
The review found the BDIC spends between 12 and 30 times more than commercial banks in order to manage the loans it gives out.
"If they were a real business, instead of a Crown corporation that doesn't seem to be accountable to anyone, those numbers would be much smaller," says Mike Bradshaw, Executive Director of the Northwest Territories Chamber of Commerce.
"Have you looked at how many people they employ? It's astronomical for the amount of loans that they give out and accounts they oversee."
Part of the reason for the high costs, according to the review, is that the BDIC is top-heavy. It has 15 to 16 full-time employees, almost half of them managers.
Government says study flawed
Minister of Industry, Tourism and Investment David Ramsay, who is responsible for the BDIC, says the review didn't use the proper methodology, didn't include interviews with some staff and didn't get a good response on a survey of corporation clients. The review was re-done, again by Biswanath Chakrabarty & Co. CGA, at a cost of $66,000.
However, Ramsey did acknowledge the high number of managers in the department, explaining that there were "human resource issues related to the reasons why there are a number of managers in that organization.
"When people come over in a certain position," says Ramsay, "there's a requirement that they maintain that position, or at least that level of position that they had with the Government of the Northwest Territories."
Also highlighted in the report was the BDIC's lack of performance measures. Currently, it does not measure the effectiveness of its programs, with one exception. Ramsay says the BDIC agrees with that recommendation and is working to develop "a more comprehensive and effective performance management system."
Finally, the report recommended that the territorial government could save money by dissolving the BDIC and farming its services out to other government organizations and financial institutions. However, Ramsay says that's not going to happen.