ImpactAlpha, August 17 – What do Zimbabwe, Central African Republic and Navajo Nation have in common? They’re all ranked among the hardest places in the world to do business.
Lack of access to land, property and finance, and inadequate dispute resolution processes, means Navajo Nation, which spans Arizona, New Mexico and Utah, ranks with the bottom 15% of countries for starting and running a business, according to a new report from Native-led business incubator Change Labs and program evaluator Casual Design.
“Doing Business on the Navajo Nation” is the first comprehensive survey of the business environment on a Native U.S. territory. The organizations used the World Bank’s Doing Business framework to analyze the business environment on the U.S.’s largest Indian reservation.
“We had suspected the ranking would be low, but not as low as the bottom 15%,” Change Labs’ Heather Fleming told ImpactAlpha (see, “Bringing global social innovation home to the Navajo Nation”). “We’re on par with some of the more challenged African nations.”
Among the report’s key findings: Accessing land on the Navajo Nation requires four times as many procedures and takes six times as long as off the reservation. Getting access to electricity takes 6.5x as long and costs 4x more. Resolving commercial disputes can take up to two years.
“The land issue is the root cause of a lot of this,” said Fleming. She suspects that other Native territories face similar challenges, owing to the difficulty of accessing land for business registration. “If everybody has that issue, then they probably have every other issue too.”
Access to land
On Navajo Nation, the matter of registering a lease or business location is complicated by an unmapped patchwork of different land types, all of which have different processes and administrators. Often, businesses end up registering in border towns, like Cortez, Colo.
A digital map of land types would address a critical land access challenge, noted Fleming. Change Lab and Casual Design also advocate reducing the reviews for business leases and speeding the site leasing process.
Change Labs, an advocate for entrepreneurship, is petitioning for U.S. Congressional funding to clean up several vacant, contaminated buildings located on prime real estate in Tuba City, Ariz., which would give businesses space to grow into.
Accessing finance, enforcing contracts
Lack of access to finance is a significant barrier for business owners on Navajo Nation, though the environment ranks well in terms of consumer protections. Change Labs, in partnership with credit union Nusenda, has helped disseminate $170,000 in COVID relief funding for struggling businesses.
Another issue, which Fleming says gets insufficient attention, is Navajo business owners’ difficulty in enforcing contracts. Navajo Nation ranks in the bottom 5% worldwide on the issue, owing to a backlog of cases in local judicial courts, long waiting periods between hearings, and limited availability of experts and delays caused by the expert’s activity.
“If you can’t enforce a contract or resolve a dispute, being a business owner exposes you to so much risk,” Fleming said.
The path forward
The Navajo Nation could better leverage technology for essential business functions more generally, the report finds.
Added Fleming, “Now that we have the problem defined, we can begin to explore new partnerships and new solutions to address the problem.”