Canada’s planned construction, energy, and defense projects could create significant opportunities for businesses, but smaller companies can be ruled out as participants. A study by the Business Development Bank of Canada, published on October 6th, suggests that these projects could draw in an additional $670 billion in investments by 2030. Challenges with financing and procurement can limit the capacity of firms to benefit from the projected growth.

A report created by the Bank, in cooperation with the Transition Accelerator, highlights the importance of housing and social infrastructure, with the projected investment of $220.1 billion. Energy projects represent another $159.8 billion, followed by national defense at $153.7 billion. Mining and natural gas account for $125.8 billion, and artificial intelligence data centers at $11.2 billion. The identified investment areas host significant business opportunities, but they are conditional on the availability of resources for their development.

The study estimates that the additional investments could create an additional $443 billion in business-to-business economic activity for Canadian businesses. In essence, it means that there will be opportunities not only for the organizations that will construct the identified infrastructure projects. Overall, the study suggests that approximately a quarter of a million businesses will be needed to support the projected projects.

Despite the opportunities that the projected investments offer, there are challenges facing small businesses and medium-sized enterprises (SMEs). Companies may find themselves unable to finance their share of the identified projects and will be unable to participate in their development. Additionally, procurement practices of larger firms can limit the opportunities for smaller businesses to get contracts.

The businesses that are currently working on large projects are likely to expand their operations to include additional suppliers. In the study, 67% of the respondents that were SMEs suggested that they would increase their spending on such projects within the next two years. This statistic highlights the expectations of the businesses that are already participating in the large-scale projects, rather than a projection for all small businesses in Canada.

According to the report, the projected increase in investment would lead to a 4.1% increase in the GDP. The report states that the increase would come compared to the business-as-usual scenario. It compares the economic outcome in case the large infrastructure projects are realized to the alternative outcome in case no additional investments are made. As such, the 4.1% is not an annual increase but a cumulative increase by 2030.

The opportunity that was identified for Canadian businesses is one of scale but it comes with challenges. The identified benefits for smaller enterprises are conditional on their capacity to finance larger contracts and to acquire additional resources. Facilitating the access of smaller firms to additional funding and contracts will create additional business opportunities and will contribute to the projected increase in GDP.

Sources