PROGRAM: DATE:  SEPTEMBER 23, 1998, 9:40 a.m.
MORNING EDITION     

 STATION OR NETWORK: TIME:
NATIONAL PUBLIC RADIO
 

WELFARE & THE NAVAJO, PART THREE
 

BOB EDWARDS, Anchor: Starting most businesses requires three things: labor, capital, and land. On an Indian reservation, all three are difficult to obtain. That's one reason the standard of living on most of the 500 reservations lags far behind the rest of the nation. In part three of a series about welfare on the Navajo reservation, William Drummond talks with Indians who have successfully built businesses.
 

WILLIAM DRUMMOND, Reporter: Flagstaff, Arizona is not just a gateway to the Grand Canyon, but also the gateway to Arizona's Navajo reservation. Flagstaff sits astride old Route 66 and is about an hour away from the actual line where the reservation begins. Flagstaff, a growing city of 60,000 with freeways, malls, diners, and a university, has a downtown dress shop offering Native American inspired designs. Called "Deerwater Fashions", it's run by a Navajo woman named Aresta Laruso.
 

ARESTA LARUSO, Deerwater Fashions: I do a lot of contemporary, Native American clothing. Taking what's "in" today and adding a little bit of the Native American element to it.
 

DRUMMOND: Her customers come not just from Flagstaff, but from as far away as Santa Fe and Phoenix. The Navajo reservation desperately needs creative business people like Laruso, but she says the climate for business is much more hospitable off the reservation in a city like Flagstaff.
 

LARUSO: Basically, here it's so much easier. You've just got to find a space, talk to the landlord, pay the rent, and you're in. That's it. I mean, it's okay as opposed to signing your way through the red tape on the reservation just to do a business.
 

DRUMMOND: In the reservation town of Payente, the heights of Flagstaff are miles and climate zones away as the landscape changes from pine trees to windswept, sandstone mesas where there are no cappuccino bars or trendy restaurants. Just a McDonalds and a workman-like Burger King. The Burger King is run by a wiry, intense man with deep set eye named Richard Mike. He is as successful an Indian businessman as they come, but his list of laments is long. First, he says, his workforce is unreliable.
 

RICHARD MIKE, Burger King: We have probably a 500% turnaround rate. And a lot of the kids, if they're hungover, they just don't show up. I mean, there's no resignation. Usually for every position here - and there's 60 positions here - they're replaced about five times in one year.
 

DRUMMOND: Even though the workforce is unstable, Mike can keep the Burger King staffed because youngsters looking for jobs are plentiful. But the bigger problem, he says, is raising capital to start a business. Because Navajo land is held in trust for the tribe by the government, banks won't issue conventional business loans. There's no title to land to offer as collateral; the bank can't foreclose.
 

MIKE: You notice on reservations, all Indian reservations in the United States, you'll notice that there are no small businesses. And 80% of American jobs are in small business, and that's why we don't have any jobs on the reservation. And I think predominantly it's caused by Indians not being able to own the land. I'm really cognizant of it because when I see Americans outside, you know, I always think well, here the only difference between you and me is you can own land and you can own your own house and I can't.
 

DRUMMOND: Richard Mike managed to raise the money on his own with the help of a friend. That's the pattern for most private businesses on the reservation. Just a short walk from the Burger King is a restaurant called "The Blue Coffee Pot", owned and operated by a Navajo woman named Winnifred Dicente Watson.
 

WINNIFRED DICENTE WATSON, "The Blue Coffee Cup": You have to go out and find your own funding. And that's the hardest thing.
 

DRUMMOND: I wonder why aren't there more Indian entrepreneurs like yourself who are successful?
 

WATSON: I think Indians don't really realize that. They just think well, the tribe is there, the government's there. They're going to give me the money and I'm going to do it. It doesn't work that way.
 

DRUMMOND: Because banks won't usually issue loans, many Indians have no place to turn except to tribal government for assistance. But according to Winnifred Watson, this often results in a dead end.
 

WATSON: A lot of those people really don't know how a business is started from the ground up. When I say "business", they say, okay, Burger King, McDonalds, and Holiday Inn, that's a business. And their approach to business is...It doesn't even consider the individual - it doesn't. Because somebody told them that all those people out there are uneducated. They don't have the experience or the know-how, so then, don't give them the chance. I mean, that's the way I see it.
 

DRUMMOND: The seat of tribal government is in Window Rock, Arizona, the capitol of the Navajo Nation. The tribe does give loans to get businesses started, but landing one is not easy. Bessie Allen made use of a tribally operated loan program and opened a coin operated laundry in January. It's located in the town's only shopping center.
 

BESSIE ALLEN, Laundry Owner: This is all computerized. Push the button, it'll tell you how much it'll cost.
 

DRUMMOND: Life and work on the reservation get clothes really dirty because of the constant blowing dust. And because of the remoteness of many homes and the lack of running water, people wait a long time to wash and as a result, bring in huge loads.
 

ALLEN: You can almost wash a cow in that one over there.
 

DRUMMOND: Allen already owned another laundromat in the reservation town of Pinion. She says it took eight years of planning and scrounging up the money before she could open the first business in 1994. With that under her belt, she applied to the tribe for a small business loan. Tribal government programs are more flexible than any bank, but the tribe's resources are limited. Customarily, the tribe's maximum loan is $100,000. Bessie Allen submitted an application for $250,000 and it was approved.
 

ALLEN: The last six months, I was in Window Rock almost every day. Early in the morning before people get to work, I'm there wanting to know where my papers are. You have to copy all your business plans - get at least 20-30 copies - because people will lose them. You have to be determined, that's what I learned.
 

DRUMMOND: Even though she succeeded in tapping into the tribal system, Allen says it's too slow and complex.
 

ALLEN: And yet, you know, the jobs are needed so badly. Just as an example, I had just a little bitty part-time job that we just put up a notice today. And look how much applications I've got. And it hurts to see...You know you have to pick only one out of maybe 20 or 40 people. Jobs are very sacred. I know at Pinion, every one of those employees that I have there came off the welfare. Every one of them have really improved their livelihood.
 

DRUMMOND: Tribal officials say they want to reduce the burden of red tape. Payente - looked at as a model to create growth - was able to levy a 2.5% sales tax to build up its infrastructure to make it more attractive to businesses. Bulldozers are clearing land for another motel. Payente's signs of growth are slow but steady. But this is just one town on a reservation the size of West Virginia. Even the most optimistic planners don't expect these reforms to create enough jobs. 7,000 Navajo adults are now on public assistance. The government wants to get them off welfare and into the labor market in the next few years.
 

EDWARDS: Tomorrow, the Navajo Tribal Government plans to take over the administration of welfare on the reservation.
 
 

(END)