In this blog, Professor Monder Ram draws on evidence from the recent Time to Change Report to advocate for better and more inclusive support for ethnic minority entrepreneurs to help boost the UK economy.
A £100 billion boost to the UK economy is tantalisingly within reach if the country’s ethnic minority businesses (EMBs) are given the right support and their activities are recorded accurately. This is a key finding from a major new report on the UK’s ethnic minority entrepreneurs by my colleagues and I at the Centre for Research in Ethnic Minority Entrepreneurship (CREME). Grasping this prize requires systemic change. We present a comprehensive set of recommendations – ranging from the need for a national strategy on inclusive entrepreneurship to the importance of local, community-based interventions – that could catapult the already impressive £25bn contribution EMBs make to the elusive figure of 100bn.
Our report appears amid intense policy interest in ‘Building Back Better’ and ‘Levelling-Up’, and the reverberations around racial inequalities exposed by ‘Black Lives Matter’ and the pandemic. The economic and social contribution of Black and ethnic minority entrepreneurs could be part of an imaginative solution to these policy challenges. We show that EMBs are more likely to export, innovate and grow more quickly than their white-owned counterparts. They also provide employment opportunities, social support, and vital services to local communities, yet policymakers often overlook such qualities.
We believe a national strategy for inclusive entrepreneurship is an important starting point. Successive UK governments of all persuasions have acclaimed ‘enterprise’ whilst only fitfully recognising the barriers ethnic minorities face in their entrepreneurial journeys – these include access to finance, a lack of appropriate business support, and isolation from networks vital to business success. The US, Canada, and some European countries we examined have a clear strategy for monitoring, engaging, and partnering with EMBs. They often benefit from detailed research which is used to develop customised interventions. The UK lacks such data. We outline steps to develop a more robust evidence base on the role of the EMBs in the economy – this is vital to the development of evidence-based policies.
Supporting EMBs to survive and grow is central to the approach we propose. The challenge for ethnic minorities is business survival and growth, not start-up. Yet policy interventions too often focus on the start-up phase, effectively ignoring the barriers that thwart the growth potential of EMBs. Black and ethnic minority communities have high entrepreneurial aspirations – much more so than their white counterparts. But too often, these aspirations are not translated into viable growth-oriented businesses, as suggested by the long reported mismatch between the high entrepreneurial intentions of Black entrepreneurs and the actual number of business that survive after three years.
Promoting long-term partnerships that build stronger networks of support for ethnic minority businesses is the final element of the agenda we advocate. A persistent trust-deficit means EMBs use business support less than other firms. Key business support intermediaries – notably Banks, Growth Hubs, Chambers of Commerce, and corporations – need to reassess how they engage with ethnic minorities. For Banks in particular, the development of stronger relationships with EMBs is vital to tackling the enduring problem of ‘discouragement’, which prevents ethnic minorities receiving the finance they need to develop their businesses. We believe an ‘accountability pledge’ will sensitise the bodies to the importance of strong engagement with EMBs, and could ultimately prove mutually beneficial.
The full report is available below.