Time for change report says Ethnic Minority Businesses can thrive with structured support

• Aparna Sreevalsan
• 13 May, 2022

BANK NatWest partnered with the Centre for Research in Ethnic Minority Entrepreneurship (CREME) at Aston University and has published a report called Time For Change explaining the importance of supporting Ethnic Minority Businesses (EMBs) in the UK.

Both have set out ten evidence-based recommendations in the report to promote the inclusion of EMBs in the finance sector.

The report explains how EMBs are helpful in boosting the UK economy and suggests that these ethnic-led businesses should receive country-wide support.

The report sets out a standard feature for all future plans. Experts from the team claim that the implementation of these ten recommendations would result in tackling multiple barriers faced by EMBs, particularly in accessing finance, markets, and quality business support.

The ten recommendations are as follows:

• Tackle perceptions of unequal treatment to increase EMBs’ engagement with bank finance.
• Monitor engagement with diverse suppliers to facilitate EMBs’ access to procurement opportunities.
• Develop more sustainable and quality business support to help EMBs realise their growth potential.
• Improve access to business support by establishing trust-based relationships with ethnic minority communities.
• Foster local networks of support through partnerships working to strengthen support for EMBs.
• Include EMB communities in the policy formulation process to enhance the relevance of support.
• Create local community hubs to better engage with EMBs and ease their access to finance and business support.
• Develop a UK-wide policy on inclusive entrepreneurship to set out a clear vision for achieving inclusive growth.
• Create a UK-wide mechanism for promoting and supporting EMBs to provide long-term leadership on this agenda.
• Gather better data on entrepreneurial diversity to foster evidence-based policymaking.

It also states that supporting these businesses could increase their Gross Value Added (GVA) contribution from the current £25b a year to £100b.

Professor Monder Ram, director of the Centre for Research in Ethnic Minority Entrepreneurship at Aston Business School, said: “This major report sets out an ambitious yet practical agenda to realise the potential of UK’s ethnic minority businesses. The entrepreneurial ambition of ethnic minorities can play a crucial role in the UK Government’s vision of ‘Levelling Up’ prosperity across regions, promoting trade opportunities of ‘Global Britain’ and creating a more cohesive society. Drawing on the latest research and examples of international best practices, the report presents a comprehensive approach to tackling the barriers faced by firms owned by ethnic minority communities.”

The Covid-19 pandemic has seriously affected ethnic minority-led businesses due to the sectors in which they tend to operate and recommends recovery support, says the report.

To tackle wider social structural barriers such as unequal access to employment opportunities and product markets, and gender and ethnicity pay gaps, a more inclusive approach was required and government could help to level the playing field, says the report’s authors.

The report also highlights the need for greater accountability of organisations across public, private and third sectors, including business support agencies, finance providers and large purchasing organisations, for their business engagement with EMBs.

Andrew Harrison, Head of Business Banking at NatWest Group, said: “As the UK’s biggest bank for business, we’re committed to championing small businesses and supporting growth, but we know that there are barriers which disproportionately affect Ethnic Minority Businesses. This is why we aim for at least 20 per cent of the places on our 13 nationwide accelerator hubs to be for ethnic minority entrepreneurs. In 2021, 26 per cent of businesses in our hubs were EMBs.”

As stated in the report, increasing the growth of EMBs requires quality support that meets the specific needs of EMB communities.