Need more data to support Europe’s ‘minority’ businesses?
Philippe Legrain says more information is needed on minority businesses
Think back to the darkest days of 2020. Covid-19 was sweeping the world, economies were in lockdown and – perhaps most importantly – genuine panic was being created by a disease that refused to respond to existing antiviral treatments.
Hope was restored with the arrival of the first vaccine brought to market by Pfizer in partnership with a relatively unknown German company called BioEntech.
As we now know, BioNTech – currently valued at around 41 billion euros – was a vaccine research company and was co-founded by a husband and wife team of Turkish descent. From a certain point of view, it is a European company “owned by a minority” which succeeded in changing the world.
And as a new report points out, minority-owned businesses make a significant contribution to the innovation economy in the UK and continental Europe. According to Minority Business Matters: Europe published by Open Political Economy Network (OPEN), there are currently six minority-owned tech unicorns in Europe and nine more in the UK.
The report doesn’t just focus on unicorns. From restaurants and shops (the traditional if somewhat stereotypical starting point for first-generation immigrants) to high-tech companies, such as the aforementioned BioEntech or Oxford Nanopore, the research highlights how companies owned and founded by people from “minorities” are not . Not only are they part of the fabric of European business life, but they are also increasingly important economically in terms of job creation and their contribution to GDP.
And yet, the report points out, relatively little is known about them. Philippe Legrain is the founder of OPEN and explains that European governments do not tend to collect data on the ethnicity of business owners. “The UK has a whole beneficial ownership register and you can look at that register and find out who is from a minority community,” he says.
However, with the exception of Denmark, this information is not readily available elsewhere on the continent. Therefore, in order to complete this investigation, OPEN had to deploy an AI algorithm to identify minority owners.
So why is it important? Well, Open argues that minority businesses face very specific challenges. And without information about the identity of the owners, little can be done to help them overcome the obstacles that stand in their way.
“Challenges faced by minority-owned businesses include discrimination, disconnection — they are not part of networks that other business owners can operate in — and suspicion,” LeGrand said.
There is a flip side to the coin, he admits. “Minority entrepreneurs often have the will to succeed and the determination to bounce back. They also benefit from being connected to their own network. Yet many are overwhelmed by the difficulties they face,” he added.
Legrain argues that it is necessary to help and support these companies to overcome chronic inequalities. But what does it look like?
“Politics has a role to play in public procurement,” he says. “Often, minority companies cannot access public markets because the processes are opaque.”
As for the private sector, Legrain says progress is being made, particularly as large companies realize the benefits of sourcing from multiple sources as they seek to make their supply chains more resilient.
But this brings us back to the problem of having transparent information on the beneficial owners of companies. OPEN recommends that all European countries keep a register of beneficial owners with ethnic details. In addition, the government should collect ethnic data on residents.
Now, it is clear that not everyone will agree. There are real philosophical problems here. Countries can take the view that all citizens are just citizens and therefore there is no need to focus on ethnicity. In fact, it would be undesirable to do so. A similar argument can be made about recording the ethnicity of owners or managers.
From its point of view as a think tank dedicated to the promotion of commercial and social openness, OPEN considers that the fight against discrimination requires information. And as Legrain argues, with data, the EU Racial Equality Directive is difficult to enforce.
There is certainly a debate. In the meantime, it is worth celebrating the contributions of businesses founded and developed by immigrants.
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