Five Reasons the Sewell Report Lets Down Black Entrepreneurs

The long awaited report by the Commission on Race and Ethnic Disparities missed a golden opportunity to effect a step change in the support of Black and ethnic minority entrepreneurship in the UK. I sat on a Working Group that contributed several proposals to the Commission. The report’s sole recommendation on enterprise - a competition amongst Universities to establish pilot projects for aspiring Black entrepreneurs – is welcome but falls short of the steps to needed make a real difference. The Commission has failed to learn the lessons from a substantial body of evidence from researchers (including my colleagues and I at the Centre for Research in Ethnic Minority Entrepreneurship [CREME]) and influential reports from some of its own bodies, notably the British Business Bank.

Here are five reasons the report has disappointed so many hoping for an evidence-based and positive agenda for Black and ethnic minority entrepreneurship:

1.    Total neglect of structural and systemic disadvantage

It’s no coincidence that Black and ethnic minority businesses are concentrated in the most deprived areas, competitive sectors, and harshest of market conditions. A weighty body of academic evidence shows how economic, political, and institutional factors push many in this direction. Discrimination in the labour market often means that businesses are started because of necessity rather than choice. Systemic disadvantage was recently identified as a key factor in explaining the persistent disparities in business outcomes for entrepreneurs from ethnic minority backgrounds.

Systemic interventions are possible. In 2020, the Canadian government announced a $221 million programme loans for up to $93 million to help Black business owners to cover from the pandemic — including up to $53 million towards the creation of a new National Ecosystem Fund, $33.3 million in loans, and $6.5 million to support data collection on the systemic barriers encountered by Black entrepreneurs across the country. 

2.    The Commission’s misplaced emphasis on ‘agency’

The Commission’s invocation of the ‘power of agency’ as a solution for aspiring entrepreneurs is puzzling. Black and ethnic minority communities have shown remarkable ‘agency’ when measured in terms of entrepreneurial intentions, business growth and innovation. But too often, this expression agency seems to be thwarted by systemic constraints, as suggested by the long reported mismatch between the high entrepreneurial intentions of Black entrepreneurs and the actual number of business they start. It’s the system and not the ‘mindset’ of Black and ethnic minority business owners that needs fixing.

3.    Ignoring the contribution of Black and ethnic minority businesses to ‘levelling up’ and ‘building back better’

EMBs make a significant economic and social contribution to the economy and possess many of the qualities that will be needed as the UK seeks to ‘build back better’. Black and ethnic minority businesses make a significant economic and social contribution to the economy and possess many of the qualities that will be needed as the UK seeks to ‘level up’ and ‘build back better’. Black and ethnic minority entrepreneurs represent a significant part of the business landscape. A recent large-scale study found 250,000 Black and ethnic minority entrepreneurs, contribute ￡25 billion Gross Value to the UK economy. The study also revealed they were more likely to export, innovate and grow more quickly compared to their white-owned counterparts

The social contribution of the iconic ‘corner shop’ and other locally-embedded ventures that serve the myriad communities is also considerable, and often under-appreciated when only measured in hard financial terms. The COVID-19 crisis starkly illustrates the vital role of these local lifelines in supplying essential goods and services – food retail, cut price restaurants, taxi driving. These activities are necessary for the day-to-day functioning of the locality and contribute to the competitive attractiveness of the modern city.

4.    Neglecting international good practice

Countries around the world are introducing novel initiatives to encourage migrant and ethnic minority entrepreneurs. There’s widespread acceptance that supporting viable entrepreneurial activities can be a means of promoting economic and social inclusion. The United Nations, Organisation of Economic Co-operation and Development and European Union have systematically documented several fascinating examples of good practice. It’s unfortunate the opportunity to learn from them was neglected.

5.    A lapse of institutional memory

Over the last 40 years, successive governments have introduced measures to support Black and ethnic minority entrepreneurs. Although the record is mixed, the positive aspects of this body of work – including the need for more evidence-led and integrated business support – has been overlooked by the Commission.

The need for progressive responses to racial inequality is pressing. In entrepreneurship, there are important lessons to be learnt from history, from international exemplars, and indeed from organisations in the UK seized of the urgency of genuine change. I hope it’s not too late to draw on this fertile stock of knowledge to push for meaningful change.

Monder Ram

Centre for Research in Ethnic Minority Entrepreneurship

Aston University