The diversity dividend: How investing in ethnic minority businesses can drive UK economic growth

Prof. Monder Ram OBE (pictured), drector of the Centre for Research in Ethnic Minority Entrepreneurship at Aston University, is a commissioner for the Business Commission West Midlands.

He has been supporting with engagement in the region’s business community and the creation of the final ‘Roadmap for Business Growth’ report.

Monder reflects on his role in the commission and the next steps for business growth in the Midlands in this blog.

Ethnic minority businesses (EMBs) are a vital part of the UK economy, contributing over £25 billion to the UK's GDP annually.

However, these businesses often face unique challenges that hinder their growth and development.

My colleagues and I at Centre for Research in Ethnic Minority Entrepreneurship (CREME), have long reported on the challenges EMBs encounter, particularly in accessing finance and navigating complex business support ecosystems – a point made tellingly in the recent report by the Business Commission West Midlands (BCWM).

Our recent ‘Time to Change’ report, produced in partnership with NatWest Group, highlights the need for systemic change to unlock the full potential of EMBs.

The report estimates that the contribution of EMBs could increase fourfold to £100 billion if given the right support. An estimated £10 billion boost awaits the West Midlands if we address this challenge for EMBs in the region.

This untapped potential represents a significant opportunity for the West Midlands to drive economic growth and create a more inclusive business environment.

One of the key challenges facing EMBs is access to finance.

Many ethnic minority entrepreneurs struggle to secure the funding they need to grow their businesses, often due to perceived unequal treatment and discouragement.

To address this issue, regional and national authorities must work together to create tailored strategies that engage effectively with EMBs and offer them the support they need to access long-term finance.

Another barrier is the complexity of the business support ecosystem, pointed also by the BCWM for small firms per se.

EMBs often find it difficult to navigate the various support services available, leading to lower engagement with mainstream networks.

To combat this, local authorities should collaborate with community-based organisations to improve the accessibility of business support and build trust-based relationships with ethnic minority communities.

Furthermore, EMBs face challenges in accessing public procurement opportunities. Simplifying tender processes and increasing transparency can help level the playing field for small and medium enterprises (SMEs), including EMBs. Local authorities should also work to identify innovative businesses with the potential to scale up, particularly in areas where take-up of funding remains low.

To drive long-term growth, it is crucial to invest in the development of ethnic minority entrepreneurs.

Providing flexible leadership and management training can help facilitate business growth and equip EMBs with the skills they need to succeed.

This is a key recommendation in the BCWM for small firms in the West Midlands.

Additionally, fostering local networks of support through partnership working can strengthen the ecosystem and enhance the relevance of support services.

In conclusion, unlocking the potential of ethnic minority businesses in the West Midlands requires a concerted effort from regional and national actors.

By addressing the barriers to finance, simplifying the business support landscape, and investing in the development of ethnic minority entrepreneurs, we can create a more inclusive and thriving economy.

It is time for us to take action and ensure that EMBs have the support they need to grow and prosper.