The UK is one of the most powerful financial centres in the world, yet financial exclusion remains a significant issue. Ethnic minority businesses are estimated to contribute £25 to £32 billion to the UK economy per year[i]. Despite this, they face a series of challenges including accessing finance and effectively engaging with business support[ii].
Mechanisms of inequality and discrimination may adapt over time but their effect on Black, Asian, Minority Ethnic (BAME) people has remained similar for decades. Research has shown that Ethnic Minority Businesses are significantly more likely to exhibit discouragement in applying for finance[iii], and a report from the Department for Communities and Local Government found evidence that people from ethnic minority groups are more likely to have their loan applications rejected than Indian and White businesses[iv]. In addition, discrimination in the labour market impacts earnings; whether discrimination is direct or indirect, it is still inequality. A recent pay audit found that London’s Black and Minority Ethnic public employees were paid up to 37% less on average than their White counterparts[v].
There are a number of initiatives being spearheaded by Centre for Research in Ethnic Minority Entrepreneurship (CREME) that are positively impacting the experiences of ethnic minority entrepreneurs in access to finance, networks and support. The Enterprise and Diversity Alliance (EDA) is one of these initiatives. Launched in 2010 by Professor Monder Ram and informed by his research on supporting minority networks, the alliance works to ensure that minority businesses can become mainstream enterprises through better access to money, markets and management skills.[vi]
Tomorrow [25th October 2018], Responsible Finance, Professor Monder Ram from CREME and Dr Steve Walker from responsible finance provider ART Business Loans are hosting a joint roundtable to discuss inclusive access to finance for enterprise. The event will springboard off Responsible Finance’s research released earlier in the year. It will provide an overview and history of ethnic minority entrepreneurship, practical examples of the approach of responsible finance providers and examples of some initiatives currently active in the UK which aim at supporting diverse business people.
We are grateful to Aston University for hosting in its Martin Luther King Centre. The event is sure to be thought provoking and engaging. Stay tuned for post-event outcomes and analysis.
[i] Economic and Social Research Council https://esrc.ukri.org/news-events-and-publications/evidence-briefings/supporting-ethnic-minority-and-female-entrepreneurs/
[ii] Centre for Ethnic Minority Entrepreneurship, Enterprise and Diversity Alliance: https://www.birmingham.ac.uk/schools/business/research/creme/enterprise-diversity-alliance/index.aspx
[iii] R. Owen, T. Botelho, O.Anwar (2016) Exploring the success and barriers to SME access to finance and its potential role in achieving growth. Enterprise Research Centre, p. 31
[iv] Ethnic Minority Businesses and Access to Finance (2013) Department for Communities and Local Government, P.7
[v] Walker (2018) London’s public workers face ‘ethnicity pay gap’ of up to 37%, The Guardian
[vi] Economic & Social Research Council (2017) Network boosts ethnic minority businesses.