By Jan Niessen, Director, Migration Policy Group
Micro, small and medium-sized enterprises are engines of growth and economic development. They operate mostly at the local level and make significant contributions to employment, income generation, investment and international trade. Cities can capitalize more on the diversity of its population by ensuring that male and female entrepreneurs with an immigrant background benefit from general measures promoting a favourable entrepreneurial climate. Immigrant-owned businesses provide added value as they have knowledge of and fill gaps in markets, which are not necessarily covered by large mainstream businesses. They also open additional avenues to international trade.Overall, micro,small and medium-sized enterprises tend to be more innovative and flexible, making them interesting for mainstream business partners that are often bigger and more traditional, static and risk averse. Local policies cannot only promote the development of business skills and competences of all entrepreneurs, but can also facilitate that immigrant businesses are linked with mainstream economic players. This makes good business sense and has a positive impact on immigrants’ socio-economic integration.
Incubating small business at the local level
Unfortunately, too many municipalities do not seem to be aware of these facts. Luckily,those which are provide direct support to all entrepreneurs and encourage private and civil society sector organisations to do so as well. Usually, such support includes assistance on administrative, regulatory and tax matters, on building a solid business plan,and on training in accounting, marketing and finance. It should neither be taken for granted that all entrepreneurs are aware of the existence of these support measures, nor that every entrepreneur can actually benefit from them. Experience demonstrates that for entrepreneurs with an immigrant background special outreach campaigns are needed as well as additional measures, such as translation and interpretation services.Specific measures are to address challenges with which only entrepreneurs with an immigrant background are confronted, such as those related to residence status,recognition of foreign qualifications and discrimination.
Municipalities can push for the development of the intercultural competences of the staff of services providers and for recruiting staff from among the immigrant population. This will enhance the effectiveness and quality of service provision. When such measures are also adopted by financial institutions this helps to remove obstacles for equal treatment in accessing finance for starting and growing a business. Another area where municipalities can promote change in existing policies and practices,relates to membership of organisations and participation in networks. Being well-connected with a variety of organisations is important for all entrepreneurs, and even more so for immigrant entrepreneurs, as this offers opportunities for new business and for mutual learning among peers. It also increases social capital, status and influence. In name many organisations and networks are open to all entrepreneurs. In reality too many of them are rather closed bulwarks of vested interests. Opening them up for entrepreneurs with a diverse background is in their own longer-term interest. Municipalities can lead by example and regularly consult with all stakeholders, expressly including immigrant entrepreneurs and their organisations, and promote cooperation among them.
Government as economic actors in their own right
Governments are not only policy makers and service providers, but also economic actors in their own right. They are among the biggest employers and in OECD countries they spend on average 13% % of their Gross Domestic Product (GDP) on goods, services, infrastructure, education and health. This would be much more when state owned businesses such as utilities (water, electricity, etc.) were included. More than half is spent at the local level. In other words, governments are very big economic players and wield considerable purchasing power, which they can use to also achieve socio-economic goals. Strangely enough, these facts seem to be unknown by many local policy-makers, thus leaving un-used a potential powerful means to promote the economic integration of immigrants.By adopting a supplier diversity programme municipalities facilitate that immigrant businesses are linked with mainstream businesses. This entails that the municipality keeps a record its total spend and its suppliers. This may demonstrate that immigrant entrepreneurs are underrepresented as supplier of the municipality (which could amount to indirect discrimination). To change the situation various things can be done. The municipality can divide calls for tender in lots enabling small businesses to submit a bid. It can bring calls for tenders under the attention of all potential suppliers and reach expressly out to immigrant entrepreneurs. Meetings can be organised at which all potential suppliers are informed on procurement rules and procedures. Smaller businesses can be assisted to form consortia. Diversity and equality aspects of bids can be made a performance award criterion when there is a link with the subject-matter of the contract. Social clauses can be included in contracts with a view to prevent discrimination.
Public private partnerships on supplier diversity
Last but not least, the municipality can encourage its corporate suppliers to undertake the same type of action. Together public and private procurers can create a wider candidate pool of suppliers that provides wider choices which in turn brings access to innovation and flexibility into supply chains. By engaging fit-to-supply immigrant businesses, they invest in areas where immigrants live and help these communities to generate revenues. By linking immigrant businesses with mainstream businesses they avoid these businesses becoming trapped in a non-profitable niche industry or becoming ghettoized serving only their community. Together public and private procurers can mitigate risks, enhance their reputation and share good practice.
Incubating a win win situation
Ideally, all the above cited activities are embedded in municipalities’ overall socio-economic and urban policies, requiring internal communication and cooperation between various departments of local government. This is not always easy to achieve because different municipal departments have their own mandates, priorities and resources. On top of this, many cities have to cope with budget cuts and a less favourable climate for working on integration issues. This forces city governments to become more creative and cost-effective and to cooperate with actors in the private and civil society sector. Demonstrating the contribution of businesses owned by immigrants to the local economy strengthens efforts to socially integrate immigrants, increases trust amongst various groups in the population and enhances confidence in local integration policies.
Ten cities in Europe, united in the Council of Europe led and European Commission sponsored DELI project, have worked together for 18 months on the topic of inclusive entrepreneurship, with the Migration Policy Group providing expertise and background information. The results of this work will be presented at a conference, “Building Inclusive Societies,” in Brussels on 23rd and 24th of June 2015. Newly designed management standards will be presented together with other tools such as an on-line assessment tool with good practice example and a public procurement matrix.
For further information visit the DELI project website.
Jan Niessen in the Director of the Migration Policy Group in Brussels. The Council of Europe and Migration Policy Group share responsibility for the overall coordination and implementation of the Diversity in the Economy (DELI) project.