The contribution and challenges of ethnic minority businesses in Europe
Minority businesses in Europe, of which there at least 800,000, contribute at least €570 billion to the economy and employ at least 2.7 million people, according to OPEN’s pioneering new report with MSDUK.
Key findings include:
- the first-ever list of the top 50 minority businesses in Europe;
- studies of the contribution of dynamic minority entrepreneurs in the tech, healthcare and sustainability sectors; and
- profiles of the eight countries covered in the report: Germany, France, Italy, Spain, the Netherlands, Sweden, Belgium and Ireland.
Europe’s biggest minority business is French shipping giant CMA CGM, which was founded by the late Jacques Saadé, an immigrant from Lebanon, and has a turnover of €47 billion.
Second-biggest is BioNTech – the German biotechnology company that developed the first and in Europe most widely used Covid vaccine – whose co-founders, Uğur Şahin and Özlem Türeci, are a husband-and-wife team of Turkish origin.
Third are the European operations of the EG Group, a petrol-station retail company founded and owned by British Indian brothers Mohsin and Zuber Issa, who were profiled in our UK Minority Businesses Matter report.
Fifteen of the top 50 were founded or are owned by entrepreneurs of Turkish origin, ten by ethnic Indians, ten by ethnic Arabs and five by people of Iranian origin. One was founded by a black entrepreneur of African origin. Three were founded or are owned by women.
While there is no official data on the overall contribution to the EU of minority entrepreneurs, the proportion of employers in the current EU-27 countries who were born outside the (pre-Brexit) EU-28 has nearly doubled over the past decade, from 4% in 2010 to 7.6% in 2019.
In the absence of official data, we have produced our own estimates, using an artificial intelligence (AI) algorithm developed by Namsor, a French data-science company to identify companies that have beneficial owners – the individuals who ultimately own or otherwise exercise control over a company – with non-Western names. The results were then cross-checked and fine-tuned with human expertise and additional research.
Minority entrepreneurs often originate from Europe’s former colonies in Africa, Asia, Latin America and the Caribbean. Increasingly, though, they come from a wider range of countries: think of Syrian entrepreneurs in Germany, Indian businesspeople in the Netherlands and Chinese factory owners in Italy.
Our research finds that in France, the top ethnicity of minority entrepreneurs is Algerian; in Germany, the Netherlands and Belgium it is Turkish; in Spain, Italy and Ireland it is Chinese; and in Sweden it is Iranian.
Black entrepreneurs of sub-Saharan African origin account for more than one in ten minority business owners in the Netherlands, France and Ireland.
The proportion of minority beneficial owners who are female varies between 18.7% in Germany and 32.2% in France.
In countries such as Italy and Spain where large-scale non-Western immigration is a relatively recent phenomenon, minority businesses are fewer, smaller and concentrated in activities that require little capital and scarcely any professional qualifications, such as convenience stores and restaurants.
But in countries such as France, Germany and the Netherlands where post-war immigrants are more numerous and better-established – and their children and grandchildren have benefited from a local education – minority businesses also increasingly operate in higher-value activities such as business services and tech.
Europe’s leading minority-founded unicorns – privately held tech start-ups that are valued at $1 billion (around €1 billion) or more – include:
- Berlin-based Gorillas, an instant grocery-delivery service;
- Amsterdam-based Bunq, a fintech bank;
- Ghent-based Deliverect, a food-delivery logistics service;
- Munich-based Agile Robots, an AI robotics firm;
- Berlin-based Omio, an online travel app; and
- Switzerland’s first unicorn, MindMaze, an AI neuroscience firm.
CHALLENGES AND STRENGTHS
Such outstanding successes are the all more remarkable because minority businesses typically face three big challenges, in addition to those that all business owners face:
- discrimination on the basis of their race or ethnicity;
- disconnection from mainstream business networks, and so lack contacts, contracts and capital;
- disproportionate levels of doubt about their abilities – and in particular about their ability to succeed in business.
One big reason for such successes is the strengths that minority entrepreneurs tend to have, in addition to their individual qualities:
- a burning drive to succeed.
- the determination to overcome the many challenges they face and the resilience to bounce back from setbacks;
- their diversity: their diverse skills, foreign contacts, different experiences and original perspectives can also be a source of business advantage.
While the main purpose of this report is to raise awareness of the contribution and challenges of minority entrepreneurs in Europe, we also have three key recommendations: on opening up data, combating discrimination and making the most of entrepreneurs’ diversity.
- For the sake of corporate transparency, all EU countries ought to emulate Denmark in creating a public register of companies’ beneficial owners that is available to download in full for free.
- To measure progress in achieving the EU’s Racial Equality Directive’s goal of eliminating discrimination, all EU countries ought to collect data on the race and ethnicity of their residents, including business owners.
- And just as companies and public authorities now seek to promote diversity in the workplace – to advance equal opportunities and because it is good for business – so they ought to promote diversity in their supply chains too. Thus both public authorities and large corporates ought to pursue inclusive procurement policies that provide equality of opportunity for diverse suppliers.
The European Supplier Diversity Project (ESDP) – which is being developed along with local partners by MSDUK, which commissioned this report – can play an important role in this. There is also scope for EU action.
Philippe Legrain, Founder of OPEN and lead author of the report, said: “Despite the huge challenges they face, minority businesses in Europe are leaders across tech, sustainability and healthcare and their contribution to the economy through valuable jobs, wealth and innovation will only continue to grow. While such successes are remarkable, ethnic minority entrepreneurs still do not enjoy equal treatment in Europe, an issue obscured by the lack of transparency around data and reporting on ethnicity in Europe. It is both smart business and a moral imperative to tackle this challenge and ensure minority businesses thrive across Europe, which is why we have compiled this report as a call to action for European governments and corporations.”
Mayank Shah, Founder and CEO MSDUK and the European Supplier Diversity Project (ESDP), said: “Minority communities and immigrants play an ever more important role in European societies, and this report shows their significant contribution to the economy. The economic inclusion of ethnic minority entrepreneurs would only ensure more resilient, lower cost and higher quality supply chains which can tap into new innovations and additional markets, it would also bolster socio-economic equality and justice, which are vital given the current economic uncertainties facing Europe.”
APCO Worldwide for OPEN
Download the full report (pdf)