Is More Data Required To Support Europe’s “Minority” Businesses?

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Philippe legrain says more information is needed on minority businesses


Cast your mind back to the darkest days of 2020. Covid-19 was sweeping the world, economies were being locked down and – perhaps most importantly – there was genuine terror generated by an illness that stubbornly refused to respond to existing anti-viral treatments.

Hope was restored by the arrival of the first vaccine, brought to the market by Pfizer in partnership with a relatively little-known German company known as BioNTech.

As we now know, BioNTech – currently valued at around 41 billion euro – was and is a vaccine research venture co- founded by a husband and wife team of Turkish origin. Viewed from one perspective, it was a “minority-owned” European business that succeeded in changing the world.

And as a new report points out, minority-owned businesses are making a significant contribution to the innovation economy in both the U.K. and the European mainland. According to Minority Businesses Matter: Europe published by the Open Political Economy Network (OPEN) there are currently six minority-owned tech unicorns in Europe and a further nine in the United Kingdom.

The report doesn’t simply focus on unicorns. From restaurants and shops (the traditional if somewhat stereotyped starting points for first-generation migrants) to high-tech ventures, such as the aforementioned BioNTech or Oxford Nanopore, the study highlights how businesses owned and founded by people from “minority” backgrounds are not only part of the fabric of Europe’s commercial life they are also increasingly economically important in terms of their contribution to job creation and GDP.

And yet, the report points argues, relatively little is known about them. Philippe Legrain is the founder of OPEN and as he explains, European governments don’t tend to collect information on the ethnic background of business owners. “The U.K. has a complete register that provides beneficial ownership and you can look at that register and find out who is from a minority community,” he says.

However, with the exception of Denmark, this kind of information is not easily available elsewhere on the continent. Consequently, to complete this survey, OPEN had to deploy an AI algorithm to identify minority owners.

Specific Challenges

So why does this matter? Well, OPEN argues that minority businesses face some very specific challenges. And without information on who the owners are, very little can be done to help them overcome any hurdles that stand in their way.

“The challenges facing minority-owned businesses include discrimination, disconnection – they aren’t part of the networks that other business owners can tap into – and doubt,” says Legrain.

There is, he acknowledges, another side to the coin. “Entrepreneurs from minority backgrounds often have a drive to succeed and a determination to bounce back. They also benefit from being connected to their own networks. Nevertheless, many are overwhelmed by the problems they face,” he adds.

Legrain argues that there is a need to provide support and help such businesses overcome lingering discrimination. But what does that look like?

“There is a role for policy in terms of public procurement,” he says. “Often minority businesses can’t get access to public contracts because the processes are opaque.”

In terms of the private sector, Legrain says progress is being made, not least because large corporations are realising the benefits of procurement from diverse sources as they seek to make their supply chains more resilient.

But that brings us back to the problem of having transparent information about the beneficial ownership of businesses. OPEN is recommending that all European countries should maintain a register of beneficial ownership that includes details of ethnicity. In addition, governments should collect data on the ethnicity of residents.

Now it has to be said that not everyone would agree. There are some very real philosophical issues here. Countries may take the view that all citizens are simply citizens and there is, therefore, no requirement to focus on ethnicity. Indeed, it would be undesirable to do so. A similar argument could be made about recording the ethnicity of owners or directors.

From its perspective as a think tank dedicated to promoting commercial and social openness, OPEN takes the view that information is needed to combat discrimination. And as Legrain argues, with data, it is difficult to enforce the E.U.’s Racial Equality Directive.

There is certainly a debate to be had. In the meantime, it’s worth celebrating the contribution of businesses founded and grown by migrants.