Nurturing immigrant enterpreneurship: introduction

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Contents

Summary

This is an extract from the EMN European Microfinance Network report on nurturning migrant enterprise which was published as a result of a transnational exchange of experience project called 'Making strength meet demand' involving partners from half a dozen EU member States and Norway. Partners were ADIE (France), Evers and Jung (Germany), First Step (Ireland), Fonds de Participation/Participatiefonds (Belgium), Network Credit Norway (Norway) and Un Sol Mon (Spain).

Introduction

While immigrant and ethnic minority entrepreneurs show a particular dynamism in creating enterprises, they also tend to experience more severe problems than other small entrepreneurs. Access to finance, both for start-up and for growth, is typically perceived as a major problem, if not the greatest single problem by these entrepreneurs. Microlenders have removed many of the barriers characteristic the traditional sector by offering small loans, alternative guarantee options and flexible repayment plans. Nevertheless, immigrant micro-entrepreneurs face specific difficulties in accessing microloans and starting their businesses, such as bureaucracy, lack of access to information, limited recognition of foreign qualifications and professional experience, cultural differences… Some of these barriers could be better overcome by helping microfinance practitioners make their services more inclusive. It is clear, however, that the provision of microcredit alone does not suffice and can not be disconnected from factors related to business environment and other support services.

To help creating a more nurturing environment, the “Making Strength Meet Demand” project was launched in June 2005. It was carried out by European Microfinance Network (EMN) in lead partnership with six of its members: Adie (France), Evers and Jung (Germany), First Step (Ireland), Fonds de Participation (Belgium), Network Credit Norway (Norway) and Un Sol Mon (Spain). All of them support micro-enterprises, providing microloans and/or pre- and post-loan advice, training and mentoring. The project is supported by the European Commission Directorate-General Justice Freedom and Security INTI "Integration of third country nationals" programme. The project focused on increasing the capacity to provide microloans and related services, such as training and mentoring, in order to better support immigrants in creating and developing their own businesses.

This report summarizes the project findings. Its aim is to raise awareness that the resources inherent in cultural diversity can be better utilized. More particularly, it identifies micro enterprise support practices which facilitate the process and strengthen chances for immigrants and ethnic minorities to succeed in their business. The report is meant for European microfinance practitioners, as well as business support organisations and policy makers. The information in this report derives mainly from research and experience of the project partners in six European countries. Each of the partners worked on a national study focusing on the situation of immigrant micro-entrepreneurs and aiming to identify main challenges and good practices based on:

  • A literature and environment analysis of immigrant or ethnic minority entrepreneurship in their country
  • Members’ own experience providing loans, mentoring and training immigrant entrepreneurs
  • Interviews of organisations providing services to this target group
  • Interviews of, and/or focus groups with immigrant or ethnic entrepreneurs

Although the INTI programme focuses on third country nationals, we adopted the more general term of immigrants, defined here as people not possessing citizenship of an EU member State, as well as naturalised citizens originating from third countries. Naturalised immigrants face less legal complications in setting up a business than foreign citizens do, yet they are confronted by many of the same difficulties. It was a challenge to standardize information. Statistics are generally not comparable from one country to another, due to different definitions and time periods, but they do give a rough idea of the situation in a given country. The level of information available also varies from country to country. Furthermore, each partner focused on different aspects depending on its own priorities and the local context.

Methodology

The information in this report is derived mainly from research and experience of the project partners in six European countries. Each of the partners worked on a national study focusing on the situation of immigrant micro-entrepreneurs and aiming to identify main challenges and good practices based on:

  • A literature and environment analysis of immigrant or ethnic minority entrepreneurship in their country
  • Members’ own experience providing loans, mentoring and training immigrant entrepreneurs
  • Interviews of organisations providing services to this target group
  • Interviews of, and/or focus groups with immigrant or ethnic entrepreneurs

A checklist of main topics to be covered was decided together, nevertheless each project member was free to orient and structure its own report as it deemed most useful in its own context. These national reports are summarized in appendix 3. The main findings to highlight in the common handbook were decided together.

It was a challenge to standardize information, and as far as statistics are concerned, it is important not to compare them between countries, as they are often with different definitions and from different years. They are indicated mainly to give a rough idea of the country’s situation. The level of information available also varies from country to country. Finally, it must be stated that the partners focused on different aspects and the topics covered in this report were not always covered by all in their own countries.

Assumptions and definitions

INTEGRATION: The project was implemented as part of the European Commission INTI, "Integration of third country nationals" programme. In this study, we assume that starting a business is a factor of integration, by allowing the entrepreneur to earn his living. In project discussions, great store was set on the 2-way process of integration, which implies adaptation from both immigrants themselves and recipient societies, with their citizens, structures and organisations.

Regulatory and legal framework

A first observation to keep in mind is that some of the most significant difficulties in self-employment are not specific to third country nationals. It seems safe to state that the largest share of the problems faced by immigrant entrepreneurs are those faced by all small entrepreneurs. Policies improving the environment for all microentrepreneurs would therefore greatly benefit immigrant entrepreneurs.

Nevertheless, as seen in the section on immigrants’ path to entrepreneurship, there are many extra barriers specific to non-nationals as well, particularly when it comes to the right to self-employment, access to certain sectors of work, or recognition of experience and diplomas. Finally, fighting discrimination is a long-term process that requires involvement at all levels but needs real backing from policy makers.