The Impact of Economic Events on Ethnic Minority-Led Business in Birmingham

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Neelam Afzal discusses the importance of ethnic minority-led businesses for the economy of Birmingham and the UK, but how these businesses are often detached from mainstream business support and struggle disproportionally when accessing finance. 

This blog post was produced for inclusion in the Birmingham Economic Review for 2022. 

The annual Birmingham Economic Review is produced by the University of Birmingham’s City-REDI and the Greater Birmingham Chambers of Commerce. It is an in-depth exploration of the economy of England’s second city and a high-quality resource for informing research, policy and investment decisions. 

This post is featured in Chapter 1 of the Birmingham Economic Review, on the economy, crises and resilience. 

Read the Birmingham Economic Review.

Visit the WMREDI Data Lab to find out more about Birmingham.

In a 2021 report published by Diversity UK, it was reported that ethnic minority-led businesses contributed a staggering £74 billion to the UK Economy, with 6 million businesses registered in the UK and employing 3 million people in 2019-20.       


Research published by Aston University’s Centre for Research in Ethnic Minority Entrepreneurship (CREME) revealed:  

  • Ethnic minority-led businesses are more innovative and more likely to export than non-ethnic minority led businesses.  
  • Ethnic minority led businesses are often detached from mainstream business support and struggle disproportionally when accessing finance. 
  • The impact of Covid-19 has bought structural inequalities in ethnic minority-led businesses.  

Ethnic minority led businesses in Birmingham have reported that they face their own unique challenges but are often overlooked by policymakers in the region or in central government.  

The disproportionate challenges faced by ethnic minority led businesses have further been impacted by the coronavirus crisis, inflation, energy prices and the Commonwealth Games. 


National and regional evidence from aggregated data revealed that there was a higher and disproportionate number of covid-related deaths from ethnic minority communities and a broad correlation between areas where there is social and economic deprivation. Many ethnic minority-led businesses operate in the hospitality and retail sector, including high-street, clothing and supermarket businesses.  Many of these businesses required their workers to be in close proximity to their customers.

The Pandemic

Research undertaken by the West Midlands Combined Authority (2020), has shown that a large number of ethnic minority groups faced losing their jobs and will have difficulties finding suitable alternative positions. During the pandemic, ethnic minority-led businesses were often unable to access external funding due to many factors, such as the lack of local business support, a need for assistance in completing applications, and language and technology barriers. There were several initiatives by the Birmingham Chamber of Commerce, Asian Business Chamber of Commerce and other business support groups to assist businesses in tackling language or technological barriers. Local businesses report that often they would learn about funding or support after the event, and there was no single, clear conduit for delivering support and assistance.   

Whilst some ethnic minority-led businesses have closed, other ethnic minority-led businesses have done well, through innovation. Some local Birmingham ethnic minority-led businesses have developed innovative sanitising products and distributed Personal Protective Equipment (PPE).  Businesses have diversified their operations, to use technology (which for some ethnic minority-led businesses has been a challenge) and they have changed their business models.  

Nevertheless, the long-term challenges of the pandemic have now been exacerbated by current issues, such as inflation, and grossly increased energy prices.  It has been reported that sectors such as retail and manufacturing have particularly suffered, first during the pandemic, during which many were unable to source their products from existing suppliers from outside of the UK, and now with increasing energy prices. This is having a debilitating impact on the survival of these businesses. Ethnic minority led businesses in many sectors have been unable to pass on increasing costs to their customers.   

The Birmingham Commonwealth Games

The Commonwealth Games has had a positive impact on ethnic minority-led businesses in the region. The Birmingham Race Impact Group commissioned a panel of race and equality practitioners to consider inequality, particularly where diverse communities felt ignored by the Commonwealth Games organisers regarding legacy, community engagement and procurement. It is expected that in time, further data will emerge. 

At a national level, there needs to be better-quality data from the Government, which is collated and published, identifying better access to finance and support, implemented through coherent plans to support businesses, and a strategic approach to addressing the impact of economic factors which disproportionately affect ethnic minority led-businesses. This must be addressed within the Government’s strategic plans for levelling up in the Midlands. 

This blog was written by Neelam Afzal, Partner and Solicitor, Wildings Solicitors and Committee Member, Asian Business Chamber of Commerce. 

The views expressed in this analysis post are those of the authors and not necessarily those of City-REDI / WM REDI or the University of Birmingham.

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