October is Indigenous Business Month in Australia. A report published by the Reserve Bank of Australia (RBA) shows steady growth in the First Nations business sector but the need for much more to be done.
The number of registered Indigenous businesses and corporations grew at around four per cent a year between 2006–18, according to First Nations Businesses: Progress, Challenges and Opportunities.The report by Michelle Evans and Cain Polidano was published by the Reserve Bank of Australia (RBA) in June. However, the authors stress this figure is based on the best available evidence, which is far from complete. Any increase is also from a historically low base.
Growth could reflect initiatives developed to support First Nations businesses, such as Indigenous preferential procurement policies (IPPPs) and First Nations-specific business development programs, as well as financial products and services. Yet, despite these opportunities, many budding First Nations entrepreneurs still face substantial barriers to establishing a successful business.
Following are extracts from the report, and comments from Evans, co-founder of Indigenous Business Month and an associate professor in leadership at the University of Melbourne who has trained over 200 First Nations entrepreneurs.
Exclusion from a high-trust economy
“The compounding intergenerational legacy of invasion and structural racism continues to exclude First Nations people from the benefits of a high trust economy,” says Evans.
While Australia may be considered a “high-trust” economy, it is not universally so. The long shadow of Australia's past means many First Nations Australians are shut out of attaining credentials and are excluded from the benefits of a high-trust economy. Trust in our economy is based not only on race, but also on crude indicators of trustworthiness, including well-resourced networks, past intergenerational advantages, business experience, financial and other assets, and educational qualifications.
A trust deficit can impact First Nations entrepreneurs in many ways, including difficulty in attracting low-cost finance, building a customer base, winning contracts and establishing links with reliable suppliers. In the absence of trust, customers, suppliers and employees must vet the quality of new goods or services, scrutinise claims made by businesses without a proven track record and/or enter complex contractual arrangements to protect themselves from possible harm.
Too little data
“Lack of data makes it difficult to pinpoint specific factors that are driving growth,” says Evans. “One possibility is the introduction of Indigenous procurement policies at the federal level. At the broader community level, we can see growing interest in First Nations culture supported by renewed focus on the Uluru Statement from the Heart and the constitutional change promised by the new Labor government.
“We’re also seeing more First Nations people completing post-secondary education and more First Nations professionals and entrepreneurs. This mobility is very important. Native title is also continuing to have an impact, and many organisations are getting on board with a reconciliation journey. There are many different elements at play — including the nature and quality of the businesses themselves.”
Many First Nations entrepreneurs have established successful businesses and corporations that bring unique Indigenous knowledge and perspectives to our economic, social and cultural lives. First Nations businesses and corporations are some of Australia's most heterogeneous entities, with vast diversity across dimensions of location, size and industry. These businesses and corporations drive revenue, pay taxes, employ large numbers of Australians, operate business models with goods and services that are valued by the market and, most notably, show leadership through impact. However, First Nations economic contributions are generally unknown and not widely celebrated.
To make the sector visible and to enable robust evaluation of programs to support it, better data is needed, says the report. Currently, very little is known about the First Nations business sector because First Nations-owned businesses are only made visible through various business registries, such as Supply Nation, the Office of the Registrar of Indigenous Corporations, Indigenous Chambers of Commerce and the Industry Capability Network Limited. Many businesses may decide not to register because of fears of negative discrimination or because they cannot — or choose not to — undergo Indigenous verification processes. Like the decision to register, the decision to have ownership verified is complex, depending on personal and family history, connections to community and sometimes a philosophical stance on being verified by state mandate.
To meet this need, the Reserve Bank is working in partnership with the Australian Bureau of Statistics (ABS), the National Indigenous Australians Agency (NIAA) and business registry custodians to bring all anonymised registry data together in one dataset and integrate it with annual outcome data from the ABS going back at least as far as 2008. This project — known as the Indigenous Economic Power Project (IEPP) — will track procurement and First Nations business outcomes for a period spanning before and after the implementation of government preferential procurement policies. This data will be used to produce a comprehensive national picture of registered businesses and their contribution to the community each year, and to conduct robust impact analysis to measure the effectiveness of affirmative action policies and how they can be tweaked to ensure all Indigenous businesses share in their benefits.
First Nations people are the most under-represented cultural category in corporate leadership. In 2018, the Australian Human Rights Commission (Leading for Change: A blueprint for cultural diversity and inclusive leadership revisited) reported on cultural diversity in Australian leadership across corporate, federal parliament, public service and university sectors. Of the 2490 people in leadership roles across all four sectors, 75.9 per cent were Anglo-Celtic, 19 per cent European, 4.7 per cent non-European and 0.4 per cent Indigenous.
“I haven’t seen a definitive number, but I doubt there are more than five First Nations directors on ASX 200 boards,” says Evans. “There isn’t a problem with supply. There are extremely talented Aboriginal and Torres Strait Islander professionals out there who are very sophisticated in the business and governance space. A major problem is that leadership is built on networks, which are not diverse. Indigenous business leaders are working constantly and hard in an attempt to expand and develop the social capital that comes with those networks.”
Evans urges boards to commit to developing a pipeline of future directors by providing opportunities such as training programs and chances to observe.
“This must go beyond functional compliance to the culture of the organisations and how they work,” she says. “Many of the top firms do have a strong commitment history around Reconciliation Action Plans and targets, but this is often left to middle management and visible only on special weeks of the year. Change needs to be a part of the ongoing business-as-usual of the firm — and it needs to come from the top.”
About Indigenous Business Month
Indigenous Business Month runs from 1 – 31 October as an initiative driven by the alumni of Melbourne Business School’s MURRA Indigenous Business Master Class, who see business as a way of providing positive role models for young First Nations Australians and improving the quality of life in First Nations communities. For more information visit indigenousbusinessmonth.com.au
Already a member?
Login to view this content