Andrew McRae: We must tap into our migrant entrepreneurs

It doesn’t matter if you were born in Estonia, Ethiopia or even England, we need you to start up your business in Scotland.

German-born Antje Karl who runs the Yarn Cake in Glasgow

People born outside Scotland – including elsewhere in the UK as well as the rest of the world – account for about a quarter of firms started up north of the border. And immigrant-led businesses, firms run by people born outside the UK, contribute £13bn to the Scottish economy and provide 107,000 jobs.

But there’s an opportunity to attract more would-be entrepreneurs.

Statistics the Federation of Small Businesses (FSB) compiled show that in the past 20 years, Scotland’s business community grew by an impressive 46 per cent.

But over the same timeframe, the number of UK businesses grew by 63 per cent. While these figures are distorted by London – where more businesses were started in the last decade than currently operate in Scotland – that doesn’t mean we shouldn’t try and close this enterprise gap.

For a start, we need to make sure our future immigration system works for Scotland.

It is easy to understand that a faster growing population with more working age people feeds through to business population growth.

Between 2000 and 2018, Scotland’s population increased by 7.4 per cent and the UK’s population increased by 12.8 per cent. This trend could partially account for the disparity in entrepreneurship.

Unfortunately the measures outlined in the UK government’s immigration White Paper do little to reverse this trend, and may exacerbate the problem.

We need to see a change in the approach from the UK government to ensure business-minded people face no barriers making Scotland a home for their operations.

Why’s this so important? Research FSB conducted with the Hunter Centre shows all migrants – including immigrants from outside the UK, but also migrants born elsewhere in the UK, returnee Scots and people who have moved within Scotland – are more likely to start a business.

Migrant entrepreneurs are more likely to have postgraduate qualifications, family business experience, export ambitions and higher growth ambitions.

A full 28,000 enterprises in Scotland’s three largest cities are run by immigrants. And in rural Scotland, migrants are more likely to be entrepreneurial than locals – driving both economic activity and community sustainability.

And it isn’t just people from overseas who are helping us create jobs and drive growth. People who moved to Scotland but were born elsewhere in the UK are 67 per cent more likely to start a business than non-migrant Scots. There’s no simple explanation for this trend. But you can understand that if you move to a new place and find your skills are in demand, or there’s no suitable job, you might decide this is the moment to take the plunge.

Not only do we need to help people start up, we need to give them the best chance of success. But there’s a problem.

Immigrant business owners in Scotland aren’t linking into private and public support networks, preferring to learn from others within their community. With this comes a risk that they’ll miss out on wider perspectives regarding business opportunities and pitfalls.

FSB – like other business groups – needs to work harder to make sure our membership reflects the wider business community. And that probably means adjusting our approach for immigrant communities and ethnic minorities.

The same argument holds for public sector enterprise support, delivered though bodies like Business Gateway. While we see pockets of good work, more needs to be done to ensure that all sorts of business owner get the right sort of help.

FSB’s new Going Global campaign celebrates the smaller firms exporting to foreign markets – and many of these operators are immigrant business owners.

There’s an opportunity afforded by these business owners to help us realise Scotland’s trade, export and internationalisation ambitions by using the cultural, business and market knowledge they have in spades.

Migrants of all descriptions are already making a huge contribution to our local economies and communities. We should work hard to attract more of them, while making sure they’re tapping the help to which they’re entitled.

Andrew McRae is Scotland policy chair for the Federation of Small Businesses