Māori entrepreneurs are being held back from financial success due to issues with accessing finance, managing debt and wealth, and tax compliance. That’s according to Massey University Māori Business and Leadership Centre, and the Westpac Massey Fin-Ed Centre.
The two organisations released a report this week that found there’s room for improvement when it comes to Māori entrepreneurs’ uptake of financial services – particularly when the the Māori economy is estimated to be worth $42 billion.
The study conducted focus groups with 30 Māori entrepreneurs in Northland and Auckland. It found that less than 14% of participants had taken up small debt financing from banks, yet 64% said debt is a problem.
Of those who said debt isn’t a problem, 89% had no backup plan and 56% had no business budget. Most participants felt confident about their money management skills.
According to Te Au Rangahau director Dr Jason Mika, the report shows there is potential to develop financial capability even more.
“While many are accessing support, some are not doing it as much as they could, especially in the early stages of their business.”
Westpac New Zealand head of specialists for commercial, corporate and institutional banking, Steve Atkinson, says debt can be worrying for businesses, but it’s not the biggest issue. Sustainable business plans are also crucial.
“Many Māori entities are looking at 50-100 years out and how their business will be sustainable and benefit future generations, whereas many mainstream small-to-medium sized businesses are more focused on the next 2-5 years. So financial institutions have to recognise the needs of their customers,” says Atkinson.
The study also found that 36% of participant had a poor experience when interacting with government agencies for support or business mentoring.
Westpac Massey Fin-Ed Centre director Dr Pushpa Wood says debt could be a potential future issue and there is a need for contingency planning.
“Support networks generally don’t accommodate the differences in the approach of Māori enterprises,” Wood says. “Programmes could be more open to different ways of thinking about how and why business is done. The objective is to help businesses, but it needs to be done in a way that is culturally appropriate for the entrepreneur.”
This could take a number of forms, such as a Māori responsiveness plan. Study participants indicated that whanau-centred design and delivery of youth-focused programmes are likely to help business support service uptake.
“The key thing is to talk to Māori to understand their needs and support them in a way that is consistent with their values,” Adds Mika.
Businesses are also taking their own cooperative approach to business solutions. That approach could differentiate Māori businesses, Mika notes.
“In Northland, a lot of the firms we talked to were smaller in scale. Entrepreneurs were self-employed and the businesses were whānau-based. What was really interesting was the way they were pushing for a more cooperative approach to address issues around scale, including how to make the most of opportunities.”
“The entrepreneurs we talked to were proud of being Māori and expressed their Māori identity through their businesses,” he says. “They understand the importance of being profitable – profit is the lifeblood of the business, but it’s not necessarily why they are in business.
“It can be a tricky balancing act and it shapes the decisions they make in running their enterprises. Success is defined by having a business that is financially sustainable while providing opportunities for whanau to participate and benefits for the wider community.”
Mika says that Māori goals include financial independence, self-determination, and to afford choices for mokopuna.