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SUPPORTING REFUGEES IN ENTREPRENEURSHIP
Prepared for the OECD Centre for Entrepreneurship, SMEs, Regions and Cities
Myrto Chliova, Steffen Farny and Virva Salmivaara
Aalto University
1
Table of contents
Key messages 2!
Introduction 3!
Rapid growth in number of refugees settling in Europe 3!
Entrepreneurship as a solution to labour market integration of refugees 3!
What are the potential benefits of entrepreneurship for refugees? 5!
Expected benefits of refugee entrepreneurship 5!
Realized benefits of refugee entrepreneurship 5!
What challenges do refugees face when starting a business? 6!
Individual level challenges 7!
Ethnic group level challenges 8!
Market and opportunity level challenges 9!
Institutional level challenges 10!
What can policy do? 11!
Policy environment 11!
Diversity of migration situation and policy approaches across the EU 11!
Current policies strengthening refugee interest and competence in entrepreneurship 13!
Current policies strengthening the environment for migrant / refugee entrepreneurship 15!
Evaluation on the best practices and impact of current policy programs 17!
Policy recommendations 18!
The promise and limits of entrepreneurship as a solution for social integration 18!
Policies to strengthen refugee interest and competence in entrepreneurship 18!
Policies to improve the environment for migrant / refugee entrepreneurship 20!
Summary of policy recommendations 22!
References 25!
Appendix: Policy examples 30!
!
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Key messages
● In 2016, there were approximately 65.6 million people worldwide, who have been
forced to leave their home region. Of this number, 22.5 million were refugees
fleeing from their country of origin, 40.3 million were displaced within their own
country and 2.8 million were asylum-seekers.
● The integration of refugees remains challenging for national governments and local
administrations. One option that is under-utilised is entrepreneurship.
● Refugees face many barriers to business creation, including a lack of
entrepreneurship skill and finance, difficulty navigating the regulatory
environment, language barriers, difficulty securing a premise and building
networks as well as particular legal restrictions related to refugee-status.
● National and regional policymakers have launched a range of initiatives to support
the integration of refugees through entrepreneurship. These include
entrepreneurship training programmes, small grants and co-working spaces.
● High-quality data on refugees engaged in venture creation activities to support
evidence-based policies is currently lacking throughout Europe.
● Successfully supporting refugee entrepreneurship likely needs to combine policies
that enhance the interests and competences of the individuals (e.g. entrepreneurial
advisory and coaching services) and policies that improve the supportive structural
conditions for entrepreneurship (e.g. opportunities for networking, access to
finance and premises). Policymakers should strive for balance between national
and local level policies, and between mainstream programs that have proven
effective and where refugees can be offered support without much additional cost
and tailored entrepreneurial support programs where the particular needs of
refugees can be addressed in more detail.
● The report outlines a variety of approaches by public entities to support refugee
entrepreneurship at a local or city level, often in collaboration with non-
governmental and private sector actors.
● We recommend policymakers to have realistic expectations about the promise of
refugee entrepreneurship as a means of integration and economic development.
However, due to the recent influx of refugee still being in the early-stage of
integration and the large number of under-aged people in this group, the future
potential for refugee entrepreneurship might be much larger than the current
numbers suggest. Assessment of the phenomenon and establishing support and
alleviating the barriers for refugee entrepreneurship could enable greater
prevalence and impact of refugee entrepreneurship.
3
Introduction
Rapid growth in number of refugees settling in Europe
In recent years, the number of refugees in the world has grown to an all-time high, reaching 22.5
million people at the end of 20161. This has led to a rapid growth of asylum seekers coming to
Europe. According to Eurostat statistics2, the number of first-time asylum applications in
European Union countries has risen from 563,000 applications in 2014 to over 1.2 million in both
2015 and 2016 and fallen back to 650,000 in 2017. In contrast to the previous peak of asylum
seekers in 1992 that was connected to the Yugoslavian war, the majority of asylum seekers have
in recent years come to Europe from Syria, Iraq and Afghanistan.
Unlike immigrants who leave from one country or region to settle in another in search for a better
life, the United Nations3 defines refugees as vulnerable persons who are in the need of protection
from outside their country of origin due to a “well-founded fear of being persecuted for reasons of
race, religion, nationality, political opinion or membership of a particular social group or political
opinion”. Before these individuals’ request for refuge has been formally processed and approved
by the host country, these people are referred to as asylum seekers. In this report, we focus on
refugees and asylum seekers only. However, there are other groups of vulnerable migrants that
may face similar situations and may benefit from the policy initiatives discussed in this report.
In 2008-2015, the European Union member states4 granted protection on grounds of a refugee
status, subsidiary protection or humanitarian reasons to 1.1 million asylum seekers, and further
710,000 asylum seekers were granted protection in 2016 and 538,000 in 2017. Germany has borne
by far the biggest share of refugees during the recent wave. Of a total around 1.5 million asylum
seekers who were granted protection in 2015-2017 around 900,000 people were registered in
Germany. The other popular destination countries have been Sweden (135,000 people granted
protection in 2015-2017), France (102,000), Italy (100,000), Austria (83,000) and the Netherlands
(48,000).
Entrepreneurship as a solution to labour market integration of refugees
While statistics on refugees are not explicitly collected at the EU level, data on non-EU born
migrants shows that the overall share of those that are self-employed has increased from 2008 to
2016 by 2.6 percentage points, in contrast to a decrease of 0.4 percentage points among national
EU citizens5. However, rates of self-employment of non-EU born citizens vary considerably
across countries within the EU (ibid). In an effort to promote greater integration through
entrepreneurship of migrants, the European Union has stressed the importance of removing
barriers for migrant entrepreneurship and raising awareness of entrepreneurship across ethnic
minorities. These themes are promoted in the EU Action Plan on the Integration of Third Country
1 http://www.unhcr.org/globaltrends2016/
2 http://ec.europa.eu/eurostat/news/news-releases
3 http://www.unesco.org/new/en/social-and-human-sciences/themes/international-migration/glossary/refugee/
4 http://ec.europa.eu/eurostat/news/news-releases
5http://ec.europa.eu/eurostat/statistics-explained/index.php/Migrant_integration_statistics_-_employment_conditions
4
Nationals6 and Entrepreneurship 2020 Action Plan7, supported by the work of the European
Commission's Network "Ethnic Minority Businesses".
However, despite these broader policy efforts, little is known about the exact prevalence, specific
barriers and benefits related to entrepreneurship by people with a refugee background, and
particularly by those of the recent refugee wave. It must be noted that only a small proportion of
all migrants in the European Union are refugees, and the administrative data does not necessarily
differentiate between the reasons for immigration (European Union, 2016c). In the beginning of
2017, there were around 37 million people born outside of the EU-28 living in the area of
European Union8, whereas the United Nations (UNHCR, 2016) reports that the refugee population
in the EU member states was about 4.3 million.
Refugees often face difficulties in integration in the labour market of the host country. Studies
show that refugees have very low employment rates compared to the native population and that
they also lag behind other migrant groups who possess greater social capital and ethnic resources
within well-established ethnic groups (Damos de Matos & Liebig, 2014; Hartog & Zorlu, 2009;
Lyon et al., 2007; Sarvimäki, 2017; Valtonen, 1999). People with refugee background often
cannot take full advantage of their educational background or qualifications on the labour market
due to, for instance, a lack of formal proofs for their education and professional licences (Wauters
& Lambrecht, 2008). Hence, refugees that do get employed often report that they are
overqualified for their jobs (European Union & OECD, 2016). The difficulties faced in the labour
market result in refugees’ inability to realise their full potential to contribute to economic
development and society’s, and their own, wellbeing.
Synthesis of previous studies points to contradictory evidence on the potential and extent of
refugee entrepreneurship. On the one hand, the self-employment path for refugees seems
promising because it offers an alternative for paid employment in tackling the high unemployment
levels, and in particular because refugees have often been self-employed in the past and thus
represent a group likely to pursue self-employment in the future (Lyon et al., 2007; Rengs et al.,
2017). Providing supportive evidence, a study from Australia finds that around 10% of refugees
had started their own business after staying in the country for five years (Legrain, 2016). On the
other hand, studies conducted within the EU show the phenomenon of refugee entrepreneurship to
be relatively limited in scope. A study done in Belgium in the early 2000s, for instance, found that
only around 1.48% of refugees in the country were self-employed (Wauters & Lambrecht, 2006).
A more recent report surveying 305 Syrian refugees in Austria, the Netherlands, and the United
Kingdom found that although as many as 32% of the interviewees had owned a business in their
native country, yet only a few had started a business and no more than 12% had intentions to
become entrepreneurs after their relocation (Deloitte, 2017). This may be due to lack of
knowledge on the available support, the fear of losing financial benefits, or the previous business
idea not considered possible or having success potential in the host country environment (ibid).
6 http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52016DC0377&locale=en
7 https://ec.europa.eu/growth/smes/promoting-entrepreneurship/action-plan_en
8 http://ec.europa.eu/eurostat/statistics-explained/index.php/Migration_and_migrant_population_statistics
5
Overall, these results should be interpreted with care, as both the phenomenon of refugee
entrepreneurship and the accumulation of evidence on its effects are currently at a nascent stage.
The recent inflow of refugee migration becomes only visible on host country labour markets with
a time delay. This is because some of the arriving people are under-aged and hence not yet at
working-age, while for many of the recent refugees’ asylum procedures are pending, or if asylum
has been granted, they are still in early stages of integration to the host country environment.
Hence, the potential for refugee entrepreneurship in the future might be much larger than the
current numbers suggest, and further assessment of the phenomenon is needed to inform the initial
policy efforts to support it. Establishing support and alleviating the barriers for refugee
entrepreneurship could enable greater prevalence and impact of refugee entrepreneurship.
In this background paper, we respond to the need to develop a more comprehensive understanding
of refugee entrepreneurship. We provide grounds for further research in this area by bringing
together the current research on the benefits and barriers of refugee entrepreneurship and by
presenting the current policy approaches within the EU, as well as further policy
recommendations for enhancing the possibilities of refugees to engage in entrepreneurship. We
draw from studies that have specifically addressed refugees and asylum seekers as well as
research on migrants in general.
What are the potential benefits of entrepreneurship for refugees?
Expected benefits of refugee entrepreneurship
While current studies reveal relatively little, partially due to a lack of reliable data (Sak et al.,
2017), about the actual benefits of entrepreneurship for refugees, they present a relatively clear
picture regarding the expected benefits. Migrants and refugees frequently look to entrepreneurship
as a way out of unemployment and towards greater integration in the host country
(Kloosterman et al., 1999; Lyon et al., 2007; Wauters & Lambrecht, 2006; 2008). Indeed,
proclivity to engage in entrepreneurship is relatively high within refugee groups, as reported for
instance in the case of Australia, where refugees are the most entrepreneurial group of migrants
(Collins, 2017). These motivations are not always related to the necessity aspect of
entrepreneurship, as refugees sometimes view entrepreneurship as an appealing professional
choice (Obschonka et al., 2018; Wauters & Lambrecht, 2006). In addition, for instance Muslim
refugees have reported that their frequent family and religious commitments make
entrepreneurship an appropriate choice for employment, as it allows for autonomy and
adaptability that paid jobs cannot offer (Najib, 2014).
Realized benefits of refugee entrepreneurship
There are some indications that entrepreneurship can have benefits for refugees, even though
these are tentative and not based on conclusive evidence.
Lyon and colleagues (2007), for instance, provide an account of improvements that are self-
reported by refugee entrepreneurs in the UK who were running a business at the time of the study.
These entrepreneurs claim that their business has resulted in positive improvements in their skills,
income levels and overall integration. In their study, a majority of refugee entrepreneurs stated
that running their own business led to a wider socialisation with the local community and thus
6
enabled them to break out from co-ethnic circles. The entrepreneurs also self-report an average of
four other jobs created through each of their businesses, which were operating mainly in the
retail or restaurant sectors. As a result, Lyon and colleagues report a positive spillover effect for
local development in deprived urban areas where refugee enterprises were mainly located, as the
entrepreneurs and employees tended to live in the area with their families and thus be consumers
there. The entrepreneurs reported that the training offered to employees enhanced the professional
skills and entrepreneurial mindset in the community, and the businesses also served as community
centres for the co-ethnic community.
Another report of an entrepreneurship training program for refugee women in Australia reported a
very modest rate of new business creation, but substantial gains in terms of the gained knowledge
and skills contributing to self-confidence and social networks for these women (Van Kooy,
2016). Indeed, this finding echoes results of studies that show the importance of empowerment in
fostering entrepreneurship and supporting existing business owners. A meta-analysis on
entrepreneurship support programs across the world indicated that microloans can have positive
side-effects in terms of women’s empowerment (Chliova et al., 2015). Furthermore, an
experimental study showed that training that focuses on teaching a proactive and entrepreneurial
mindset can improve entrepreneurial outcomes better than traditional business skills training
(Campos et al., 2017).
Studies on refugee entrepreneurs should be, however, interpreted with caution. First, refugee
populations exhibit great heterogeneity and thus results cannot be easily generalized across
them. Second, both Lyon and colleagues and Van Kooy use self-reported data, without employing
a comparison group (of refugees that did not become entrepreneurs), or a longitudinal research
design (that would account for those entrepreneurs that failed), and as such could lead to
positively biased conclusions. For now, no studies exist to our knowledge that account for the
effects of refugee entrepreneurship over time or that compare refugee self-employment to the
counterfactual of regular job placements.
What challenges do refugees face when starting a business?
While entrepreneurial endeavours of native entrepreneurs face substantial challenges and high
probabilities of failure, entrepreneurship can be even more challenging for migrants, and
even more so for refugees (Wauters & Lambrecht, 2008). Economic migrants typically have
time to plan and organize their departure, to save money, learn the local language or prepare
beforehand for the cultural changes that await them (Gold, 1992; Lyon et al., 2007; Wauters &
Lambrecht, 2006). They are also more likely to be assisted by pre-existing social networks based
on profession, kinship or regional origins, in the host country (ibid). In contrast, refugees are a
much more vulnerable group, having faced prosecution and traumatic events, which lowers their
self-confidence (Wauters & Lambrecht, 2006). Indeed, when compared to other migrant groups,
refugees tend to be the slower to ‘close the gap’ with the rest of society (Scholten et al., 2017).
Nevertheless, some studies also report that the past engagement in entrepreneurship and cross-
cultural experiences result in a high entrepreneurial spirit amongst refugees and migrants in
general (Rengs et al., 2017; Vandor & Franke, 2016) that could be harnessed if some of the
barriers could be removed.
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Challenges for refugee entrepreneurs might stem from two broad areas: first, their own individual
limitations, and second, limitations in their environment surrounding them, which can be related
to the ethnic group, the market or the institutional level. Below we therefore summarize the most
commonly identified challenges for migrant and refugee entrepreneurship, as identified in the
literature, originating in inhibiting conditions present at the individual, ethnic group, market and
institutional level. We have synthesized the review of literature in Figure 1, which allocates each
challenge to the most relevant level.
Figure 1: Challenges for Refugee Entrepreneurship at institutional, market, ethnic group and
individual level
Individual level challenges
A major barrier to entrepreneurship identified in previous literature is the low or not applicable
human capital (i.e. knowledge, skills, capabilities) of migrants and refugees. Indeed, the refugees
that manage to become entrepreneurs tend to have higher educational attainment and skills, as
well as prior self-employment experience (Fong et al., 2008; Wauters & Lambrecht, 2006).
Recent refugees to Europe from Syria and other war-torn countries tend to be on average less
educated than migrants or the local population (Adecco, 2017; European Union, 2016c).
However, data on the exact educational levels vary. For instance, a German study showed that
only 8.3% of Syrian refugees had higher education, and 80% of those registered as unemployed
lacked any vocational training (ibid). Another study however based on the UK, Austria and the
Netherlands reported that 38% of interviewed Syrian refugees had a university education
(Deloitte, 2017). The level of education also varies across different countries of origin, with
Syrian refugees being overall more educated than refugees from Afghanistan, Iran, Iraq, Somalia,
or Eritrea (European Union, 2016c). Notably, even when refugees have professional
qualifications, their diplomas might not be accepted in the host country, or they may lack formal
certifications, either because those do not exist, or because certificates were left behind when
fleeing their home country (Wauters & Lambrecht, 2008). Attaining education and obtaining
8
professional certifications in the host country can also be a challenge due to the information and
business training being offered usually in the local language only, without translation services
(ibid).
Another frequently noted challenge, both for migrants and refugees, is the lack of proficiency in
the language of the host country. Indeed, studies across a range of countries have found that
learning the local language can be very beneficial to entrepreneurs in order to gain business
licences, build professional networks with business partners and to serve customers (Fong et al.,
2008; Kloosterman, 2015; Lyon et al., 2007; Najib, 2014). This finding seems to be consistent
with barriers that recent Syrian refugees face in Europe, as they report language as one of their
greatest barriers in securing employment (Deloitte, 2017).
Refugees also frequently lack knowledge on market opportunities (Lyon et al., 2007), and for
instance their distrust towards authorities and lack of local language skills may explain limited
effort in seeking professional advice on how to establish a business and operate in the
institutional environment (e.g. taxes, regulations) (Wauters & Lambrecht, 2008). For refugees,
unlike other migrant groups, an additional issue can be the lack of social networks, as forced
migration is much less coordinated and less driven by social networks in the receiving country.
That might mean that some refugees will have no one to turn to, which can be an additional
barrier when looking for help in setting up a business (Wauters & Lambrecht, 2008).
Psychological problems can also be a major challenge in the case for migrants, and even more so
in the case of refugees from war-torn countries. The relationship can go both directions. First,
stress can afflict migrant and refugee entrepreneurs because they tend to work long hours (Fong et
al., 2008, Lyon et al., 2007; Wauters & Lambrecht, 2008). Second, the trauma and psychological
problems can be a barrier to the self-reliance and confidence necessary for starting up a business
(Lyon et al., 2007; Needham & Quintiliani, 2007; Wauters & Lambrecht, 2006). Indeed, poor
mental health is among the greatest barriers in the integration of refugees into employment within
the European Union (Scholten et al., 2017).
Assets are another challenge for entrepreneurship. Indeed, those migrants and refugees with
economic assets have a greater likelihood to become entrepreneurs (Fong et al., 2008; Lyon et al.,
2007; Najib, 2014; Wauters & Lambrecht, 2006; 2008). Many refugees lack access to a bank
account, even after residing for some time in their host country and are thus not eligible to get a
formal loan from a bank (Lyon et al., 2007). The difficulty of obtaining loans can also be
attributed partly to the sectors refugee entrepreneurs tend to pursue (Wauters & Lambrecht, 2008),
described later on. Beyond assets, lack of suitable and affordable premises can be another
challenge, as well as advise on appropriate location, which can be a crucial factor for
entrepreneurial success (Lyon et al., 2007; Wauters & Lambrecht, 2008). This can be both due to
high cost of premises (Lyon et al., 2007), but more fundamentally due to inattention by most
refugee entrepreneurs to the importance of location as a success factor for their business (Wauters
& Lambrecht, 2008).
Ethnic group level challenges
Not all ethnic groups are similarly poised for entrepreneurial action and entrepreneurial success,
as some groups have a stronger culture of entrepreneurship. Those from countries with lower
levels of self-employment are less likely to set up a business (Fong et al., 2008; Kloosterman,
9
2010). Dense social networks within a migrant or refugee community can support early-stage
entrepreneurship but can be very restrictive in terms of limiting the opportunities for profit
generation and expanding the operations into broader markets (Portes & Sensenbrenner, 1993).
Also, human and financial capital does not only vary at the individual level but also at the ethnic
group level. For instance, Iranian refugees to the EU have typically brought with them high
human and financial capital, compared to refugees from Somalia and Eritrea (Scholten et al.,
2017). As a result, challenges to employment in general and entrepreneurship in particular can be
discerned at the ethnic group level and be dependent on size and density of the group in each host
country or region.
In addition, gender-based cultural norms are also a major barrier to entrepreneurship by refugee
women (Rath, 2011). In practice there are very few women refugee entrepreneurs (Wauters &
Lambrecht, 2006), a phenomenon that can be attributed to their lower human and financial capital
and work experience, which can in turn be attributed to cultural norms that might hinder women
working outside home or running businesses, and which allocate disproportionate family and
childcare commitments to women (Lyon et al., 2007; Rath, 2011; Van Kooy, 2016).
Finally, certain ethnic groups face higher discrimination. Discrimination can be particularly high
for Muslim refugees in non-Muslim countries, for instance (Najib, 2014). In the EU, in particular,
views on immigration have been found to be more negative than elsewhere in the world
(Gallup/IOM, 2015). Previous studies have described how discrimination can reduce chances of
integration in the job market (Kloosterman, 2010), but also chances of securing financial loans, as
well as chances of securing local, and even migrant clients from other ethnic groups when
engaging in entrepreneurship (Wauters & Lambrecht, 2008).
Market and opportunity level challenges
Among the most serious but often overlooked challenges that migrant and refugee entrepreneurs
face are those related to the markets or opportunities they tend to pursue. Indeed, a stream of
literature has shown how migrants tend to enter areas with low entry barriers and low educational
qualifications, such as retail, wholesale or restaurants (Collins, 2003; Kloosterman et al., 1999;
Lyon et al., 2007; Wauters & Lambrecht, 2006; 2008), due to individual barriers already outlined
above. This type of “necessity” rather than “opportunity” entrepreneurship is not particularly
promising and does not afford substantial chances for upward mobility (ibid). Selection of
opportunities tends to follow imitation of other co-patriots, and as such typically results in high
competition in areas of low yield (Wauters & Lambrecht, 2008). Earnings of refugee
entrepreneurs are unfortunately much lower than the earnings of native entrepreneurs, which can
be partially explained by the types of low skilled sectors the first ones select (Wauters &
Lambrecht, 2006).
Migrants are sometimes well placed to cater to niche “ethnic” markets that comprise of a
clientele of other migrants, and yet this is a limited strategy that can result into lock-in and lower
earnings (Achidi Ndofor & Priem, 2009). More profitable are those entrepreneurs that can provide
services and products to the mainstream market (Kloosterman, 2015), however this can be
challenging due to their limited networks with the local society. Those migrants with higher
human and financial capital have been found to be more successful in targeting the more
profitable mainstream markets (Achidi Ndofor & Priem, 2009).
10
Finally, it is important to note that the general situation of the economy matters, for both native
as well as migrant and refugee entrepreneurs (Kloosterman, 2003). Similar to integration through
paid employment being more likely in countries with good labour market conditions (EU report,
2016c; Scholten et al., 2017), both new business creation and successful business operations are
overall more likely under improved economic conditions. This is particularly true in the case of
opportunity-based, and not necessity-based, entrepreneurship.
Institutional level challenges
There are several challenges that migrant and refugee entrepreneurs face that originate at the
institutional level of a country.
The status of migrants and refugees poses a first challenge to entrepreneurial activity. The
broader uncertainty related to the refugee status is a key barrier, compounded by the uncertainty
on whether family members will be able to be reunited (Lyon et al., 2007; Wauters & Lambrecht,
2006). The time-consuming asylum application procedure, ranging from 3 to 12 months on
average in the EU that often leads to a subsidiary protection status, as well as lengthy stays within
constrained camps, adds to the challenges faced by refugees interested to become entrepreneurs,
as inactivity can decrease chances of labour market integration in general (Adecco, 2017;
European Union, 2016c; Scholten et al., 2017), and that could be relevant for integration through
entrepreneurship as well. In a study in the Netherlands, refugees with low to medium intention to
become entrepreneurs, became less interested to engage in entrepreneurship, the lengthier their
stay in the host country (Berns, 2017). However, intentions and the probability of actual
entrepreneurship might increase again in the long run, as data on migrants and refugees in the
United States suggests (Fong et al., 2008).
A strict regime of regulation such as the one present in several EU countries might be limiting
the emergence of immigrant entrepreneurship. Asylum seekers who have not yet received the
refugee status are not formally permitted to start a business in most countries (Wauters &
Lambrecht, 2008), with few exceptions, such as Austria and Italy (Martin et al., 2016, p. 45).
Furthermore, even though the EU Qualification Directive (2011/95/EU) requires that refugees are
given access to employment and self-employment official work bans and labour market tests in
certain countries are another barrier to employment in general9, and entrepreneurship in particular
(Scholten et al., 2017). Some studies find that in many cases immigrant entrepreneurship starts out
as informal (Collins, 2003), as the cost of taxes and compliance can be too much to shoulder for
businesses operating in low skilled areas (Lyon et al., 2007). Similarly, high minimum wages
present in several EU countries can induce greater informality among immigrant entrepreneurs in
low skilled sectors, as they rely on low paid informal family work to keep afloat (Kloosterman,
1999, 2003). However, also a loose enforcement of regulation, such as in the case of the
Netherlands (Kloosterman 1999, 2003) can allow for higher levels of such informal
entrepreneurship.
9 Tanay, 2016, available at:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwiurYqYrtXaAhXRYVAK
HYqqC8MQFgg0MAE&url=http%3A%2F%2Fec.europa.eu%2Fsocial%2FBlobServlet%3FdocId%3D16831%26lan
gId%3Den&usg=AOvVaw1hJcktrnjobAGEVbY0IwDG
11
Another frequently cited challenge is the presence of high bureaucracy and red tape in the
process of both new business creation and subsequent compliance (Wauters & Lambrecht, 2008).
Bad experiences with state services upon arrival tend to breed distrust among refugees towards
the state in the future (Lyon et al., 2007). Studies have also revealed a huge lack of clarity
regarding regulations related to running a business among refugees (Wauters & Lambrecht,
2008). Finally, beyond the content of state regulations and services, research has highlighted the
issue of insufficient or inappropriate communication of existing regulations and services for
entrepreneurs, as refugees tend not to know about support programs offered (Berns, 2017; Lyon et
al., 2007; Rath, 2011).
What can policy do?
Policy environment
The European Union member states have considerable freedom to decide on their nation’s policy
approach on supporting refugee entrepreneurship. Integration and employment policy are the
responsibility of the member states, and national governments often delegate activities further to
cities and local administrations. The EU has emphasised the involvement of all levels of
governance, including the regional and local authorities, and also of civil society (Hooper et al.
2017). As a result, the execution of projects is not limited to national, regional and local
authorities, but also carried out by a large number of public, non-profit and private organisations
that follow the broader policy initiatives. These organisations are focused either on supporting
immigrants or refugees in particular, or they involve these groups alongside with the potential
native entrepreneurs or other target groups (European Union, 2008a). Hence, practical support for
refugee entrepreneurship, such as offering training and coaching that helps migrants/refugees
develop entrepreneurial skills or to gain access to finance and networks is partly in the hands of
the private or third sector (Berns, 2017). At the same time, national level policy makers and the
European Union typically provide financing for these programs and can influence the regulatory
environment for the SMEs (European Commission, 2016). They are also in the position to ease
the path towards entrepreneurship, for instance, by adjusting rules in regards to obligatory
licenses, requirements for gaining financing, and the regulation of social security benefits of
nascent entrepreneurs (European Union, 2008a).
Diversity of migration situation and policy approaches across the EU
The 28 European Union member states demonstrate vast differences in terms of their history of
immigration and the size of migrant population, the social policy and welfare regime, as well as
the political momentum and general attitudes towards immigration (European Union, 2008a).
About 90% of all refugees residing in Europe are settled in only six countries: Germany, the
United Kingdom, Sweden, France, Belgium and Austria (European Union & OECD, 2016). These
countries have received the largest numbers of refugees already before the most recent crisis and
have been hosting refugee populations for over a decade. For instance, in Germany over 68% of
refugees have been in the country for more than 15 years (ibid). The countries with large refugee
populations offer important social networks for refugee entrepreneurship (Deloitte, 2017). In
contrast, in other EU countries refugees as a demographic segment are a much more recent
phenomenon that has a more limited economic and societal impact. Whereas it is estimated that
the refugees that have come to Europe by the end of 2016 will increase the European labour force
12
by 0.4% across all member states (OECD, 2015), in Germany, receiving the largest number of
refugees, the labour force will increase by 1.5% in upcoming years (IAB, 2015).
European countries also have established different types of entrepreneurship support services. The
majority of European countries have been focusing their efforts on mainstreaming their
employment integration policies (Scholten et al., 2017), including support for entrepreneurship.
This is in line with EU guidelines that highlight the need for all support programs to acknowledge
different forms of diversity (ethnic background, social class, gender, sexual inclination) (European
Commission, 2008a). Mainstreaming refers to services being offered that are not specific to
refugees, but are inclusive to migrant groups more broadly, and in many cases also to the general
native population. The mainstreaming approach holds the benefit of integrating refugees into the
rest of society and bringing them into existing services. However, countries that have received
large numbers of incoming refugees during the recent influx have turned towards more tailoring
approaches in their employment integration policies (EMN, 2015). Thus, Austria, Sweden, and
Germany in particular have diverged from the mainstreaming approach, developing a strategy of
offering tailored policy approaches for refugee employment integration (Scholten et al., 2017).
The choice between mainstreaming or tailoring seems to depend on the urgency and size of the
refugee influx (external drivers), as well as on the available resources and regulatory barriers
(internal drivers) present within a specific country. The higher the formal barriers and the larger
the refugee influx, the more mainstream services are unable to cater to refugees and tailored
approaches need to be employed (Scholten et al., 2017). For countries where the urgency of the
refugee influx is lower, existing mainstream services that are made available in several languages
by advisors that is sensitive to diversity may be more feasible. There is no evidence as of yet on
which approach (mainstreaming vs. tailoring) brings better results, but it seems plausible that
broad mainstreaming might need to be balanced with more targeted local adaptation to refugee
ethnic groups for optimal results (Desiderio, 2014).
Another divergence between EU countries is the level of centralization or decentralization of
employment integration services offered. Scandinavian countries are more likely to follow a state-
centric approach, while other countries less so. Overall, while policies to encourage employment
can be found at various levels and are typically rely on EU-level funds (Rath, 2011), local
authorities seem to carry out most of the initiatives regarding refugee employment integration and,
in particular, entrepreneurship support services (Hooper et al., 2017; Scholten et al., 2017). Cities
frequently initiate pilot programs, which can be on the forefront of innovation, but might also
conflict with national government’s mandate for a coherent, long-term and scalable strategy
(Hooper et al., 2017).
In order to evaluate the policy approaches towards migrant and ethnic minority entrepreneurship
across the member states, the European Union has conducted several studies (in 2000, 2008 and
2016). These studies give a concise overview of the currently available policy support and
demonstrate the versatility of approaches reflecting the distinct situation of each country. The
policy schemes that support refugee/migrant entrepreneurship in particular have been most
prominent in Northern and Western European countries, whereas countries in Southern, Central
and Eastern Europe have been less active in this area (European Union, 2008a). Similarly, at the
municipal level, policies that focus on “ethnic entrepreneurship” exhibit great variation across
Europe (Rath, 2011). In sum, measures to support refugee entrepreneurship are at the moment
13
experimental and of an ad hoc nature, while solid evidence on their effectiveness is lacking
(Hooper et al., 2017; Scholten et al., 2017). In the following section, we describe some of the
more promising best practices that have been implemented to strengthen refugee integration and
that can be conducive to integration through entrepreneurship.
Current policies strengthening refugee interest and competence in entrepreneurship
A great part of existing policy support focuses on supporting migrant/refugee entrepreneurship
through individual empowerment and skills development. In this kind of agency-based approach,
the support consists of advisory and coaching services that are meant to leverage the individuals’
personal potential by enhancing their knowledge and competence in successfully becoming an
entrepreneur.
First, on a pan-European level, initiatives have started to document refugees’ human capital. As
widely suggested in the literature, the identification of individuals with entrepreneurial interest,
skills and prior experience has greater chances of success in respective endeavours. However, this
has not been systematically developed and implemented across the EU. Broader policies that can
help with the foundational work of skills assessment and skills enhancement can be traced back to
the EU Commission for the promotion of migrant entrepreneurship (2016). The Europass portal,
for instance, has been introduced with the aim of coordinating qualification recognition practices
and decisions across the EU, while the ‘Skills Agenda for Europe’ (2016) focuses on actions that
can improve training, skills and support within the EU. One of these actions, the “EU Skills
Profile Tool for Third Country Nationals”10, aims to specifically empower refugees through
documenting their skills. The profile tool is available online for free use by authorities and other
organizations within the EU, promoting easier assessment, which can be a first step towards
employment integration for these groups. This is particularly relevant, as in many EU countries
there is no systematic, national level skills assessment in place for asylum seekers or refugees11.
Second, on a national level, a few countries have started to develop skill assessment tools tailored
to their national context. Such developments are underway in some EU countries, such as Austria,
Norway, Germany and Denmark, with the Danish approach considered as a best practice example.
The website12 developed by Danish authorities offers detailed guidelines, forms, tools and data
helping the translation of qualifications into internationally comparable standards (Adecco, 2017).
While such services are not relevant to entrepreneurship only, they can be used as a basis for the
provision of individual level support in new business creation, by mapping out the skills
prospective entrepreneurs hold.
Third, on a local level, some public entrepreneurship support services have extended their
service offering to include refugees. Irrespective of whether individuals with interest in
entrepreneurship are actively identified or not, entrepreneurship support programs are typically
available in the majority of EU countries and major cities (see Appendix: Vienna Business
10 https://ec.europa.eu/migrantskills/#/
11 Tanay, 2016, available at:
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&ved=0ahUKEwiurYqYrtXaAhXRYVAK
HYqqC8MQFgg0MAE&url=http%3A%2F%2Fec.europa.eu%2Fsocial%2FBlobServlet%3FdocId%3D16831%26lan
gId%3Den&usg=AOvVaw1hJcktrnjobAGEVbY0IwDG
12 http://ufm.dk/en/education-and-institutions/recognition-and- transparency
14
Agency, CNA-Dedalo). Such programs seek to help the participants assess the feasibility of their
business idea, to improve it and to cope with the local regulatory and administrative issues related
to starting up and running a business. Interestingly while entrepreneurship support services help
with the early startup stage of business creation, few services exist with an explicit focus on
strengthening existing small businesses by migrants or refugees (Rath, 2011). The example of
Barcelona Activa, the Barcelona City Council’s economic development agency, is illustrative of a
very successful mainstreamed entrepreneurship support service. While there are no numbers on
refugee entrepreneurs, migrant entrepreneurs comprise a big segment (around one third) of
Barcelona Activa’s beneficiaries. The centre functions as a one-stop-shop that offers training,
coaching, incubation space and other services, and boasts impressive results, as between 2004 and
2011 it had helped create 6,214 businesses and 11,800 jobs (Desiderio, 2014). Barcelona Activa
also offers more tailored programs, such as the ODAME program, targeted to women in
particular. Another example, Almi Business School in Sweden, established by state-owned
company Almi, which offers training for migrants with an entrepreneurial background in order to
help them to start businesses in Stockholm. In Glasgow the Business Gateway’s Ethnic
Entrepreneurship Programme has been targeting refugees and migrants since 2005 with tailored
programs but also with the aim of bringing their integration into their mainstream course offering
(Desiderio, 2014). Similarly, the city of Hamburg has established the program Unternehmer ohne
Grenzen (Entrepreneurs without Borders) to provide coaching and assistance with business
creation (ibid).
Fourth, notably, some policymakers have introduced new tailored services to emphasize refugee
entrepreneurship as a pathway for integration. Efforts to ‘fast-track’ labour integration of refugees
are being developed across several countries, such as in Sweden13, Germany (see Arrivo case in
Appendix) or the Netherlands, that aim to identify individuals particularly suited for an
entrepreneurial career. In Finland, the Startup Refugees initiative, consisting of a network of
companies, government, officials, NGOs and research institutes, assesses the professional skills
and experience of refugees as early as possible and helps them to find jobs or establish companies.
The initiative reports that by August 2017 they had evaluated 1,800 people and offered a number
of courses and events. In addition to finding employment for refugees, the initiative had helped
establish 35 businesses.
For this purpose, national and city entrepreneurship support services also offer training in the
native languages of prominent immigrant/refugee groups (see Appendix: Utrecht Refugee Launch
Pad). In Sweden, vocational language training is being offered to third-country nationals of
several professional backgrounds, including entrepreneurs (EMN, 2015). The Vienna Business
Agency, in its Mingo Migrant Enterprises program, has experimented with coaching
entrepreneurs in several ethnic languages (more info in Appendix) and also set up a tailored
service under the name CoRE (Centre of Refugee Empowerment) to guide refugees towards self-
employment and freelancing within specific occupations, including bakery, carpentry and IT. A
solution for sustainably extending the reach of existing services is by hiring consultants with
varied cultural backgrounds who also speak minority languages, as has been the case within
entrepreneurship support services in the cities of Amsterdam, Frankfurt, Copenhagen, Helsinki or
Stuttgart, among others (Rath, 2011). In Italy, the RE-LAB project coordinated across a number
of cities has targeted specifically refugees, providing courses and support to 341 pre-selected
13 http://www.government.se/articles/2015/12/fast-track---a-quicker- introduction-of-newly-arrived-immigrants/
15
individuals, which led to the creation of 14 micro-businesses14. While that might sound like a
modest number, it is indicative of the difficulty of business creation for individuals with a recent
refugee background.
Fifth, recent inclusive policy initiatives have targeted women and their role in the labour market.
In some initiatives particular attention is paid on the empowerment of women immigrants and
refugees. Several initiatives are planned across the EU countries. A Greek organisation, Institute
of Entrepreneurship Development (iED) runs a project called ICRSI that operates in Turkey,
Albania, Latvia, Poland, Romania, Turkey and the Czech Republic and aims to develop a model
for encouraging entrepreneurship amongst refugee and migrant women. Entryway, that operates
in Italy, Germany, Greece, Spain and Sweden focuses on particular regions and especially to
young immigrants and women. In Sweden, Ester Foundation that supports women entrepreneurs
with non-European backgrounds is offering financial instruments such as microloans and credit
guarantees (see discussion of financing instruments in next section) in cooperation with Swedbank
and Johaniterhjälpen charity organisation. This makes it possible for the migrant women
entrepreneurs to receive loans with a reduced cost and risk.
The EU is furthermore calling for more cross-country programs aimed at improving the skills of
refugee entrepreneurs. These are very recent and no concrete results have been published,
however they are worth noting. For example, MEnt program seeks to remove barriers for
entrepreneurship by offering mentoring for refugees and other immigrants in Austria, Belgium,
Italy, France and Germany. Similarly, the TREND (Training Refugees in Entrepreneurial Skills in
Digital Devices) program was initiated to develop startup services for refugee entrepreneurs in
Greece, Norway, Germany, Ireland and Belgium. Entryway, a program that spans Italy, Germany,
Greece, Spain and Sweden, focuses on entrepreneurship of young refugees and female refugees,
while ICRSI attempts something similar across Turkey, Albania, Latvia, Poland, Romania and the
Czech Republic.
Current policies strengthening the environment for migrant / refugee entrepreneurship
Beyond strengthening the capabilities of individual migrants and refugees, several policy
initiatives take a focus on enabling structural changes at several levels, which can be conducive to
more successful migrant and refugee entrepreneurship. These policies are sometimes bundled
together with entrepreneurship support services mentioned in the previous section.
First, some policy schemes encompass activities that seek to enhance the networking within and
beyond their ethnic community and to help migrants/refugees to expand their businesses to serve
the mainstream population. Collaboration between refugees and the mainstream business
networks and financial institutions have been supported in Aachen, Germany, for instance,
where a network of entrepreneurs, business executives and leaders of trade associations, public
institutions and industry-related organizations has been created to increase the vitality of the local
business environment and, at the same time, to influence the public perceptions about migrants’
economic role and contribution15. Similarly, the city of Sundvall in Sweden uses the project
Affärsintegration to link highly promising migrants, that have language competence, as well as
14 https://ec.europa.eu/migrant-integration/intpract/re-lab-start-up-your-business
15 http://www.business-network-aachen.de
16
knowledge and networks with their country of origin, with local entrepreneurs (Rath, 2011), as
does the e-learning platform YUMP Academy (more info in Appendix).
In this spirit, some initiatives also aim to improve the local communities’ attitudes towards
migrants or refugees, and their entrepreneurship potential. A very innovative initiative that
combines networking and entrepreneurial support, trying to influence attitudes towards refugee
entrepreneurs can be found in the Netherlands. The Utrecht refugee launch pad, run by the
municipality and several partners offers both refugees and locals co-housing and startup training
with the intention of enhancing labour market integration and business creation by forming tighter
connections between people with different backgrounds (more info in Appendix). In Sweden, the
association of ethnic entrepreneurs, IFS, has promoted cooperation between businesses owned by
migrants and the local population, and has furthermore sought to raise awareness and support
positive perceptions by producing films that tell the stories of successful migrant entrepreneurs. In
Germany, the Migrants Entrepreneurs in Munich (MEM) program highlights that in addition to
provision of services it is necessary to create means for open communication and to promote the
recognition of entrepreneurs with non-local backgrounds through public awards.
Second, another way that policies improve chances of successful refugee entrepreneurship is
through easier access to working facilities and financing (European Union, 2008a). Examples of
helping refugees to find financing range from programs that focus on specific groups to initiatives
that span the European Union. Bringing together and assessing the financial instruments available
for migrant entrepreneurs was an important part of a study that was conducted by Ecorys for the
European Commission and assessed the abilities of those coming from outside the European
Union to set up and move their businesses to the EU member states16. Overall, help with financing
tends to largely consist of providing information and helping with the applications (European
Union, 2008a).
Some policy initiatives are targeted at improving chances of financing for migrant or refugee
entrepreneurs specifically. Examples of such initiatives include credit guarantees and microloans
schemes, developed usually by regional and local authorities. For example, CNA World-Dedalo
project, catering to migrants in several Italian regions, offers credit guarantees in order to make
it easier for their members to get loans (see Appendix). Credit guarantees ensure that the lender to
small businesses or individuals is reimbursed for a pre-defined share of an outstanding loan, in the
case of default, making possible the lending to individuals or small businesses with insufficient
collateral (OECD, 2003). Similar public initiatives that provide assurances and guarantees for
business loans by municipal bodies have been developing in Spain and the Netherlands
(Desiderio, 2014). The Swedish Agency for Economic and Regional Growth (NUTEK) has also
been engaging in efforts to facilitate the extension of more loans by mainstream banks to migrant
businesses through increasing banks’ awareness of their potential (ibid).
Similarly, microloans are sometimes offered to support prospective entrepreneurs, especially
through the vehicle of city level initiatives, such as in the case of the city of Turin, where
microloans were provided by the municipality and private banks (Rath, 2011). A similar initiative
by the city of Dortmund, which is suffering from a highly marginalized and unemployed
population that consists in great part of migrants, has been offering microloans that have
16https://publications.europa.eu/en/publication-detail/-/publication/d0ea84c5-fb38-11e7-b8f5-
01aa75ed71a1/language-en
17
contributed to creating or saving more than 300 jobs (Desiderio, 2014). Micro-loans in Europe are
usually for sums smaller than 10.000 euros and inclusive in their targeting. Apart from few efforts
that target exclusively a particular group, such as the aforementioned Ester Foundation program in
Sweden, most programs are available to local and immigrant entrepreneurs, as long as they fulfil
certain criteria. For instance, in the case of Turin, an in-depth assessment through several
meetings is carried out to ascertain entrepreneurs’ needs and corresponding loan size in order to
ensure that the loans are needed and will be used productively (Rath, 2011). Microloans and credit
guarantees are frequently used in conjunction to ensure adequate financing for vulnerable ventures
(ibid).
Improved access to facilities for migrant / refugee entrepreneurs is another area that certain policy
initiatives target. Subsidized premises for aspiring entrepreneurs are frequently offered by
business incubators, which are sometimes run by cities. These services are typically not tailored to
refugees or migrants only but can be of relevance as well. For instance, the city of Helsinki has
been subsidizing entrepreneurs’ rents for premises in Maria 1-0, in what was previously a hospital
building. Barcelona Activa, mentioned earlier, also offers incubation space for new businesses.
Similar business incubators are run by the cities of Tallinn, Turku, Wrocław, and Zurich, among
others (Rath, 2011).
Third, as a part of the efforts that seek to enhance the operating environment of refugee
entrepreneurs some policies have been adopted to create easier access to market. For example, in
Turin, Italy, the local flea market has since 1935 offered “irregular migrants” a space to practice
their business by a special city statute and developed this initiative into an EU-financed project.
Brussels also features a market place where asylum seekers that do not have a right to work can
sell arts and crafts and use their profits for the benefit of local refugee centres. These policies aim
to relax, under controlled conditions, limitations that preclude refugees and migrants from
entrepreneurial activity. At the national policy level, some countries, for instance Germany, give
access to the labour markets earlier than the nine-month deadline in the Reception Conditions
Directive (European Commission, 2016).
Evaluation on the best practices and impact of current policy programs
To date, only little information exists on the impact and effectiveness of policy measures that have
been implemented to support migrant/refugee entrepreneurship. Individual, short-term programs
monitor their impact infrequently, but nevertheless offer some anecdotal evidence on the number
of businesses they have helped create. Based on these, qualitative assessments have been made to
evaluate the good practices that could be scaled up and utilised in different countries and
environments (European Union, 2016a). Overall, migrants have been found to trust and rely on
informal networks much more than on formal support and building trust towards the official
support mechanisms may be even more important amongst refugee groups (European Union,
2008b).
Furthermore, the European Union has called to focus on programs that generate results and create
new businesses. However, simply looking at the evolution of the number of business that have
been established by refugees may not suffice to give a holistic picture of the situation. For
instance, low minimum wages may make it easier for refugees to establish businesses. At the
same time, not all businesses created result in substantial personal benefits for the refugees in
18
terms of income or integration into society, “given the low value-added nature of the activity, the
high displacement effects and the negligible additional local income produced” (Lyon et al., 2007,
p. 363).
Analysing whether the migrant/refugee population is more or less active than the native-born
population in a country can serve as the basis for further assessing the particular barriers for these
groups, as well as for further evaluating the reasons for engaging in and benefits deriving from
entrepreneurship given the economic and entrepreneurial environment. Additional quantitative
indicators that reflect the success and impact of policy measures on refugee entrepreneurship
could then involve measures that assess the integration into the networks of customers and
suppliers of the host country, the number of employees, their growth aspirations as well as long-
term viability (European Union, 2016a). Further research could also inform decisions on the
optimal balance between mainstream vs. tailored entrepreneurial support programs, and national
level vs. local level policies. Such research could particularly benefit by distinguishing between
migrant entrepreneurs and refugee entrepreneurs, since very little evidence is available for the
latter group. It should also assess whether entrepreneurship by refugees has been motivated by
necessity and lack of other alternatives, or by opportunities for improved employment and social
integration. Such statistics might allow for more knowledgeable policymaking, especially in
regards to the latest and least documented wave of refugees coming into Europe.
Policy recommendations
The promise and limits of entrepreneurship as a solution for social integration
Based on our reading or prior literature on migrant and refugee entrepreneurship, we would
recommend that policymakers have realistic expectations about the promise of these activities for
realizing labour market and social integration objectives. Entrepreneurship is an inherently risky
activity, highly dependent on individual level skills, the social context, and market environment,
among other factors. As such it can be challenging path for refugees, even more than for natives
or economic migrants. It is therefore unlikely to act as a generalized solution that ensures easy
integration or economic development.
However, this should not be interpreted as entrepreneurship being unimportant for policy-making
related to refugees. It rather suggests that entrepreneurship should be seen as an important piece of
the broader integration framework that policymakers can work on. Prior research suggests that
entrepreneurship can be of greater use as a component within long term policies that distinguish
between those that can most benefit from it, and others for whom it is not as relevant, at least as a
starting point (Collins, 2003; Fong et al., 2008; Wauters & Lambrecht, 2006; 2008). Our
recommendations for policymakers are drawn from the precious analysis of literature and
documentation of current and proposed policy actions and focuses on a) policies to strengthen
refugee/migrant interest and competence in entrepreneurship, as well as b) policies to improve the
environment of refugee/migrant entrepreneurship.
Policies to strengthen refugee interest and competence in entrepreneurship
● Avoid one-size-fits-all approaches and instead identify and support individuals with
high potential and interest in entrepreneurship. These will tend to be people who are
19
literate and conversant in the host country language and have prior education and work
experience that can be leveraged in the host country, and who are not in need of acute
psychological support. Those individuals have reasonable chances of success as
entrepreneurs and of benefiting from technical assistance programs and services, including
incubator / accelerator / mentoring programs, networking, legal advice and other startup
services. These services are usually already offered at several levels, notably the country
and city level, for native entrepreneurs, and frequently also for economic migrants.
Policymakers need not reinvent these services from scratch, but instead carefully target
them to that part of the refugee population that is able to make some use of them.
● Similarly, for those individuals with low probability to enter and succeed in an
entrepreneurial role immediately or relatively shortly after arrival in the host country,
policies can help to gradually build human and financial capital for a potential future
integration through entrepreneurship over a number of years. This necessitates a long-
term view that removes barriers to entrepreneurship over time, providing
asylum/residency, teaching literacy as well as the host country’s local language, and later
helping them to gain initial work experience, providing incentives to save and teaching
financial literacy skills. In the context of the US for instance, “stable employment is a
common denominator in the successful path to self-sufficiency among refugees” (Fong et
al., 2008, p. 152), who identify the need for a job placement after literacy and language
education has started but before refugees can be expected to start up their own ventures.
After job placement, language literacy and training can continue, while gradually being
reduced, with incentives to save (for instance through individual savings accounts) and
financial literacy becoming an important component of these programs. The provision of
timely psychosocial support is also extremely important for those refugees that have
experienced severe trauma in particular, ensuring the foundations for their broader
integration and their chances of successful integration through entrepreneurship in the
future. !
● Facilitate and incentivize mentoring relationships with culturally, geographically and/or
religious co-ethnic peers who have been successfully integrated into and established
businesses in the host country. Through mentoring of “entrepreneurial role models” with
similar socio-cultural background, newly arriving refugees are likely to increase their
entrepreneurial intention and boost their confidence by learning about the cultural
differences and specific business know-how of a successful co-ethnic entrepreneur.
● Develop women's self-reliance and entrepreneurial capacity. Heavy family
commitments and low human and financial capital can result in women being particularly
disadvantaged and unlikely to take full advantage of their potential. Fostering the skills of
women refugees can therefore improve not only their chances of entrepreneurship, but also
their broader integration, through improved self-confidence, social networks and
employability. Entrepreneurship teaching programs can thus act as means to empower and
integrate these women into the host society much faster than they would otherwise.
20
Policies to improve the environment for migrant / refugee entrepreneurship
● Provide a humane and streamlined entry experience to refugees. This ensures that
distrust towards the state does not harm their future interactions with the government,
including payment of taxes, compliance, and embeddedness in government services and
structures.
● The provision of stable employment as a critical stepping stone towards financial self-
reliance and human capital points to the importance of providing financial incentives for
increasing employability of refugees. These could include sponsoring of internships in
private companies, but also financial incentives for businesses that choose to hire refugees.
● Encourage and facilitate volunteering in established organizations. Through
volunteering and quasi-volunteering work, with some form of compensation, in
entrepreneurial projects, both parties enhance their social and cultural capital.
Furthermore, volunteering activities provide refugees with access to local organizations
and entrepreneurs to build their network. At best, such volunteering opportunities occur in
the social economy and other industrial sectors where European countries currently have a
labour shortage, and thus a strong interest to support novel, sometimes experimental,
entrepreneurial projects.
● Identify and alleviate barriers to entrepreneurship at the level of ethnic groups.
These barriers might inhibit the broader integration of specific ethnic groups, beyond their
entrepreneurial potential. Efforts to battle discrimination of ethnic group stereotypes and to
foster greater acceptance and communication with the host country society and with the
local business society can include cultural and business events, with a particular emphasis
on networking and mentoring events. They can also include the collaboration of country or
city level entrepreneurship support services with the financial and banking sector for
explicitly addressing limitations in the funding available for high potential refugee and
migrant entrepreneurs.
● Identify market opportunities taking into account the country / region / city /
neighbourhood level. Policy has tended to not only consider all individuals with a one
size fits all mentality, but also all types of market opportunities. A first step is to collect
data on necessity- versus opportunity-driven entrepreneurship. Necessity-driven
entrepreneurship, which is frequently informal, produces low yields and is in competitive,
low barrier markets, typically catering to an ethnic niche clientele. Opportunity-driven
entrepreneurship is typically found in higher potential sectors requiring a minimum of
human and financial capital for success. Differentiating between the two is important for
two reasons. First, policymakers can promote through their technical support services to
specific sectors that offer a high potential for growth and upward mobility. Second, they
can match these to the types of individuals that express an interest in entrepreneurship. For
instance, for highly skilled and high potential individuals, programs providing assistance
for entrepreneurship based on specific technology related opportunities can be developed.
But even for those individuals that have a lower skill profile, there might be some
opportunities that are in growing sectors and provide leeway for profits and upward
mobility. These are characterised with high demand and relative lack of pressures for cost
21
cutting, at least in post-industrial countries, such as elderly care, childcare, pet care or
house cleaning. Identifying and then promoting such sectors of growing demand and
frequently insufficient supply to refugees and migrants can be much more promising for
their social integration than the saturated restaurant and small retail sector. To this aim the
local policy makers are in a position to evaluate whether any local industries have
particular need for skills that might be found among the specific refugee ethnic groups,
while entrepreneurship services’ advisors could steer refugees to promising sectors and
towards relevant training and development opportunities.
● Lower the bureaucratic procedures, complexities and time needed to set up a new
business, as well as the compliance costs to keep it running. Lower institutional barriers
to entrepreneurship can improve chances of entrepreneurship and also the chances that it
will be within the formal legal framework.
● Communicate all relevant programs and services through a “one-stop-shop”. This
can be either a physical location or a website, or both. While building capacity, including
language capacity among refugees is important, in the short term it is useful to offer
information and services in multiple languages, and through culturally and linguistically
sensitive and diverse staff. Furthermore, the option to engage in entrepreneurship could be
discussed in compulsory introduction courses for refugees and interested individuals
directed to relevant services and programs. Finally, even the creation of a one stop shop
does not always guarantee adequate communication, as refugees can be distrustful of
government programs. Programs and services should be therefore further communicated
through formal and informal organizations that already have an established and
trusted relationship with refugees.
● Engage in cross sector partnerships, including governments, firms and communities.
Such collaborations are critical in addressing the cross-sectoral issues of refugee
communities and ensuring their successful labour market and social integration. The
success of such collaborations in turn hinges on the ability to engage people with
leadership potential and to create regular exchanges and meetings, to drive the relevant
issues forward.
● Promote and incentivise legal forms of refugee entrepreneurship. One needs to
acknowledge that most of the listed suggestions, in particular the ones developing
individual entrepreneurial skills, could simultaneously be applied to create destructive and
even illegal forms of refugee entrepreneurship. That a substantial part of entrepreneurship
occurs in the informal economy is a part of the economic status-quo in Western
economies. Therefore, it is important to design policies in a way that guide those engaged
in informal economy to formalise their activities by making legal enterprising the most
desirable choice. As an example, the proposed “Made by refugees in (country)” trademark
for products of legally-registered refugee businesses could provide such an incentive and
create higher value for their products.
● Collect refugee specific longitudinal data to improve evidence-based policy-making.
High quality data sets support monitoring the policy process of integrating refugees and
are necessary to correct current, and design future policy tools catered to the specific needs
22
of the region or nation. The current lack of reliable, sorted and aggregated data is one of
the key impediments in the current policies. It would thus be beneficial to launch a
“Virtual Observatory for Refugee Integration” (Sak et al., 2017) that develops key
performance indicators and generally monitors refugee entrepreneurship in different
contexts.
Summary of policy recommendations
We synthesize the above recommendations that aim to remove barriers for the entrepreneurship of
refugees. Figure 2 portrays the two main proposed paths to entrepreneurship for refugees, together
with the broader foundations conducive to successful implementation of both paths.
The main premise is that not all refugees come with the skillset, assets and confidence that would
enable them to engage in higher potential, opportunity-driven entrepreneurship, and that some are
better poised to become entrepreneurs in the short-term as compared to others. The ‘fast track’
approach therefore focuses on providing timely entrepreneurship support services those that might
be more likely not only to engage in entrepreneurship and self-employment but also to achieve
reasonable success in these. Identifying these high-potential individuals early on is crucial in order
to avoid that a lengthy period of inactivity tempers their entrepreneurial motivation and outdates
their skills. As mentioned in prior sections, individuals that have prior experience in
entrepreneurship and self-employment, education and language skills relevant to the host country,
are relatively young (in their late 20s or in their 30s and 40s) and are in reasonable good mental
health, will be more likely to successfully engage in entrepreneurship; however, decisions should
be made at an individual basis and these criteria only reflect average likelihoods drawn from
previous research. Such entrepreneurial fitness assessments could be integrated in the overall skills
assessment that EU countries are gradually developing for refugees. Once refugees with high
potential are identified, it is important to connect them with existing entrepreneurship support
services, which in many countries are cognizant of the challenges for migrant entrepreneurs and
which can be further equipped to address refugees. If individuals identified have reasonable good
host country language skills and prior work and entrepreneurial experience, then these services and
other tailored programs can help build these individuals’ local skillset and networks. As such, an
emphasis on networking and mentoring can provide them with the necessary local social capital,
not restricted to their ‘niche ethnic group’ and help them recognize and exploit entrepreneurial
opportunities in sectors of high demand and growth.
Figure 2: The two paths to refugee entrepreneurship
23
Beyond this targeted group, more refugees might have great potential for entrepreneurship and
self-employment once several key barriers are removed. However, this approach requires some
time and the respective capacity building, and we therefore term it ‘the long run’. For refugees
that might have great longer-term interest in and potential for successful entrepreneurship, a
capacity building approach can focus on a) training programs that equip them with critical skills,
such as literacy and language skills of the host country language and/or English, b) gradual build-
up of work experience (for instance through apprenticeships and other work placements that can be
partly facilitated by local authorities), c) build-up of savings and financial literacy (for instance
through individual savings accounts set up by authorities and local banks, and respective training)
and d) psychosocial support and trainings for building self-confidence, the later particularly
important for women. Such capacity building can improve chances of labour market integration in
general, and chances of integration through entrepreneurship and self-employment in particular.
Finally, build-up of integration capacity can be coupled with encouragement to engage in self-
employment and entrepreneurship in low-skills but high demand sectors. These sectors can offer
market opportunities without requiring lengthy additional education.
The ‘fast track’ and ‘long run’ are for the sake of conceptual clarity distinct in our model, however
they should not be understood as isolated. There might be cases where for instance refugees have a
high entrepreneurship potential and mainly lack local language skills, in which case after training
in the local language they could be integrated into the ‘fast track’. What is important to
acknowledge is that entrepreneurship can be promoted for different groups with different time
horizons, leading to positive outcomes, and that flexibility in services offered is important.
Furthermore, irrespective of time horizons, foundational policy work, explained in this report and
summarized here, can help increase chances of refugee entrepreneurship across all groups. This
includes building trust with asylum seekers at entry and expediting asylum decisions, so that those
24
granted refugee status can be channelled to programs for integration through entrepreneurship as
suggested here, or other programs for labour integration. It also requires greater proficiency on the
part of authorities in diversity and cultural sensitivity, the simplification of processes and costs for
setting up and maintaining a business, and an openness in seeking solutions in cooperation with
companies, civil society and the ethnic communities on the ground. Overall, these steps and other
detailed in this report aim to increase the value that refugees can create for themselves and for the
countries they settle in.
25
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Appendix: Policy examples
Policy Example: Arrivo Berlin
Target group: Refugees looking for vocational training or a job
Country: Germany
Intervention type: Connects private sector organisations looking to train or employ refugees
Objectives: Arrivo aims to improve the labour market integration prospects of refugee residents
and to plug labour shortages in local SMEs, who face greater difficulty in recruitment than larger
enterprises.
Programme length: Internships can last several months
Description: Arrivo is an umbrella body financed by the Berlin city council in collaboration with
the Chamber of Commerce. Arrivo comprises 9 projects that can be categorized as vocational
training for refugees, coaching for refugees and consulting established businesses interested in
employing refugees. Arrivo applies a modular structure to offers a combination of workshops on
local employment standards and ethics, short vocational and language training modules,
internships and on-the-job skills assessment. Local SMEs perceive Arrivo as a recruitment tool.
Partners: Association Supporting Vocational Education in Berlin (VFBB), Chamber of
Commerce (IHK Berlin), Association of Employers in Berlin (UVB), Chamber of Crafts,
Results achieved: In total more than 900 refugees participated in at least one module in the
hospitality, health and social care, and construction sectors. By the end of 2016, Arrivo had 285
refugees participating in vocational training in the crafts section, out of which 90 had found
employment in one of the 250 partnering SMEs.
For more information, please see: http://www.arrivo-servicebuero.de/
Policy Example: Project “Startup-Modul” at Vienna Business Agency
Target group: Aspiring Entrepreneurs with Migration and Refugees Background, Young Migrant
Enterprises
Country: Austria
Intervention type: Multilingual coaching for self-employment
Objectives: The City of Vienna offers free early-stage entrepreneurship support services in 15
languages. Startup Modul at Vienna Business Agency (Wirtschaftsagentur) offers startup-,
financing-, and venture growth services in form of free individual coaching sessions as well as
two-week intensive workshops. Additionally, the objective is to consult migrants and refugees on
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dealing with the Austrian bureaucracy.
Programme length: Max 2 weeks per course; in general services are available up until 3 years
after enterprise foundation
Description: Migrant Enterprises is integrated into the general business advocacy offering of the
City of Vienna. They advise aspiring entrepreneurs with migration background in their native
language on all relevant topics to become an entrepreneur and offer intercultural classes to help
immigrants understand Viennese business culture.
Startup Academy – Offers basic knowledge on business creation and development in free workshops
Women Enterprise Services – Offers consulting services and links to women business networks and organisations
Coaching Sessions – on startup, financing and expansion plans
Offices – Offers office space tailored to the specific needs of startups, at low cost with short contract periods
Partners: EU-funded Mingo project
Similar projects: NewCo Helsinki, Finland; Barcelona Activa Emprenedoria, Spain
For more information, please see: https://viennabusinessagency.at/beratungen/migrant-
enterprises-6/
Policy Example: CNA World-Dedalo Project
Target group: Migrant entrepreneurs, migrants willing to start up their businesses
Country: Italy
Intervention type: Legal and Regulatory Advice, Business Training, and Networking
Objectives: Foster ethnic minority entrepreneurship, improve migrants' business management
skills and legal understanding, and enhance migrants' access to finance
Programme length: four training rounds per year
Description: CNA World is an association founded in 2009 within the National Confederation of
Crafts and Small and Medium Enterprises (CNA). Since its first project in 2000, the “Progetto
Dedalo” has been scaled to become the CNA World programme with 25 similar projects running
throughout Italy that provides access to finance, offers startup information, and support in access
to credit and micro-credit. CNA World has established a Credit Guarantee Consortium (Consorzio
Fidi within CNA) to facilitate access to credit for the members, their main activity is to provide
credit guarantees to favour the granting of loans to their members. Through a permanent help
desk, CNA World offers and bundles individualized support to migrant entrepreneurs, mainly sole
traders.
32
Partners: National Confederation of Crafts and Small and Medium-Sized Enterprises (CNA)
Turin, Turin Chamber of Commerce, Intesa Sao Paolo Bank,
Results achieved: has assisted a total of 472 startups since its inception in 2000. Approximately
120 startups are supported per year, with 85% survival rate (24 months after business foundation).
For more information, please see: http://www.cna.to.it/it/stranieri/
http://www.wikipreneurship.eu/index.php/CNA_World_Dedalo
Policy Example: Young Urban Movement Project (YUMP) Academy
Target group: Adolescents with migration background
Country: Sweden
Intervention type: Teaching entrepreneurial skills to adolescents
Objectives: The Yump Academy combines activating young migrants, with education and
competition elements, mainly via e-learning, in order to create entrepreneurial competencies and
ultimately support immigrant venture creation.
Programme length: tba
Description: Yump collects entrepreneurship content on a self-learning education platform that
offers real-life mentoring and feedback. Participants of the Yump Academy start with their own
venture idea and receive personal feedback throughout the e-learning facilitated idea development
process.
IFS have the mission to stimulate and increase entrepreneurship among migrant groups. The
Swedish government agency Almi further brings advisory services, loans and venture capital.
different program: Almi Business School: This project aims to better and more quickly support
newly arrived entrepreneurs (immigrants in establishment programmes who have probably been
business owners in their home countries) to start businesses in Stockholm.
Partners: Almi & International Entrepreneur Association in Sweden (IFS)
For more information, please see: https://yumpzone.com/en
Policy Example: Utrecht Refugee Launch Pad (U-RLP)
Target group: Young refugees and local youth living in Utrecht
Country: Netherlands
Intervention type: Local youth and asylum-seekers co-living, co-learning and co-enterprising.
33
Objectives: The Utrecht Refugee Launchpad is an inclusive approach to facilitate integration by
introducing a shared housing concept between local youth and asylum seekers. It aims to create an
innovative reception facility within a neighbourhood to develop future skills and social networks
together with asylum seekers. After the U-RLP program, the participants will have developed
skills in self efficacy and resilience applicable both in and outside the Netherlands. U-RLP targets
50% of all asylum-seekers in Utrecht and 20% of neighbourhood participation.
Programme length: tba
Description: “Both asylum-seekers and local young people will be offered training courses in
English language, entrepreneurship and international business. Through the support of expert
coaching and opportunities to connect locally and space and time given for the incubation of new
business ideas, participants will be supported as they develop future-proof skills that will be of
benefit to them whether in the Netherlands or elsewhere, thereby encouraging the repair of broken
narratives and/or halting the negative spiral created by the usual approach to reception” (Compas
Oxford, 2018)
Partners: City of Utrecht, Social Impact Fund (NGO), Dutch Council for Refugees (NGO),
Socius Living (SME), Utrecht University, People’s University of Utrecht, Roehampton
University, Oxford University
Results achieved: Expected results is to strengthen both local citizen’s and refugee’s social
capital. An independent evaluation of the program is carried out by researchers from Roehampton
University and University of Oxford
For more information, please see: http://www.uia-initiative.eu/en/uia-cities/utrecht ;
https://www.compas.ox.ac.uk/project/utrecht-refugee-launchpad/ ; https://plan-einstein.nl
