Hazara refugees in Australia are turning to entrepreneurship to fight unemployment and contribute to their local community, overcoming major obstacles like a lack of startup funding to open businesses at twice the rate of other migrant groups.
This is a key finding of the “From Boats to Business” study prepared by professor Jock Collins from the University of Technology Sydney Business School, conducted as part of a three-year Australian Research Council grant to study refugee entrepreneurship in Australia.
The study observed 31 Hazara refugees who had left their home country with little to no financial capital and gone on to set up businesses in Adelaide, some after long periods of detention in South Australia’s Woomera Detention Centre.
The refugees are members of an ethnic minority from Afghanistan’s central highland region, however many Hazara people have fled the country to avoid persecution.
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Collins says these refugee entrepreneurs are not only taking employment into their own hands, they are also creating “considerable employment” for others in the community. The 31 businesses surveyed in the report had employed 180 local workers, while one business in the study employs over 870 contractors, Collins says.
“This employment impact is quite important — these businesses and the Hazara refugees are committed to their local community and put a lot of time and effort into supporting [its] activities,” he tells StartupSmart.
Refugees leading migrant entrepreneurship
Previously sign writer, painters, chefs, and factory workers in their home country, the UTS study found when these Hazara refugees arrived in Australia, they struggled with the language, had few existing support networks, and ultimately struggled to find employment.
The study references figures from the Department of Immigration and Border Protection, which show 28% of all people born in Afghanistan, aged 15 and over and living in South Australia were unemployed in 2014, with a further 37% looking for work.
Facing such high rates of unemployment, the study found many of these Hazara refugees turned to entrepreneurship as a way to maintain their cultural roots, support their community and generate capital.
This entrepreneurship happened at a rate of 9.3% of the refugee population — nearly double the rate for migrants who had arrived under a family visa (5.7%) and more than double the rate for migrants arriving under a skilled visa (4.3%).
This is referred to in the report as the “refugee entrepreneur’s paradox”: while refugees face greater barriers to entrepreneurship than any other immigrant group, they still have the highest rates of entrepreneurship of any immigrant group.
Collins says “the answer to that puzzle” lies in a refugee’s desire to build a better life in their new country.
“Refugees are quite determined to overcome whatever barriers they encounter in their lives; they are determined to work as hard as possible to make a good future for themselves and their families,” Collins observes.
To establish a startup or business, all entrepreneurs need capital. This, however, turned out to be one of the biggest barriers for the Hazara entrepreneurs observed in the study, the majority of which did not have the personal savings, well-paying jobs or strong English language skills to secure a bank loan or capital from investors.
In response to this, enterprising refugees turned to the wider Hazara community as a source of interest-free loans, many accepting money from friends, family and those they hadn’t even met yet.
One participant who ran a kebab restaurant explained: “Brothers, cousins, friends … about eight people contributed — interest free loans. Very common. If we see someone trustworthy — not into any criminal activity — we support them, whatever they are doing, for about a year”.
“No interest. It goes around,” he said, adding it was “not a formal arrangement”.
Banding together as a strong early-stage community was critical to support these businesses, and Collins says this may be another reason why rates of refugee entrepreneurship are so much higher than that of other migrant groups.
“If you look at the previous generations of Italian, Greek and Lebanese immigrant entrepreneurs they often arrived to a very established community and family network in Australia, and so could draw on those resources in their startups. For newly arrived refugees like the Hazara boat people, there is often no one around and they need to build that community themselves.”
More can be done
Despite these comparatively high rates of refugee entrepreneurship, Collins says more can be done to support newly arrived refugees looking to contribute to the economy.
“I think there’s an important need for various governments to commit to funding programs to assist newly arrived refugees to establish their businesses,” he says.
Collins says programs like Sydney’s Ignite Small Business Startups initiative demonstrate the value refugee entrepreneurship provides to the economy. The initiative created 72 new businesses for newly arrived refugees, cost $500,000 to facilitate, yet saved the government “more than $5 million over five years in welfare benefits alone”, Collins says.
“This demonstrates that with these programs that support refugees to establish a business the returns to the government, community and economy are very large,” he says.