The Implications of a Recession for the Māori Economy

Māori Business

Summary: Māori business currently makes up a small part of the New Zealand economy (1.4% of Gross Domestic Product). Most Māori businesses are concentrated in export industries, particularly the fishing, forestry, agriculture and tourism sectors. Commodity markets and international tourism are particularly vulnerable to the impact of the current recession.

Background

  1. The value-added of businesses able to be identified as Māori represents 1.4% of New Zealand’s Gross Domestic Product.6 Māori businesses are highly exposed to international trends, as they are concentrated in export sectors, particularly fishing, forestry, agriculture and tourism.
  2. Māori identifying themselves as self-employed (both with and without employees) grew by more than 20 percent between 2001 and 2006, from 17,100 to 20,850. Non-Māori self-employed grew by 8.8 percent during the same period.7
  3. However, the percentage of self-employed Māori and Māori employers has largely remained static between 2001 and 2006, although there has been a slight increase in Māori employers. It should also be noted that the self-employment rates for Māori are approximately half those of most other ethnic groups.8
  4. Anecdotally, Māori may face greater barriers to business start up, and may also have a higher rate of ‘necessity’ entrepreneurship (starting a business to create a job for oneself) than non-Māori.9 These may represent risk factors, as this group may have fewer resources to assist their businesses survive a recession.
  5. Furthermore, the latest New Zealand Institute of Economic Research Quarterly Survey of Business10 indicated that:
    • 43% of businesses expect less activity over the next three months; and
    • 32% of businesses expect to cut staff over the next three months.

 

6 Māori Participation in the New Zealand Economy, Final Report to Te Puni Kōkiri, New Zealand Institute of Economic Research (NZIER) 2007
7 Incomes for Māori Self-employed, Te Puni Kōkiri Fact Sheet, August 2007. 8 Ibid.
9 Maori Economic Development, Final Report to Te Puni Kōkiri. NZIER 2003.
10 Quarterly Survey of Business Opinion - January 2009, NZIER

Risks

  1. The characteristics of Māori business are likely to have both positive and negative effects in terms of the recession. For example, a conservative approach to risks and assets may have already reduced exposure to some of the global and national downturn, and may continue to do so. Opportunities also present themselves during a recession, however, and Māori businesses need to be able to identify and explore these, as well as continuing to manage risks. Those Māori businesses, and those New Zealand businesses, who are best able to manage both innovation and risk, are likely to be more resilient during the recession, and to be able to use the recovery as a springboard for future growth.
  2. However, the on-going growth in Māori businesses and entrepreneurial activity will be significantly negatively affected by the recession in the short term due to the following factors:
    • the commodity and tourism sectors in which many Māori businesses are concentrated are particularly vulnerable to the current economic downturn;
    • new Māori businesses may not have the experience, expertise or financial resources to survive difficult times; and
    • like other businesses, Māori businesses may become risk averse, which may limit uptake of those opportunities which are available.

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