Australia’s Indigenous business sector has grown significantly over the past five years, both in terms of size and scale. This growth has created more jobs and generated significant wealth for individuals, families and communities.
While this is a cause for celebration, maintaining this momentum will require a sustained effort, continued policy support and improved access to capital.
Number crunching
In April 2018, PwC’s Indigenous Consulting and PwC Australia published a research report titled, The contribution of the Indigenous business sector to Australia’s economy.
By triangulating data from the Australian Bureau of Statistics (ABS) 2016 Census and the Indigenous Business Direct register maintained by Supply Nation, we calculated the number of indigenous businesses trading in Australia at that time was between 8,600 and 11,900. Together, we estimated these businesses to contribute between $2.2bn and $6.6bn to the Australian economy in 2016, representing between 0.1 per cent and 0.4 per cent of the nation’s gross domestic product (GDP).
Our prediction was that the magnitude of this contribution would increase given the strengths of the Indigenous business sector and the growing Indigenous population. This has proven to be true.
Applying the same methodology to the 2021 Census data, we have identified an increase in the number of the Indigenous businesses of over 47 per cent. We estimate their collective contribution to the Australian economy has increased by at least 59%. In real 2021 terms, this is a contribution in the range of $8.5bn to $12bn, accounting for roughly 0.4 per cent to 0.6 per cent of Australia’s GDP in 2021.
Key factors contributing to the growth
There are four main drivers behind the growth in estimates between 2016 and 2021, being:
- more Aboriginal and Torres Strait Islander people starting and growing their own businesses
- a 25 per cent increase in the number of individuals self-identifying as Aboriginal and/or Torres Strait Islander in the 2021 Census
- an increase in the number of Indigenous enterprises with employees (that is, which are not sole traders) which make a greater contribution to the economy as is evident in measures like value added and GDP, and
- a change in the industries that Aboriginal and Torres Strait Islander entrepreneurs are operating in, with an increase of businesses in industries that are productive and have a higher economic value add, such as health care and social assistance, and transport, postal and warehousing.
Conditions in which to thrive
Our 2018 recommendations on how to create conditions for Indigenous businesses to thrive and to be sustainable were:
- that all governments establish and implement an Indigenous business strategy which incorporates explicit Indigenous procurement targets
- that legitimate Indigenous businesses are supported to capitalise on larger opportunities with government and the private sector by instituting measures to mitigate ‘black cladding’
- that the profile of the Indigenous business sector is raised through active promotion
- that the supply of Indigenous businesses in Australia is built up by establishing incubators and accelerator programs targeting Indigenous entrepreneurs, and
- that data collection and measurement relating to the Indigenous business sector is improved.
We continue to stand by these recommendations. We can see clear evidence of where support has been provided to Indigenous business over the last four years.
The Commonwealth, as well as most state and territory governments, now have overarching strategies for supporting Indigenous businesses and addressing Indigenous economic inclusion. A range of First Nations business advisory supports have been established, including those provided through the Commonwealth-funded Waalitj and Yarpa Hubs, the Kinaway Victorian Chamber of Commerce and the Northern Territory Indigenous Business Network.
We have seen targeted industry promotion of Indigenous businesses in specific sectors in many jurisdictions such as the Aboriginal Participation in Construction policy in NSW and a number of pushes led by the mining sector. Organisations including Supply Nation and First Australians Capital have supported Indigenous businesses to access larger contracting opportunities.
While the University of Melbourne’s Dilun Duwa Centre for Indigenous Business Leadership is compiling a national longitudinal database of Indigenous businesses, there is still no national identifier of Indigenous business ownership.
Without this, and an agreement on who and what qualifies as an ‘Indigenous business’, exact quantification of the size and contribution of the sector will remain an estimation only. There are still significant improvements to be made in how data is collected to measure the Indigenous business sector’s size and contribution.
What else should be done
Although the 2021 data shows clear progress in terms of both the number of Indigenous businesses and their economic contribution, there is further work to be done.
As a benchmark, the Indigenous business sector’s contribution to the broader economy should aspire to ‘parity’ – that is, of a size and scale that reflects the percentage of the population who identify as Aboriginal and/or Torres Strait Islander – which at present, would equate to an almost $64bn contribution. To achieve this will require intentional investment in and support for the Indigenous business sector to continue to grow.
A strong, buoyant and expanding Indigenous business sector is good for all Australians.
Unquestionably, more private capital – in the form of both debt and equity – will be required. Equally, governments need to create a policy environment (for example, tax incentives or prescribed minimum funding allocations) that encourages growth at this scale.
The private sector – including banks, superannuation funds, venture capitalists and impact investors – also has a role to play, and in some cases will need to adopt new, culturally appropriate and safe ways of working with First Nations people to help the Indigenous business sector to continue to grow.
PwC’s Indigenous Consulting (PIC) specialises in providing advice, developing strategies and supporting their execution to help realise the commercial and community potential of Indigenous policies, programs, projects, organisations and businesses.
The unique power of PIC is the combination of our Indigenous expertise and experience, with PwC’s world-leading professional services capability. Our aim is to help enable positive change by providing trusted professional services and advice to government, corporate and community clients on Indigenous matters.
Get in touch with PwC’s Indigenous Consulting team to help you enable meaningful change.
