by Issa Mansaray for Mshale
Martin Mohamed walks in and out of several stores at Karmel Mall, an eight year old mall in South Minneapolis that hosts about 300 Somali stores.
Mohamed is the chairman of the African Chamber of Commerce (ACC). He knows most of the shop owners and calls everyone he meets by name. A quick tour around the mall shows the growing number of small-businesses. Mohamed senses the financial struggles some of them are going through.
“There is a need for the African businesses to grow,” Mohamed says. “One is to do business with each other, enter the main stream American business, and to become a certified minority business provider.”
Many African entrepreneurs in Minnesota see the need for their businesses to be part of main stream American businesses. Penetrating the local business market is hard for immigrants, and the country’s financial business does not make it any easier.
The Midwest Minority Supplier Development Council (MMSDC) is an organization armed with the task of equipping small minority businesses with tools to overcome some of these barriers. Through their programs, minority businesses receive a certification which allows them to engage in business with major corporations likeCargill, Target and others.
Mohamed finds a flaw in one of the MMSDC’s criteria which requires business owners to have US citizenship so that they can be certified Minority Business Providers. This certification authenticates minority business allowing large corporations to engage directly with them. Mohamed argues that when corporations rely solely on MMSDC’s certification they indirectly decline to deal with minority businesses whose owners are US residents, but are not citizens. “I don’t think that strategy is fair.”
When large corporations seek companies through MMSDC they do so to seek diversity. Mohamed contends that diversity should go beyond color. While Africans and Africans Americans are both black, the similarity ends there, he argues. Africans, Mohamed said face immigration, family reunification, sponsorship, and student visa issues: different adversities from those experienced by African Americans.
“I think corporations need to understand the difference between diversity and multi-culture,” says Mohamed. The ACC’s mission is to “accelerate the development of African immigrant businesses, entrepreneurs, and families so that they may thrive within American economic and social systems.”
According to Mohamed the ACC has met with MMSDC in attempt to have the organization more inclusive: to include African immigrants in its diversity. “They took us nowhere,”he says.
Though the MMSDC is not a funding organization; corporations, according to Mohamed, allocate funds for diversity, work force programs, and certification for minority business providers. There are also quotas. In order for minority businesses to gain access to such quotas, they have to be certified. Mohamed claims that these resources do not reach the African immigrant business community.“So far, they have very little outreach with the African community. Our community is not really going through the certification. This means they cannot be certified minority [business] providers.”
Growing population and business“
“Our businesses are not growing as they are supposed to. We are not part of the networking,” laments Mohamed. On the other hand, the population of African immigrants in Minnesota is growing at an incredible rate.
In 2000, Minnesota ranked tenth in numbers of African immigrants in the United States. According to the U.S. Census Bureau, Minnesota’s African population is growing five times faster than the nation’s black population.
Ryan Allen, an immigration expert and professor of community and economic development at the Humphrey Institute, agrees that many Africans immigrate to Minnesota for many of the same reasons that Hmongs immigrated to here in the 1970s and 1980s.
For African immigrants, Minnesota is attractive, “because the quality of life is high,”Allan he says. “There are opportunities… like affordable housing.” Minnesota, he added is not the only place experiencing the economic fallout and foreclosure. “Minnesota has a lot to offer immigrants.”
According to the Minnesota State Demographic Center,“The black or African American alone population in Minnesota is projected to rise 64 percent between 2000 and 2015, and to reach 386,600 by 2030.”
The report “Minnesota Population Projections by Race and Hispanic Origin 2000-2030”, stated that, “Blacks will remain Minnesota’s largest nonwhite racial group.”
In Hennepin County alone, the Black and African America population has increased from 104,725 in 2000 to an estimated 137,300 in 2010 and projected to be 150,500 in 2015.In terms of business, these figures highlight the need for a more inclusive partnership with Africans or multi-cultural business as the African buying power is almost $1 billion (annually) as estimated by the Minnesota Bankers Association.
Not all is well for African entrepreneurs who are still struggling to sustain their businesses, build wealth or participate in community activities. Though it has been described as Minnesota’s fastest growing market, many Africans find it difficult to operate in the American finance system.
For many immigrants the challenges rise from learning a financial system different from the one in their home country. With little or no credit it is almost impossible for these new business owners to get business loan assistance from financial institutions. For some of these individuals aborting their dreams and working in different industries seems to be an easier solution. However, there are others whose resilience has allowed them to fight language and cultural barriers and to learn how to navigate the business industry.
In 2002, there were approximately 22,000 minority firms in Minnesota generating over $3.2 billion in total revenue according to the U.S. Department of Commerce’s Minority Business Development Agency (MBDA). Some of these were African businesses.
Around Lake Street in Minneapolis are about 300 Somali businesses, most of these businesses reside within Karmell Mall, and a second Somali mall known as “24” (its on Elliot Avenue and 24th St). While all these businesses are registered with the Secretary of State’s office none is certified by the MMSDC.
Sharon Garth, President of the Minnesota Minority Suppliers Development Council (MMSDC) explains why, “The African community is at this time concentrated on the retail side of business.”
“When you look at the businesses that are cropping up around Lake Street and other areas, those are primarily business-to-costumer businesses,” Garth said. “They are retail in nature and they have individual customers who they are marketing and selling to. They are not marketing to sell to large corporations like Target or 3M.”
The MMSDC, an affiliate of the National Minority Suppliers Council is one of 39 councils around the country. Garth said the MMSDC’s mission is to facilitate business opportunities between minority business enterprises and corporations. She describes the MMSDC as a business-to-business organization.
Garth said businesses like those at the Lake Street are not part of MMSDC’s focus or charter at this time. However, she agrees that some of her organization’s policies need to be changed. She hopes to discuss some of the problems among minority-business owners at theMMSDC’s April meeting in Washington.
Many African business owners interviewed are concerned about MMSDC’s membership limitation that requires only US citizens. For the ACC, this limits financial resources and business influence in minority communities.“We are very clear that there are still companies that we are not able to reach at this point in time,” Garth agreed. “Because of citizenship.”
Nevertheless, the role that many cherish more than any other is being part of an organization that considers their contribution to business developments in Minnesota.
In dealing with minorities businesses, ACC argued there should a distinction between diversity and multi-cultural businesses. Mohamed and others believe that the MMSDC focuses more on diversity than they do on multi-cultural businesses in the Somali, Liberian or Latino communities. Linking multicultural businesses to corporations is what the African Chamber of Commerce wants the MMSDC look into.
The Somali Mall is home to markets where dozens of shops are open every day. It booms with activities as customers look around for goods and services that they can’t find from other retailers in Minnesota. Tagging African businesses as “minority-business” works in some government sectors, but hasn’t worked well when dealing with big corporations. The problem, according to experts is the size of African businesses.
“The sizes of any business will obviously affect their growth,” said D Craig Taylor, Director of Business and Community Development at the University of Minnesota. “Depending on their capacity; it can affect their ability to deal with a large or a smaller contracts, and more consistent with their capacity to perform.”The lack of capacity to prove financial stability, management skills and demonstrated track record in handling projects for big companies, makes African and minority business owners to become subcontractors.
The MMSDC also suggest this to its small-business members. “Corporations are going to use businesses that have the ability to meet the requirements or the scope of what is been requested,” Taylor said.
“If the business is too small, in most cases, they would be passed over.” However, ACC wants small-business owners to get past the supplier-diversity managers and sit at the table with those in charge of specific projects geared towards the multicultural communities. As minority groups continue to increase, so is the need for their businesses to tap into new sources for capital. But, without help or certification, many find it difficult to continue, let alone expand.
The Twin Cities collaborate on certain projects with the MMSDC. When multicultural businesses are not certified, Mohamed said, they miss many opportunities such as funding from the government.“You can do all you want, but you’re not reaching out the multicultural community who are bilingual,” Mohamed said. These multicultural businesses have many challenges, especially in trying to survive the country’s economic meltdown.
For years, many believe they could get help from the City to expand or gain access to the corporate market. Now, nothing is certain because dealing with corporations needs certification from the MMSDC . Like the African businesses, much of the Latino businesses also look forward to expand, but no one could offer any lucid explanation to them beyond the requirements set by MMSDC for business certification. With millions of dollars pouring to other businesses, doubt has descended among the multicultural business communities. Contracts and contractorsIn 2006, the City of St. Paul’s housing and redevelopment services awarded $220 million in contracts, according to an audit report, but less than seven percent went to minority groups.
Last year, Mayor Chris Coleman said while the audit report showed no ill intent “there was a lack of coordination impeding our ability to do everything we needed to do.” According to MPR , Coleman also added that, “there were clear lines of accountability, there was no one person that could be held accountable or to the council or to the community.”There are many minority-owned businesses that are not considered in the process.
Many suggest that a plan should be in place to track general contractors to ensure that they’re complying with minority hiring goals.
Clifton Boyd Jr. serves in the committee charged with studying the contracts dealing with women and minority firms.“Still there is a little struggle up till today,” Boyd said. “We still have a problem getting contracts with the larger contractors at the City of St. Paul.”
Boyd and other members continue to meet with officials to solve the problems. The contracts to minority groups are far less as compared to their population.
Boyd emphasized, “It is not a reflection on the total population.”Five years ago, social justice groups and African American community leaders demanded the City of St. Paul to examine lapses in its goals in giving contracts to minority vendors. However, many of the city’s critics viewed it as a bureaucratic response to solving problems far entrenched in the city’s power corridor.
The work at the City is not yet over, it still has it host of skeptics.
In 2004, only two percent of the city’s total contract spending went to minority vendors. It was less than the previous years. St. Paul’s minority population is 39 percent. Angela Burkhalter, who co-manages the Minority Businesses Retention Program for the City of St. Paul, said while at the Planning and Economic Development (PED), they opened up opportunities for entrepreneurs, startup businesses and offered technical assistance.A
t the news Department of Human Rights and Equal Economic Opportunity, Burkhalter who comes from a corporate background said the department will coordinate various contracting services to include minority and multicultural groups.When she joined the City of St. Paul, her first job was to know the minority businesses.
“You can’t sell them anything if you don’t know who they are. It was my habit to go and find out about their businesses,”Burkhalter said. “So it is the same here to find out about businesses, and I also have to learn about the government ordinances.”
The City’s Vendor Outreach Program (VEM) sets goals for small minority owned businesses. “We don’t buy fashion,” Burkhalter said, referring to the African retail businesses at the Somali Mall. “
That is not where we spend tax payers’ money.”
NOTE: In the next edition, the challenges and obstacles for minority businesses – views for the MMSDC and the City of St. Paul.