KfW Research: One in five businesses in Germany founded by migrants

• Crisis years 2020 and 2022 led to a drop in migrants’ entrepreneurial activities
• But they still have a stronger desire to be self-employment than the population at large
• Migrants make a relevant contribution to start-up activity in Germany

The entrepreneurial activities of migrants decreased in 2022, a year that was dominated by the Ukraine conflict, the energy crisis, inflation and economic uncertainty. Entrepreneurial activity dropped to 98 start-ups per 10,000 employable persons, slipping under the rate of 108 start-ups in the overall population. And yet, migrants accounted for just slightly more than one in five start-ups in Germany, 22%, according to a special analysis recently conducted by KfW Research on the basis of the KfW Entrepreneurship Monitor. The term migrant comprises persons without German citizenship or naturalised persons.

In the crisis year 2020, when the pandemic broke out, entrepreneurial activities by migrants had already decreased, falling below the rate for the overall population for the first time since data collections began (start-up rate of 91 compared with 104 for the total population). While the effects of the pandemic on the overall economy gradually tapered off in the subsequent year 2021, migrants’ entrepreneurial activities increased again at a disproportionately high rate (start-up rate of 120 compared with 119 for the overall population).

Even if entrepreneurial activities by migrants fell more sharply in the two crisis years 2020 and 2022, the same is not true of their desire for self-employment. In the years 2020 and 2022 the share of persons who generally preferred self-employment was higher among migrants, at 34% among females and 31% among males, than in the population at large (24% and 23%).

“Migrants continue to have a strong desire to be their own bosses. In the crisis years, migrants’ entrepreneurial activities were probably hampered above all by external conditions, for example because of the traditionally stronger transnational focus of migrant start-ups”,

said Dr Fritzi Köhler-Geib, Chief Economist of KfW.

“I expect migrants’ start-up activities to gather steam as soon as the overall economic environment becomes more favourable again. Migrants continue to make a relevant contribution to start-up activity in Germany.”

The current analysis by KfW Research can be retrieved from
https://www.kfw.de/Volkswirtschaft-Kompakt