Article:

Impact of COVID-19 on Māori Businesses

07 April 2020

Our Māori Business specialists provide commentary on how Iwi, Hapu and Whanau run businesses may each be impacted by COVID-19 and how they can prepare themselves.

Iwi

These organisations will have varying impact depending on where they have invested their settlement funds commercially. However, the social arms of these entities will continue on as essential business in supporting their people and communities. It is hard to comment generally for Iwi organisations, but it will be their aroha and awhi for their people that will shine at this time reaping social benefits. We are seeing collaboration between Iwi locally with initiatives working to support their people to get through this lock down period and I imagine this is happening right throughout Aotearoa.

Hapu

These organisations are typically landowner based and participate commercially in primary industries producing food. As essential services they are continuing on. The impact of this event is yet to be known as most are still in production and with China coming back into the market it is promising that they will feel least impact. These entities are typically conservative and have little debt due to that conservatism and a financial institution around them that struggles to cater for their debt needs. These businesses should continue as per normal, with the impact being sustainable in the short term. It will be interesting to see how the banking industry responds to these needs under the circumstances as this could result in better outcomes for the future for Māori Business. Again local Hapu are banding together to support their kaumatua and whanau and providing the necessities to get through this period.

Whanau

This is where it will be felt most. These are commercial entities that we are seeing be closed down as non-essential services. A month’s lockdown will mean most may not survive the financial impact.  They are also facing staff issues as they struggle to service wage payments whilst keeping their business afloat. While some will survive, I think we are going to see challenging outcomes in our small business market, of which Māori contribute to. However, some will find ways to get an online presence and continue to operate. Doing business will look markedly different post this event, but in saying that, there is a huge opportunity for innovation and I am in no doubt that there will be Māori businesses that are resilient & well prepared for this pandemic. Now is the time to pull out that strategic plan and consider what the new normal will look like.

Business Continuity Planning for Māori Businesses

Our recent Māori Business Survey results showed that, first and foremost, Māori businesses emphasise the importance of culture, society and the environment. However, while these aims come before profit, the latter is still a crucial secondary consideration. As a result, organisations must strike a careful balance between long-term planning and short-term financial goals.

Whilst profit is still important for any business, it will be cashflow that will be key in the short term. Funding and access to capital have always been challenges for Māori Business.

One thing for Māori businesses to consider is where they are receiving funding to deliver Covid-19 services that may have been repurposed and where reporting/outcome requirements have been loosened (and in some cases been given permission to reallocate funding as required). Due to this there will be a flow-on-effect when it’s back to business as usual with services in the community still being required, but potentially no funding to provide the services. 

Reach out to someone who can help

Talk to your business adviser, your banker, your lawyer or your local Chamber of Commerce or Industry Organisation. Many businesses while not considered essential services are still working remotely from home to support these businesses. 

BDO has developed a wealth of resources and information to help our clients through this challenging time. Visit our COVID-19 hub.

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