News and Views

Diversification and innovation power Maori business margins

Recent IBISWorld research indicates Maori authorities continue to steer profitable organisations that outperform the average profit margins of the wider New Zealand economy by a sizeable 18%.

‘The strong profitability of Maori enterprises is partly due to the significant and growing land and resource holdings of many companies, through which they can reach important export markets and collect land rents,’ said Mr Sam Johnson, IBISWorld Senior Industry Analyst.

Maori businesses’ most significant holdings are in the real estate and agriculture industries, which is largely attributable to the land and resource holdings of iwi, at 14.1% of non-residential property operators and 11.4% of agricultural businesses.

IBISWorld research suggests more than 21,000 Maori enterprises, almost 70% of which are sole traders, generate almost $14 billion in revenue annually and contribute 5 to 6% of national GDP.

Dynamic deals

In addition to substantial holdings in land and resources, Maori enterprises are increasingly diversifying and participating in fast-growing areas of New Zealand’s digital economy.

‘Maori business leaders and self-employed individuals have identified biotechnology, health, high-tech manufacturing and other technology sectors as offering healthy margins and room for growth,’ said Mr Johnson.

Excellent exports

According to IBISWorld, exports from all Maori businesses exceed $480 million and reach almost 65 destinations around the globe. Of this, Maori enterprises account for products totalling $40 million, which are destined for over 50 countries. The largest importers of Maori goods include China, Australia, the United States and the United Kingdom. For Maori businesses, China is estimated to be worth more than double the next nearest trading partner, Australia, at more than $200 million per annum.

‘Maori entities own rights to about half of New Zealand’s annual fishing quota, which represents the amount that can be sustainably removed from waters in any given year. As a result, the largest Maori export category is fish and seafood, which, together with dairy and meat, accounts for almost 90% of exports,’ said Mr Johnson.

Other exports include timber, honey, hide, machinery, vegetable oils and fats, and fuels.

Favourable funding

In addition to regular business grants, subsidies and other funding, Maori business use funding programs and other benefits aimed at improving the productivity and performance of Maori-owned assets and authorities. IBISWorld estimates that funding, grants and subsidies for Maori authorities vary each year, but typically contribute about 10% of total Maori authority income.

‘Alongside schemes such as the Pathway to Increased Productivity Programme, which is designed to assist sustainable output increases in primary sector assets, Maori authorities benefit from a company income taxation rate of 17.5% compared with 28.0% for non-Maori entities,’ said Mr Johnson.

IBISWorld also identified the significant contribution of the Maori Innovation Fund (MIF), known as Te Punaha Hiringa, to support the Crown-Maori Economic Growth Partnership through $3 million each year.

Source: IBISWorld

Most Popular

Newsletter Signup

To Top