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Native Hawaiian-owned businesses may provide boost to local economy

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Native Hawaiian-owned businesses, like most others in Hawaii, are being hammered by the coronavirus pandemic but may be better positioned to help the economy recover because they are less dependent on tourism.

That is the conclusion of a report issued Friday and based on an analysis of results from an online survey administered last month by the Office of Hawaiian Affairs, the Native Hawaiian Chamber of Commerce and four other island-based Native Hawaiian chambers of commerce across the state.

OHA CEO Sylvia Hussey said the COVID-19 Impacts on Native Hawaiian Businesses Issue Brief, as expected, paints a grim picture of economic struggle.

“But the data also provides signs of hope,” she said, adding that Native Hawaiian entrepreneurs cannot only survive with a helping hand but also play a valuable role in revitalizing the economy as the coronavirus pandemic subsides.

A total of 1,044 business owners responded to the survey, about 84% of whose businesses were fully owned or owned in part by Native Hawaiians.

An estimated 11.1% of all businesses in Hawaii are owned by Native Hawaiians. That amounts to 13,147 entities, most of which are single owner-operators.

According to the survey, a majority of Native Hawaiian- owned businesses reported substantial declines in customer and client demand due to COVID-19, and they also reported a depletion of cash reserves, temporary closures, event cancellations and cuts in hours of operation.

Some 64% of the Native Hawaiian businesses noted sizable losses in revenue in February and March compared to the same period last year, with the median loss amounting to about $10,000.

Among the Native Hawaiians affected by the pandemic was Malia Tallett, who was forced to shut down her Hilo physical therapy business and shelve plans to expand and hire personnel.

“I was really freaked out,” she remembered.

But Tallett, a single mom, changed the way she was doing business and applied for and received emergency aid that allowed her to reopen and slowly build clientele. But business remains far from normal, she said.

While the tourism industry is one of the sectors most dramatically impacted by COVID-19, the survey found that only 25% of Native Hawaiian businesses are more than 50% dependent on tourism revenue. By comparison, nearly half of the non-Hawaiian businesses reported that their business revenue was over 50% dependent on the tourist industry.

According to the report, the finding suggests that Native Hawaiian-owned businesses “may be able to better stabilize prior to the lifting of travel quarantine and thus, serve as important drivers in flattening the state’s unemployment curve as we enter into the ‘kamaaina economy’ stage of recovery.”

But the data also suggests Native Hawaiian-owned businesses will need greater access to capital to keep employees working, as well as technical assistance to manage their businesses and to complete various applications for relief.

Additionally, the report recommends the development of educational material on employee health and safety targeting Native Hawaiian business owners.

Kirstin Kahaloa, president of the Hawai‘i Island Native Hawaiian Chamber of Commerce, said the survey is important to learn how Native Hawaiian businesses are faring during the COVID-19 crisis and to try to make sure they get the help they need.

It’s also paramount that Native Hawaiian voices are included in the state’s economic and community recovery and resiliency plan, she said. A shift to a more diversified economy seems inevitable, she said, and that economy should have a cultural foundation built on what makes Hawaii special.

“A diversified economy is a sustainable economy,” said Kahaloa, a portfolio manager with the Kamehameha Schools. “An economy that supports Native Hawaiians supports everyone in the community.”

The report is the first publication of a series of research briefs planned by the Native Hawaiian COVID-19 Research Hui, a collaboration between Lili‘uokalani Trust, OHA and Kamehameha Schools.

The hui says it aims to gather and generate data about how Native Hawaiians are being affected by the pandemic and help in the search for ways to move forward “to create a new normal.”

The hui plans to release a new survey next week looking at local perceptions of what Hawaii’s economy should look like after the pandemic.

Earlier in the month, the OHA Board of Trustees approved a $3 million emergency relief package to help beneficiaries and Native Hawaiian communities impacted by the COVID-19 pandemic.

The Kahiau Community Assistance Program, administered by the Council for Native Hawaiian Advancement, provides up to $1,500 in one-time emergency assistance to cover mortgage, rent (including deposits) or utility debt of Native Hawaiians facing financial hardship. Such hardship may include reduction in hours or loss of employment.

OHA reported that data from the state Department of Labor and Industrial Relations indicates that Native Hawaiians are losing their jobs during the pandemic at disproportionate rates. While Native Hawaiians constitute only 19% of the total working-age population of Hawaii, a quarter of all unemployment claimants in the first quarter of the year identified as Native Hawaiian.

What’s more, between late March and late April, the Kahiau program received a 125% increase in applications, demonstrating elevated levels of financial hardship within the Native Hawaiian community, OHA said.

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