Hannover C2 financial architecture

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Hannover policy forum background paper

Workshop C2 - GETTING THE RIGHT FINANCIAL ARCHITECTURE

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Contents

Workshop objectives

  • To explore the range of opportunities that exists for funding inclusive entrepreneurship strategies during the next round of the structural funds.
  • To analyse how these different programmes and funding streams can be best co-ordinated to achieve maximum synergy and impact on entrepreneurship among disadvantaged groups in the next period.

What is the challenge?

According to the Presidency Conclusions to the 2006 Spring Council “Unlocking the business potential particularly of SME’s” is one of the 4 areas for priority action to be adopted by the end of 2007 under revised Lisbon Agenda. The priority insists that “measures to improve the business environment for SMEs and to encourage more people, in particular women and young people, to become entrepreneurs should also be explicitly mentioned in the National Reform Programmes and well as in the reporting”.

In a similar vein, the first priority of the recent EU Communication, promoted by the Enterprise DG, on the role of policies for SMEs in implementing the Lisbon Strategy is “promoting entrepreneurship and skills”. Its new approach is said to “embrace initiatives and actions to unlock the full potential of all types of enterprise ranging from start-ups and high growth “gazelles to traditional enterprises, including craft sector, micro enterprise, social enterprises and family SMEs”.

The challenge for the next period is to ensure that these agreed priorities translate into co-ordinated actions on the ground which uses all the good practice that has been developed in the past and materially improve the opportunities for entrepreneurship for under-represented groups.

What kinds of solutions exist?

On paper there is a whole battery of programmes and funding streams which could be used to open up entrepreneurship more widely to all members of society. During the period 2000-2006, the European Social Fund spent 8 billion euros or 14% of its total budget on supporting the development of entrepreneurial skills, business start-ups, the establishment of business networks and other measures to promote enterprise and help improve competitiveness. These priorities are maintained in the proposed regulation for the next round of the Social Fund.

Entrepreneurship is raised in three out of the five new priorities of the proposed ESF Guidelines for 2007-13:

  • The “promotion of entrepreneurship and start-ups” is specifically mentioned under the adaptability priority (Article 3.1.a).
  • The “promotion of self employment and business creation – including co-operative enterprise” is also raised under the objective for “enhancing access to employment of job seekers and inactive people (Article 3.1.b).
  • Finally, “the involvement of local communities and enterprises and the promotion of local employment initiatives” is raised in the objective for “reinforcing social inclusion of people at a disadvantage with a view to their sustainable integration into employment” (Article 3.1.c)

The list of eligible measures for the social fund includes micro-credits, guarantee funds, and loan interest rebates. Opportunities also exist for using the Community Programme PROGRESS, as well as national funds for transnational cooperation and both national and EU technical assistance to support European networking.

Entrepreneurship is also raised under all three objectives for the European Regional Development Fund. The Regional Fund will, therefore, probably remain the largest single source of funding for entrepreneurship and SMEs in the next funding period. However, unlike the Social Fund, a large proportion of this spending is directed at material investments in high growth, high technology, medium sized companies. Once again INTERREG and URBACT will be able to support transnational cooperation and networking.

One of the innovations in this period is the launch of a new initiative called JEREMIE (Joint European Resource for Micro to Medium Enterprises) which allows Member States to convert part of the funds they have available under the Regional Fund into rotating financial instruments, including guarantees and micro-credits.

The Enterprise DG launched its new Competitiveness and Innovation Framework Programme (CIP) in January 2007. It continues until 2013 and has a budget of 3.6 billion euros – 60% more than in the previous period and is said to be “a coherent and integrated response to the objectives of the renewed Lisbon Strategy”.

Questions for discussion

  • How to ensure that all these programmes (also) take account of the need of entrepreneurs from disadvantaged areas and groups?
  • Whatever the starting point (employment, territorial development or enterprise), how to build synergy with other funds and initiatives
  • How to ensure that the lessons of the past are incorporated into the action plans of the future?

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