Improving Access to Microfinance in Hungary
Improving Access to Microfinance in Hungary - new comprehensive study has been published, summarizing the lessons learnt from the ATM for SMEs project.
The lack of access to credit and financial exclusion can be a serious obstacle to business creation in many European regions. Microfinancing of SMEs and support to social entrepreneurship is an already tested and proven tool which can contribute to a high level of quality and sustainable employment, reducing disparities and poverty; and thus contributing to the realization of the « Inclusive growth » priority of the Europe 2020 strategy.
There is a wide variety of microfinance programs across Europe, however, there are significant differences in how these microfinance initiatives reach their target groups. Therefore, the “ATM for SMEs” project is aiming at improving the access to microfinance in the participating regions by sharing and exchanging the local knowledge on innovative solutions.
The "ATM for SME"s consortium is lead by Fejér Enterprise Agency (HU), and is characterized by a balanced proportion of managing authorities and microfinance institutions, and a European-level advisory partner. The intensive interregional policy exchange and learning process, planned in the framework of the project, allows the gathering of evidence on the feasibility of these good practices, and capitalising on the experience accumulated in the participating regions.
The 9 regional partners will prepare 9 action plans in order to integrate and deploy good practices learnt from interregional cooperation within the identified regional or national policies.
€1,913,897.00
SME competitiveness
The influence of the project can be demonstrated by the generation of new projects – tackling at enterprise development or improving the access to local microfinance programs – and improved management of the policy instruments by adopting new approaches in the way calls are organized and assessment methodologies are developed . The project indicators show that the successful implementation of the project will influence 626 million EUR of Structural Funds related policies and 0,6 million EUR of other policies.
The Integrated Territorial Programme 2014-2020 (ITP) of Fejér County is an intrinsic part of the centralised Territorial and Settlement Development Operational Programme (TOP) of Hungary. The TOP incorporates the territorial development objectives of the Hungarian regions, and the funding of the projects will be managed in a decentralised manner, by the counties, based on the assessment system defined in the ITPs.
The main priorities of the ITP include 1) local economic development and job creation; 2) development of local public services ; 3) inclusive local society, elimination of segregation and human resources development ; 4) support of local employment promotion initiatives.
The measures concerning the « ATM for SMEs » project fall under priority 6 – Support of local employment promotion intiatives.
The ITP sets up territorial assessment criteria for the evaluation of the projects applying for ERDF/ESF funding in the framework of the TOP. Some of these criteria are assessing the impact on the local economy, employment and enterprise promotion.
Reasons for improving the ITP in the framework of the project :
- a more sophisticated assessment scheme for projects dealing with enterprise promotion would be useful
- shaping a new methodology to assess the social and territorial impacts of enterprise promotion programmes
- generation of innovative projects in the field of enterprise promotion, including improved access to financing
The Integrated Territorial Programme 2014-2020 (ITP) of Zala County is an intrinsic part of the centralised Territorial and Settlement Development Operational Programme (TOP) of Hungary. The TOP incorporates the territorial development objectives of the Hungarian regions, and the funding of the projects will be managed in a decentralised manner, by the counties, based on the assessment system defined in the ITPs.
The main priorities of the ITP include 1) Fostering local economic development and the capacity of the settlements to keep their population; 2) Preserving cultural heritage ; 3) Local cooperation programmes ; 4) Human resource development
The measures concerning the « ATM for SMEs » project fall under priority 1 – Fostering local economic development. The ITP aims at fostering a high-employmente economy in Zala county, and promoting entrepreneurship is a key factor in achieving this objective.
The ITP sets up territorial assessment criteria for the evaluation of the projects applying for ERDF/ESF funding in the framework of the TOP. Some of these criteria are assessing the impact on the local economy, employment and enterprise promotion.
Reasons for improving the ITP in the framework of the project :
- generation of innovative projects in the field of enterprise promotion, including improved access to financing
- shaping a new methodology to assess the social and territorial impacts of enterprise promotion programmes
The objective of the Regional Operational Programme (ROP) for Świętokrzyskie Voivodeship is to increase the competitiveness of the region, ensuring in parallel the improvement of the living conditions of its inhabitants through the principles of sustainable development. The priorities set out in the programme are aligned with the EU 2020 Strategy for a smart, sustainable and inclusive growth.
The programme provides for support on 10 thematic objectives, while concentrating resources on 1) support to enterprises and innovation, 2) low-carbon economy, 3) transport infrastructure 4) labour market programmes, supporting social inclusion and education.
The expected results, concerning enterprise development and social inclusion are : 1) an increase in the number of unemployed and inactive who found a job after support from the programme 2) an increase in the number of people who have improved their skills thanks to support by the programme; 3) Support to more than 35,000 people at risk of exclusion.
Reasons for improving the (ROP) in the framework of the project :
- improve the way thematic calls related to enterprise development are organized in order to include the social impact of the actions.
- generation of innovative projects in the field of enterprise promotion services and improving access to financing and business support services
In line with the Europe 2020 strategy for smart, sustainable and inclusive economic growth in the European Union, the Regional Operational Programme (ROP) of Sardinia region is supporting small and medium-sized enterprises (SMEs), both through financial support and eased credit conditions, and through strengthened key e-services, in particular in the field of facilitatations for setting up a business in the island. This should help to relieve the financial conditions of the Sardinian firms.
The Programme focuses on seven main priorities, including : 1) Competitiveness of the economy, 2) Promoting social inclusion, fighting poverty and all forms of discrimination.
The thematic priority « TO3 - SMEs competitiveness » contains measures to increase the performance and competitiveness of the SMEs in the region, in order to improve their capacities to increase in regional, national and international markets. The objective 3.6 under this priority is aiming at improving the access to credit and financing for enterprises. The specific measures are concerning the system of public guarantees (Action 3.6.1) and contribution to the development of venture capital funding market dedicated to startup's in pre-seed, seed and early stage (Action 3.6.4).
Reasons for improving the ROP in the framework of the project :
- shaping a new methodology for monitoring or evaluating measures;
- improve the way thematic calls are organized in order to measure the social impact of the actions.
Since 2002 the city of Offenbach has successfully been implementing the strategy "Start-Up City Offenbach – Promotion and strengthening of business starters". Various measures supporting people in getting self-employed or starting a business have been developed and are well-functioning, with a specific view on socially disadvantaged population groups, such as:
- Comprehensive information about the start-up process and contact points
- Counseling, training and seminars
- Funding possibilities including grants and loans such as microcredit
- Networking and office space
- Conferences and Business Start Up Awards
However, the city’s current challenge is not only to support enterprises up to one year after start-up, but to particularly strengthen the business’ growth phase in order to further develop the potential of a business through growth financing and support for growth and innovation.
So far several projects have been and are currently being carried out in the frame of the Municipal support strategy for the growth of SMEs. As such specific support is provided in the frame of ‘Planstation Offenbach’ to small and medium enterprises in the cultural and creative industries. Entrepreneurs can receive counseling and guidance as well as co-financing up to 25% for business investment for growth an innovation.
The objective of the overall strategy is to increase the number of jobs created by business starters during the first five years of their business by 25%.
As a new EU member state, Republic of Croatia has prepared 2 operational programmes for facing new challenges after entering into EU membership. Operational programme related to SME sector is “OP Competitiveness and Cohesion 2014-2020”, while a public policy related to this project is Priority Axis 3 Business Competitiveness, Investment Priority 3a1 "Better access to finance for SMEs". Alos, PORA is main coordinator for implementation of County Regional Development Strategy for period 2011-2013 (valid for 2015). In past 20 years, a lot of measures from national level has been developed and applied in Croatia with aim of enhancing the system of SME’s microfinancing.
Based on transfer of best practices planned in the framework of the ATM project gained from all other EU partners and regions, OP Competitiveness and Cohesion 2014-2020 can be improved in the sense of adopting those new practices and policies and improving existing measures and policies in the area of SME’s microfinance (e.g. establishment of new funds on national land regional level for SME’s microfinancing, adopting new and improved specific measures successful in other EU countries and regions).
The Economic Development and Innovation Operation Programme (EDIOP) draws on two of the structural funds, ERDF and ESF. In order to achieve the above high-level goals, the EDIOP designates 8 priority axes covering the fields of (1) SMEs, (2) R+D+I, (3) ICT, (4) energy, (5) employment and (6) vocational training, (7) tourism and (8) the application of financial assets.
Priority Axis 8 includes FEIs and supports all the above priority axes 1in reaching their objectives.
One of the major inadequacies SMEs facing is the lack of capital and the consequential obsolete business infrastructure, to which EDIOP response with capacity enhancement. Another area is the low level of willingness to cooperate and efficiency, which EDIOP intends to remedy through network-based economic development. The development of the SME sector with financial instruments will have an important role, part of which, is the “loan on trust” experimental programme. Young people and start-up enterprises can have access to preferential financial instruments after receiving grants, supported with a mentoring programme, and having stabilised their operation. The volume of Priority Axis 8 (composed of FEIs) is more than EUR 2.2 billion, which requires very well established monitoring and evaluating measures. There is also need for better targeted measures in microfinance to reach those groups that are in most need of this type of financing.
Burgos City Council youth self-employment programme, currently integrated within the general “self-employment” programme is focusing on direct grants to the promoters of the projects on a regular and equal distribution basis (2000€ per project aprox.) This local financial instrument is dedicated to projects which aim at promoting self-employment and entrepreneurship among the young population of Burgos city.
This instrument, taking into account the lack of enough financial resources and the social, economic and political interest of the issue, could be improved in terms of spreading out the number of projects supported and funded, along with increasing the efficiency of its implementation.
The Cooperation Platform for Business Development in the Follo Region is a policy instrument developed among 7 municipalities in the Follo region.
The main objective of The Follo Joint board with this strategy is to contribute to strengthening Follo as business region so that the region's economies can be triggered,by:
Goal 1: Develop an innovative business and scientific community who are international
leader in bio-economy.
Goal 2: Assist more entrepreneurs with establishing new enterprises
Reasons for improving the policy instrument:
The process of developing a action plan for business development in the region has just started, and this action plan will support the goals of the cooperation platform in order to build an innovative business and knowledge based environment in the region. The Action plan on business development in the Follo Region is meant to be a very action oriented practical strategy document that will outline several relevant tools and ways of reaching the general goal of developing a more favourable environment in the region, and also towards reducing the risk of investing in the early phase of new businesses. Lack of risk-willing capital is seen as one of the most important barriers for innovation and business creation from the idea to early stage development. Responsibility among the actors will be shared, and there will be cooperation with enterprises, private NGO’s (such as Microfinance Norway) and other actors.
Improving Access to Microfinance in Hungary - new comprehensive study has been published, summarizing the lessons learnt from the ATM for SMEs project.
Microfinancing based on non-profit foundations has proven in several critical periods that it can effectively help the smallest companies, family businesses.
Financial inclusion in the COVID-19 recovery measures (Project meeting in Sardinia)
During the 2nd virtual partner meeting of the “ATM for SMEs” add-on project, the discussed how the new ERDF calls can support crisis recovery for SMEs.
During the 1st virtual partner meeting of the “ATM for SMEs” add-on project, the partners discussed the local initiatives – responses to the COVID-19 situation.
All the video content of the Access To Microfinance for Small and Medium-Sized Enterprises project are available on https://vimeo.com/showcase/atmforsmes
PORA Regional development agency of Koprivnica Križevci County organized a three-day study trip in Croatia in the period from 15th to 17th October 2018.
The workshop organized by UMWS focused on the topic "microfinance as a local employment tool.
The study trip started with a welcome speech by Mr. Raffaele Paci (Vice President, Sardinia Region) who stressed the relevance of the project for the social and...
The Involvement of priority groups meeting took place at the CEEI Burgos.