The EU's Competitiveness and Innovation framework Programme

To improve competitiveness, growth and Europe's attractiveness for capital and labour, as well as to reinforce employability, a multi-dimensional programme has been designed by the EU. The Competitiveness and Innovation framework Programme (CIP) has been set up to support the competitiveness and innovation capacity of the Union.

It brings together various community measures in the field of enterprise, ICT and energy, with the main aim of acting as a catalyst in order to meet the objectives of the renewed Lisbon strategy.

The new CIP provides more concentrated support for SMEs and innovation, as well as promotes the entrepreneurial spirit among European citizens. It also directly addresses the growing concern of energy for the entire EU, and promotes the development of new and renewable energy sources to make Europe as a whole less dependent on outside energy sources.

The main change introduced by the CIP is that it brings the previous, scattered SME, ICT and energy programmes together under one framework programme. By being combined and simplified, the programme focuses on the specific goal of improving the competitiveness of industries, fostering entrepreneurship, new technologies and creating renewable energy sources.

The CIP complements other EU policies and programmes, and should help bridge the gap in Europe between research and innovation. For instance, it is complimentary to the Seventh Framework Programme for Research and Technological Development (FP7) in that it deals with innovation that has moved beyond the demonstration phase and is ready for marketing. The programme, in addition, complements innovative actions under the EU's structural funds.

The CIP was adopted in June 2006 and came into force last November. The total budget allocated for the programme for the 2007-2013 period is €3.621 billion. On an annual basis this represents an increase of 60 per cent compared to 2006 under the various predecessor programmes.

The programme is open for participation to member states of the EEA (the EU plus Norway, Iceland and Liechtenstein), the candidate countries, countries of the western Balkans, and, under certain conditions, countries participating in the EU's neighbourhood policy.

The CIP will be implemented through three specific operational programmes with each having a set of specific objectives. These are the Entrepreneurship and Innovation Programme (EIP), the Information Communication Technologies Policy Support Programme (ICT PSP), and the Intelligent Energy Europe programme (IEE).

The EIP

The Entrepreneurship and Innovation Programme is the successor of two earlier Community programmes. It is based on the results of the Multiannual Programme for Enterprise and Entrepreneurship (MAP) running between 2000-2006, and includes the environmental technologies part of the LIFE-III Environment programme that aims at the development of new environmental technologies.

This specific programme aims to facilitate access to funding for the start-up and growth of SMEs, foster SMEs co-operation, promote innovative actions and eco-innovation activities, and encourage an entrepreneurial culture.

In Europe, businesses, especially in the 12 new member states, find it hard to get access to financial resources and, hence, the launch of the EIP is a step in the right direction. For instance, only some six per cent of the EU's SMEs have obtained capital from venture capital (VC) funds, which is clearly the result of the still fragmented VC market in Europe (and also one can add the risk-averse nature of European companies).

The programme, which has a budget of approximately €2.166 billion (of which €430 million for eco-innovation), will be put into operation through three financial instruments, mainly the High Growth and Innovative SME Facility (known as GIF), the SME Guarantee Facility (SMEG) and the Capacity Building Scheme (CBS). In addition, services in support of business and innovation, in particular for SMEs, will be set up.

The ICT PSP

The second CIP specific programme, the Information Communication Technologies Policy Support Programme, aims to develop a single European information space, stimulate innovation through the wider adoption of investment in ICT, and develop an inclusive information society.

The programme is based on the objectives of the previous e-TEN, Modinis and e-Content programmes, and is complimentary to the goals of the i2010 Strategy. ICT PSP endeavours to assist developing lead markets for innovative ICT-based solutions, notably in the field of public interest.

It is expected that all this will open a wide range of new business opportunities, in particular for those Maltese SMEs providing ICT-based solutions. Projects (pilot and market replications), disseminating and exchanging best practices and thematic networks for transferring knowledge and bringing together stakeholders from different sectors will be supported under ICT PSP.

The budget of this specific programme for 2007-2013 is of €728 million, which is around 20 per cent of the total CIP budget.

The IEE programme

The Intelligent Energy Europe programme deals with the elimination of non-technological barriers, creates market possibilities and increases awareness in the EU in the field of energy.

Within the CIP the specific programme will contribute to the EU's energy strategy by supporting actions that foster energy efficiency and the rational use of energy resources (through sub-programme SAVE), promote new and renewable energy sources and support energy diversification (through sub-programme ALTENER) and promote energy efficiency and the use of new and renewable energy sources in transport (through sub-programme STEER).

The IEE offers new possibilities of synergy with the other two pillars of the CIP. Actions financed under the IEE can also serve to reinforce and/or prepare the way for action within other programmes with energy-related objectives, such as the structural funds allocated for Malta or the EU's LIFE+ programme.

The local context

At a recently well attended seminar about the CIP, organised by Forum Malta fl-Ewropa, the programme and its core elements were presented. One of the seminar's main speakers, Minister for Competitiveness and Communications, Censu Galea, highlighted the importance and potential benefits the CIP can bring to Malta.

In a country where SMEs are the backbone of the economy and where the banking sector remains practically the only source for business finance, the CIP introduces various new financial instruments, which potentially could bring various benefits to local enterprises.

What needs to be done now is that the European Commission promote, as Mr Galea rightly stated, the "think small" mentality and take into consideration small states like Malta. Brussels must create the right conditions to enable SMEs, including micro-SMEs, to make full use of these financial instruments and not over-burdensome them with bureaucratic procedures and requirements.

At the same time elements of the CIP, such as the EIP, to be tapped into, need financial intermediaries. This creates the need of local financial institutions to take a proactive role and approach the European Commission. Malta Enterprise is already quite active in this field, but more needs to be done to get all the possible benefits from the CIP.

However, it all boils down to the local Maltese companies taking an upbeat position and tapping into these funds. Calls have already been launched this year in the field of ICT PSP and IEE.

To allow SMEs to play their full role in meeting the Lisbon objective of making Europe the world's most completive and dynamic knowledge-based economy, the EU has come up with the CIP. Now it's up to local businesses to take a proactive role and apply for CIP funding.

Mr Cuschieri is a research executive at Impetus Europe Consulting Group Ltd. For more information e-mail marvin.cuschieri@impetuseurope.com