The EU Commission is currently working closely with member states to design how EU funds will be spent over the period 2014-2020. These negotiations are taking place in the form of Partnership Agreements which map out the strategic priorities to which EU funds will be allocated.
Malta submitted its Partnership Agreement to the EU Commission in April 2014. Further details on how the budget of €800 million in the European Regional Development Fund (ERDF) and European Social Fund (ESF) are planned to be committed are provided in two Operational Programmes which were made available for public consultation over the months of May and June of this year. The EU funding framework for 2014-2020 will build upon the experience learnt from previous policy cycles.
Small- and medium-sized enterprises will feature prominently in the distribution of such funds primarily via two instruments:
• Grants similar to the ones issued under the previous programming period 2007–2013 such as the €20 million for industry grant schemes administered by Malta Enterprise, and;
•Financial Instruments such as the Jeremie (Joint European Resources for Micro to Medium Enterprises) revolving financial instrument which provided SMEs with favourable lending terms.
This programme was managed by Bank of Valletta.
Although grant schemes will remain the main tool to finance the relevant member state economies, financial instruments will be used more extensively during the new programming period to complement them. These instruments have earned a prominent role in the EU Commission’s toolkit for financing the economy in view of their potential to leverage private funds. Success stories similar to Malta’s experience under the Jeremie programme across various EU member states have given the EU Commission a new impetus in this policy area.
On a national level, every member state has the faculty to develop its own tailor-made financial instrument using ERDF or ESF funds. In line with best practice, member states are to undertake a market assessment to identify gaps in financing related to the areas of SMEs, renewable energy, research and innovation and urban development.
Once market gaps are identified, the member state may develop a tailor-made financial instrument which specifically addresses market needs. In Malta the market analysis is currently being undertaken and the gaps identified will form the basis for the new financial instruments in the Maltese market for the 2014 – 2020 period.
At EU level, the EU Commission, in close collaboration with the European Investment Bank, has also developed a number of standard financial instruments. The Cosme programme is a continuation of the Competitiveness and Innovation Programme (CIP), which provides guarantees for SMEs via financial intermediaries and banks.
The Bank of Valletta Start Plus programme makes use of a CIP guarantee to provide favourable lending terms to Maltese micro-enterprises and start-ups.
Since its launch in January 2014, 57 micro-enterprises have benefitted from this financial instrument which has resulted in an additional investment in the economy of over €1.5 million.
For more information on BOV Start Plus visit www.bov.com/content/bov-start-plus-financing-package.
Mark Scicluna Bartoli is the head of EU business development at Bank of Valletta and is also responsible for the Bank of Valletta’s Brussels Representative Office.