Companies that ask for the assessment are required by Sharakah to share a series of documents to check basic information related to their work. These documents are then analysed by Sharakah experts who draft a report including the main findings. Following this first phase Sharakah experts dedicate a full-day site visit to collect other relevant information that will be summarized in a final report. The two reports are then compared to give experts a clear framework of the situation and draft an action plan to guide companies in their effort to improve their performances. In addition a dedicated Sharakah consultant is available for 12 months to support and assist entrepreneurs.

COUNTRY

Sultanate of Oman.

ORGANIZATIONS IMPLEMENTING THE PROJECT

Sharakah – The Fund For Development of Youth Projects (S.A.O.C.)

START & END DATE OF THE PROJECT

2014 – ongoing

WHO FUNDS THE INITIATIVE

The initiative is funded by Sharakah with the support of diverse Omani Public and Private Organisations.

TARGET GROUP

The tool is accessible to existing SMEs who have completed at least 1.5 years. The service is free to Sharakah members, while the payment of a fee is required to other companies.

AIMS OF THE PROJECT

The aim of the initiative is to make available a well-structured mechanism to assess companies performances and more importantly to provide them with the competencies and tools to improve their work and make them as more competitive as possible.

METHODOLOGY

The tool analyses SMEs performances to identify their strengths and weaknesses. The analysis is conducted in two phases:
Phase 1
The company provides Sharakah with a series of documents – like business plans, lists of clients and employees, tenancy agreement, bank statement, etc. – that enables the analysis of the performances according to diverse criteria that evaluate seven areas:

• compliance with regulations, general guidelines and administrative procedures;
• communication, evaluating the business’ communication capabilities and skills and the effectiveness of the used communications mechanisms;
• product/service quality;
• marketing and branding, evaluating the branding and the promotional capabilities of the business;
• human resources and capacity building, evaluating the measures, policies and procedures that the business implements to support the staff;
• financial and credit history, analysing the SME financial and credit position;
• policies and standardization, checking the business adherence to industry and international standards.

Once all documents have been analysed, a first report is drafted by Sharakah experts and shared with the company.

Phase 2
During the second phase Sharakah experts visit the company and carry out one day interview to employees, suppliers and, whether possible, clients. The findings of the site visit are then included in a final report that, compared with the first one, enables Sharakah experts to define the performance of the company. The assessment results are classified in a range from 0 to 100%:

• From 0% to 30%: this score indicates that the company performance is very scarce and need significant improvements.
• From 31% to 65%: performances are acceptable, meaning that all over all the company has good standards but there is room for improvements.
• From 65% to 100%: the company’s performances do not require any improvement as it established a good balance between sustainability and growth.

Once the performances are clear, companies are provided with an action plan focused on the area that needs to be improved. In addition to the action plan, a Sharakah consultant will offer assistance, support and advices for 12 months.

RESULTS ACHIEVED

More than 150 SMEs took benefit from this service over the last 5 years. Sharakah conducted an evaluation of the BPMT on 24 enterprises acting in diverse fields which participated in the Khazzan Project, an initiative supported by BP Oman and implemented by Sharakah to support Omani SMEs growth.
Involved entrepreneurs particularly appreciated the assistance provided by Sharakah which was perceived as a fundamental support to gain competencies on how to have a clear business idea and develop it in a proper way. According to the results of the analysis the majority of SMEs accessing the programme improved their performances as showed by the following examples:

• A company acting in the field of healthcare and medical services improved its rating from the 27.86% to the 47.76%, in particular the areas with the highest impact have been the compliance (from 42% to 64%) and the financial and credit history that registered low performance of 24% in the first monitoring and grew up to 63% after the participation to the programme.
• One of the business assisted – a company dealing with consultancy services in sustainable development such as assessment of existing projects or development of strategies and policies – registered a good performance in the first evaluation step (59.5 %) that thanks to the involvement in the programme reached the 73.3% with relevant growth rates in compliance (from 55% to 88%) and financial & credit history area (from 39% to 57%).
• Significant improvements have also been registered by another company whose performances at the beginning of the journey were quite low (19.41%) but thanks to the support received reached better results (39.39%) by enhancing considerably the rates in the marketing and branding area (from 5% to 29%) and in the financial and credit history (from 8% to 41%). These are positive data, but the analysis also shows that other areas need significant improvements to impact the overall performance of the enterprise (i.e. policies and standardization area registered a very negative performance – 0% – in the first evaluation phase and reached only 5% at the end of the programme).
• There are also companies that registered an improvement of their general performances, but were not able to reach good rates in all the areas analysed by the tool. This is for example the case of a company whose general performance grew up from 19.73% to 30.25% but that didn’t implement adequate measures to boost the areas in which it was lagging behind.

KEY CHALLENGES IN IMPLEMENTING THE INITIATIVE AND SOLUTIONS USED TO MITIGATE THEM

The most relevant challenge is related to the fact that entrepreneurs are often reluctant to share information and documents, in particular regarding their compliance with financial and administrative duties. This typology of documents is of course crucial for a proper assessment, but the most important thing is – and Sharakah uses this to mitigate this challenge – that entrepreneurs are aware of the risks they face when they are not compliant. Sharakah found out that presenting them the worst situation possible is an efficient key to mitigate this challenge.

LESSONS LEARNED

SMEs need to improve their performance in order to compete against larger corporates and to attract/maintain talents. Furthermore companies do not need someone who just says them what to do, they need to access a structured mechanism that enable them to identify problems and provide them with the competencies to understand which could be the most suitable solution to successfully manage its challenges.

SUSTAINABILITY OF THE INITIATIVE AND POTENTIAL REPLICABILITY

Being a fee-based service the initiative is highly sustainable. In addition to this, the initiative is likely to be replicated considering the number of companies that took benefit from the BPMT so far and that continues to ask for accessing the tool.

During the eight-month process INTRASOFT employees worldwide were challenged to create innovative ICT-related products and services with the aim to promote innovation drawing upon the key message “Innovation is appreciated and will be fostered with priority”.

The Innovation Competition was part of the 2017 – Year of Innovation, umbrella initiative.

COUNTRY

EU and beyond.

ORGANIZATION IMPLEMENTING THE PROJECT

The initiative is implemented by INTRASOFT International S.A. (holding INSME Vice-Presidency).

START & END DATE OF THE PROJECT

From the 1^st of May 2017 to the 31^st of December 2017.

WHO FUNDS THE INITIATIVE

The initiative was funded by INTRASOFT International S.A.

TARGET GROUP

All INTRASOFT employees.

AIMS OF THE PROJECT

The vision of the contest was to establish an innovative promoting culture within the company. In this effort, the aim was to maximize participation through an enjoyable process and uncover business potential lying within the organization. In addition, the process intended to boost an inside/out approach to innovate. The key message of the competition was “Innovation is appreciated and will be fostered with priority”.

METHODOLOGY

The competition run in two main phases.

The first phase was an open call inviting all employees to submit their innovative idea by completing a short submission form that included 5 key questions related to their idea.
The evaluation criteria were set and published on the website of the company.
The 10 top ideas were selected and promoted to the second stage of the competition that was related to the feasibility plan for their innovative ideas. Participants were requested to prepare a business plan and a short pitch in a video format. In order to develop the business plan and the pitching the 10 finalists were supported by training material and 10-hour workshops. Those workshops included group webinars and also one on one webinars per team.
The winner was selected by the jury committee – composed by ten internal and external key technology and business experts – and according to the evaluation criteria set from the beginning of the competition. The criteria were related to the following:

• Innovation
• Team Composition & Business Acumen
• Competitive Advantage
• Business Potential
• Sustainability
• Level of Readiness.

The winning team won a cash prize and the opportunity to bring its idea to life either by getting into an internal or external incubation program.
A dissemination campaign was organized in order to support and promote the competition throughout the lifetime of this project in all sites.

RESULTS ACHIEVED

• The competition added value to the INSTRASOFT existing offering: both the winning idea and the runner-up – nominated as most promising idea – were further explored by the company and the owners. Those ideas were promoted and resulted in new solutions brought to the market and tested among INTRASOFT customers.
• More than 40 business ideas were submitted and the most active offices have been the ones based in Belgium, Greece, Jordan, Kenya, Luxembourg.
• A successful task force including professionals from 5 different departments to organize the competition was created, taking benefit from the expertise of each department (New Ventures, Research Innovation Development, Marketing, Human Resources and Legal).
• The creation of innovative ideas entailed a stronger cross collaboration among the team members representing diverse departments and offices of the group.
• INTRASOFT employees had the opportunity to include external people in their team and this stimulated Open Innovation for the Group.

KEY CHALLENGES IN IMPLEMENTING THE INITIATIVE AND SOLUTIONS USED TO MITIGATE THEM

Since it was the first initiative of this kind INTRASOFT met challenges in raising employees’ interest and actively engage them. In order to deal with this challenge INTRASOFT organized info days in all branch offices by benefitting also from the CEO participation. In addition the top management of all departments contributed to encourage and engage employees through dedicated events.

Further challenges were related to:

• The organisation of the competition and of the whole process as it required a significant effort of coordination among all the groups involved.
• The engagement of people from different countries and cultures.

This has been successfully managed through the establishment of task forces involving experts and professionals with different expertise and guided by a common vision that facilitated a very positive collaboration.

LESSONS LEARNED

The initiative gave evidence to the importance of the support of the top management for the successful implementation of the initiative. This is a bit negative, it was the top management that highlighted the importance and they supported it, it was a bottom down approach. Furthermore the engagement of people from different background and the idea of triggering a cultural change made clear the importance of an effective communication and dissemination as well as the need for special attention to cultural differences.
In addition to this, the implementation of the contest confirmed that more initiatives like this have to be adopted in order to foster an innovative culture.
Finally, initiatives of this kind require a significant amount of time, therefore in case such competition will be organised again in future it will be essential to properly estimate the time needed for the implementation of the project.

SUSTAINABILITY OF THE INITIATIVE AND POTENTIAL REPLICABILITY

As part of the INTRASOFT strategic plan, the company decided to promote more innovative internal actions. In addition the initiative is considered to be sustainable because on the one hand the winning and the most promising ideas continue to take benefit from the competition as the winners have the chance to test their service/product among real customers, on the other hand INSTRASOFT enlarged its offering to the market.
Given the positive impact of the innovation competition, the possibility to organise similar initiatives is highly considered .

• raise the awareness of exploitation possibilities;
• evaluate the market potential of the research;
• analyse the innovation degree and maturity of the research;
• examine the adequacy of the idea and the legal protection system;
• set roadmaps for the long-term sustainability of project results;
• develop a coherent business plan;
• effectively present project results and their market potential to possible investors.

COUNTRY

EU member countries and associated (the initiative could be extended to extra EU countries).

ORGANIZATIONS IMPLEMENTING THE PROJECT

The initiative is implemented by META Group (INSME Member) and involves a panel of 40 experts.

START & END DATE OF THE PROJECT

2012 – ongoing

WHO FUNDS THE INITIATIVE

The services are provided by META Group and financed by donors or stakeholders involved in the initiative (Universities, Research Centres etc.). The Research Helicopter was also deployed to almost 600 R&D projects through different framework contracts by the European Commission like ESIC, the ‘Common Exploitation Booster – CEB’, and SSERR.

TARGET GROUP

Universities, research centres, public and private institutions such as the EU DG for Research and Innovation, ENEA (the Italian National Agency for New Technologies, Energy and Sustainable Economic Development), Ministries and Regional Authorities.

AIMS OF THE PROJECT

The aim of the initiative is:

• to remove the obstacles that prevent research results to reach the market as new products and services;
• to offer support to researchers and help them to exploit and commercialise their research results by transforming them into economic growth and wider benefits to society. 

METHODOLOGY

The Research Helicopter offers tailored support services (advisory, coaching, mentoring), in particular:

• Exploitation strategy seminars to:
  i) raise awareness of exploitation possibilities
  ii) discuss how to meet exploitation opportunities
  iii) analyse potential risks and obstacles associated with exploitation as well as how to address them
  iv) brainstorm on key results
  v) enhance the understanding of the importance of connecting with customers and better communicate project’s results.

• Assistance to the development of a coherent and effective business plan from the drafting phase to possible solutions for financing needs. In the framework of the business plan development project partners can get:
  i) the Lean Canvas for a selection of Key Exploitable Results
  ii) the content for a pitching to potential investors/business partners
  iii) a set of recommendations on the steps to be taken after the end of the European Commission support.

• Help to set roadmaps for the long-term sustainability of project results.
• Support in the different stages of the protection of Intellectual Property Rights.
• Guide to effective pitching that:
  i) has to address challenges and problems, the added value provided
  ii) explain how the novel service/product will mobilize a change
  iii) specify the target group.

• On demand services designed to meet specific needs.

The services can be provided at any time during the project life cycle and assistance can be required even after the project has been closed.

RESULTS ACHIEVED

The Research Helicopter has been tested and implemented in diverse EU projects. The data collected (according to strict confidentiality agreements) show that the initiative had a positive impact.
The application of the Research Helicopter within the Common Exploitation Booster (CEB) provided 193 tailored services to 1872 organisations involved in 236 projects. All participants involved were surveyed and according to the feedback results: 91% were satisfied with experts’ skills and knowledge; 79% gave a positive feedback on the usefulness of findings and recommendations.
The initiative found application also in fet2rin, a project funded by the European Union’s Horizon 2020 research and innovation programme. In that framework the success rate related to the projects’ proof of concept reached the 50% (the average rate ranges from 8% to 12%).

KEY CHALLENGES IN IMPLEMENTING THE INITIATIVE AND SOLUTIONS USED TO MITIGATE THEM

The main challenges identified in the implementation of the initiative are:

• a cultural barrier that prevents researchers from considering other possibilities than research related to the potential follow up of their projects
• an unclear definition of the activities that hinders a coherent use of the funds available.

These challenges have been mitigated by dedicating part of the advisory services to:
i) the importance of exploitation of results and the high potential that services/products have on the market, meaning there is a significant economic return that brings value to the research and can represent a propeller to bring the research to the next step both from a theoretical and practical point of view;
ii) the need for the definition of effective work packages that identify the priorities leading to the exploitation of research results.

LESSONS LEARNED

The initiative shed lights on the need for a change in the researchers’ mindset. Increasing awareness on the fact that the research in a variety of fields has a high potential to the market and could be a driver for an effective growth in R&D&I as well as enhance the chances to take benefit from the opportunities of funding offered by the dedicated EU Framework Programmes.
While tools like webinars could be convenient to reach beneficiaries, it is essential to create opportunities for face-to-face interactions between project partners and experts.

SUSTAINABILITY OF THE INITIATIVE AND POTENTIAL REPLICABILITY

The service demonstrated an high impact in the framework of the CEB and fet2rin projects, as well as from the high numbers of researchers involved so far (i.e. 18.000 in ca. 600 services offered to the EU DG Research and Innovation).
The increasing need for new opportunities to accessing funds and optimizing the results of research make the initiative a useful support for future programmes aiming at bringing more R&D results to use and closer to market.
Given the high relevance of generating impact out of R&D&I similar support services could be adopted in different context/fields using funds for Technology transfer or other funds from national and international donors.

The programme is one of the tools to implement the Pomorskie Regional Development Strategy 2020.

A detailed description of the Regional Operational Programme for Pomorskie Voivodeship is available here.

COUNTRY

Poland

ORGANIZATIONS INVOLVED IN THE INITIATIVE

Association Free Entrepreneurship (INSME Member)

START & END DATE OF THE PROJECT

2014 – 2020

WHO FUNDS THE INITIATIVE

Total Operational Programme budget: 2,193,896,122.00 EUR

Total EU contribution: 1,864,811,698.00 EUR

TARGET GROUP

The target group is broad and encompasses companies (mostly SMEs, ICT companies, but also ports and off-shore industrial areas, energy sector companies); research and academic institutions; kindergartens and schools; underprivileged or marginalized people (e.g. the unemployed, people with handicaps, youth, seniors, inhabitants of devastated post-industrial areas); medical institutions and their patients, etc.

AIMS OF THE INITIATIVE

1) Increase the share of innovative enterprises in the total number of industrial enterprises & the service sector to 13%;
2) support 3,700 enterprises;
3) create 4,000 new places in crèches and 3,000 new places in kindergartens;
4) 45,000 students participating in internships;
5) support more than 33,000 unemployed people in their search for a job;
6) upgrade 110 km of railway lines and 150 km of roads;
7) increase the share of renewable energy in the final energy consumption to 18%;
8) cover 36,000 people by flood protection;
9) increased percentage of population connected to sewage system to 86%.

(Source: http://ec.europa.eu/regional_policy/it/atlas/programmes/2014-2020/poland/2014pl16m2op011)

METHODOLOGY

The Regional Operational Programme for Pomorskie Voivodeship 2014 – 2020 is also tasked, among its various objectives, with urban revitalization. To achieve this, Pomorskie is using an innovative methodology based on a successful negotiation approach counting on the participation and involvement of various partner institutions, entities and communities. This includes a) defining smart specialisations, b) developing the best revitalization projects and coordinating activities in cities and their surrounding functional areas.

a) Pomorskie region has adopted a unique bottom-up approach partnership process which defines smart specialisations based on proposals made in open competition by interested business and science communities. The proposals were evaluated by experts from outside the region and abroad, with international business and research experience. As a result, the regional authorities identified four areas of smart specialization: 1) offshore, port and logistic technologies; 2) interactive technologies in an information-heavy environment; 3) eco-efficient technologies in the production, transmission, distribution and consumption of energy and fuel, and construction; 4) medical technologies for lifestyle diseases and the ageing sector.

Having selected the smart specialization fields, the regional authorities negotiated agreements with each of the communities organized around them, which defined the scope and priority research areas of a given specialization, and the principles and approach to supporting their development with public funds including the regional OP for 2014 – 2020.
The concluded agreements specify objectives, material, scope, principle of cooperation, rules for accessing financing from the EU structural funds and monitoring.

b) Pomorskie is using this “pilot” negotiation approach also to revitalize degraded areas in cities eligible for support from public funds.
Revitalisation projects follow the integrated project formula: there are two interlinked projects, one co-financed by the ESF and the other one financed by the ERDF. The implementation of such a model is facilitated by the fact that the OP 2014 – 2020 is actually a two-funded programme (ERDF and ESF). Multi-stage negotiations between 31 cities and regional authorities concern, among other issues, the delimitation of degraded areas, urban regeneration programmes and the scope of integrated revitalization projects. Funded projects will have to find specific solutions to the challenges identified for degraded urban areas on the basis of precise indicators of the social, economic and special situation. Projects will be implemented by cities with the involvement of various partners and groups, by using an approach which also involves residents and ensure a broader public participation.

The regional OP 2014 – 2020 is based on the assumption that territorial approach must be based not only on financial resources but most importantly on systematic cooperation both among neighboring municipalities as well as public authorities and entrepreneurs, NGOs and education and scientific research institutions.

In the programme, practical procedures for the beneficiaries are considered a priority. To support the negotiation approach, the region created a tool for submitting applications of project proposals, which is constantly being updated to the specific of successive competitions. They elaborated a document for beneficiaries giving all the information on how to apply for project funding, their evaluation and subsequent implementation and accounting.

(Source: Panorama Summer 2016/No.57)

RESULTS ACHIEVED

The initiative is in progress. As for August 2018, 81% of the allocated funds have been contracted, and 17,5% of the budget has been spent by this program’s beneficiaries. Achieved results in areas related to smart specialisations include so far:

1) numerous R+D projects co-financed by loans and grants for innovative projects, with priority given to smart specialization-related projects (especially interactive technologies in an information-saturated environment),
2) over 270 co-financed investment projects by SMEs in the region, the majority of them in line with selected smart specializations, like off-shore, port and logistics technologies,
3) 440 companies participating in seminars, conferences, business missions and fairs; 107 international events promoting the region’s economy, 40 events promoting investment in the region nationally and 15 – internationally; priority given to participants representing all smart specialisations selected in the region,
4) Investments in 16 hospitals and geriatric centres in the region, in line with smart specialization focusing on medical technologies in the area of civilization and ageing-associated diseases,
5) and many others.

The above results reflect only a portion of the Operational Programme for Pomorskie Voivodeship 2014 – 2020 expected impact related to smart specialisations; the overall impact of the whole initiative is far more wide-ranging.

KEY CHALLENGES IN IMPLEMENTING THE INITIATIVE AND SOLUTIONS USED TO MITIGATE THEM

Smart specialisations require in-depth analyses by interested parties representing economic and scientific circles to support their claims on expansion and globalization potential of selected directions. With such a bottom-up approach there is a risk of neglecting other opportunities. Periodical updating of smart specialisations may mitigate this challenge.

LESSONS LEARNED

Based on the experience gained from the 2007 – 2013 period, it must be noted that problems should be solved through actions planned in advance, based on strategic reflection. Agreements are also important to identify, prepare and coordinate priority projects increasing their chances of success.

(Source: Panorama Summer 2016/No.57)

SUSTAINABILITY OF THE INITIATIVE AND POTENTIAL REPLICABILITY

From the very beginning of the procedure for selecting smart specialisations, attention was paid to the role of private capital in the ventures and projects planned by various groups. The share of the capital will not only guarantee the greater efficiency and sustainability of implemented solutions, but will also launch mechanisms that will enable the financing of economic development after 2020, when cohesion Policy funding will be less than it is in the current programming period.

(Source: Panorama Summer 2016/No.57)

In particular Pomeranian Export Broker is one of the six strategic projects to be implemented under the Regional Strategic Programme named “Pomeranian Creativity Port” of the ROP of PR 2014-2020 whose main aim is to increase the efficiency of companies and improvement of competitiveness of higher education.

The Pomeranian Export Broker will be developed through three main branches of activities:

• Introduction to export, by identifying potential exporters in the region and prepare SMEs to export through educational and consulting activities.
• Development of the export of Pomeranian companies on chosen markets, by promoting the region and facilitating foreign contracts, participating to trade fairs and organizing economic missions etc.
• Grants for SMEs by financially supporting companies willing to participate to international trade fairs, exhibitions and economic missions etc.

COUNTRY

Poland

ORGANIZATIONS IMPLEMENTING THE PROJECT

1) Pomeranian Development Agency (Leading Partner)
2) Pomeranian Regional Chamber of Commerce
3) Free Entrepreneurship Association (INSME Member)
4) Gdansk Business Incubator STARTER
5) InvestGDA
6) Pomeranian Science and Technology Park

START & END DATE OF THE PROJECT

July 2016 – June 2023

WHO FUNDS THE INITIATIVE

1) European Funds – Regional Programme
2) Office of the Marshal of the Pomorskie Voivodeship
3) European Regional Development Fund

The total project budget is PLN 84.04 million (ca. 19.900.000,00 EUR)
Project subsidizing is PLN 64.08 million (ca. 15.000.000.00 EUR)

TARGET GROUP

Micro – small and medium entrepreneurs that are directed towards beginning export activity, export growth and acquiring new markets.

AIMS OF THE PROJECT

1) increase the number of Pomeranian SMEs active in foreign markets;
2) diversify the export markets of Pomeranian companies;
3) increase the participation of Pomeranian companies in national export;
4) strengthen the brand of Pomeranian (Polish) companies.

METHODOLOGY

To achieve these objectives the initiative works on three different fronts:

1) Identification of companies in the region that: a) would like to export but do not have yet the skills to start b) are already exporting but would like to enter new markets; c) have the potential to export but have been inactive in foreign markets. The identification will serve as a basis to develop a database of these companies and their market potential, products and services as well as work with them to prepare to export.

2) Development of the export of Pomeranian companies on chosen markets through the implementation of a process for the systematic exchange of knowledge and networking including meetings, seminars and conferences, training courses, trade fairs and missions in order to acquire new knowledge, solidify the competences of companies and establish contacts with relevant business partners.

3) Support to the export activities through grants available to MSMEs with head office in the Pomeranian Voivodeship or business institutions that represent SMEs, with a special attention to selecting projects that adhere to accomplishing the objectives of agreements for smart specializations of the region (e.g. off-shore, port and logistics technologies; interactive technologies in information-rich environment; technologies eco-efficient in the production, transmission, distribution and consumption of energy and fuels in construction; medical technologies within the field of lifestyle diseases and the ageing period).

RESULTS ACHIEVED

So far, as for September 2018, almost 800 Polish companies received support in internationalization of their businesses, ranging from increased export competencies as the result of numerous export-related seminars and conferences, through companies exhibiting individually at selected fairs and trade events all over the world thanks to financial support in the project, to participation in business missions and brokerage events which resulted in B2B meetings all over Europe and in China, Israel, USA, Canada, Japan.

Expected results include 1300 supported SMEs participating in seminars, conferences, trade fairs and business missions, 475 international cooperation events promoting Pomorskie and its entrepreneurs, 102 SMEs receiving financial support for individual internationalization-related activities abroad.

KEY CHALLENGES IN IMPLEMENTING THE INITIATIVE AND SOLUTIONS USED TO MITIGATE THEM

Among the key challenges in implementing this initiative,  it is worth mentioning the ineligibility of advisory and consulting services in the project. Such services are not available for clients, although they often express interest in this kind of support. So far the catalogue tools available in the project has not been modified. Synergies have been identified, however, so that clients in need of advice related to export promotion are directed to other bodies offering similar support, like the Enterprise Europe Network hosts.

LESSONS LEARNED

Two years of implementing this initiative showed that to achieve better results the partners should focus on a few markets at a time instead of supporting all possible targets simultaneously. Consequently, the partners decided to choose 5 strategic directions per year and concentrate their efforts to maximize the results.

SUSTAINABILITY OF THE INITIATIVE AND POTENTIAL REPLICABILITY

The initiative will contribute to the development of the SME sector in the region due to expected export growth and its consequences (increase in employment levels, profitability, innovativeness and competitiveness of companies).
It should also contribute to the growth and competitiveness of the whole region as its international ties will increase. The image of the region and its companies should also be affected positively.
The partners hope to initiate and strengthen an upward trend in globalization of the region’s companies.
As other Polish regions do not follow this model, positive results may increase its potential for replicability and enhance similar actions elsewhere.

The Regional Development Funds are based on the experiences and resources of the JESSICA Initiative (Joint European Support for Sustainable Investment in City Areas) and the JEREMIE Initiative (Joint European Resources for Micro-to-Medium Enterprises).

COUNTRY

Poland

START & END DATE OF THE INITIATIVE

The initiative is on-going. It goes back to 2007-2013 EU programming period and will continue at least until 2020.

WHO FUNDS THE INITIATIVE

To make the Cohesion Policy more efficient and sustainable, in the financial framework 2007 – 2013 companies and local governments were able to use the JESSICA Initiative (Joint European Support for Sustainable Investment in City Areas) and the JEREMIE Initiative (Joint European Resources for Micro-to-Medium Enterprises). They were repayable financial instruments in the form of loans and guarantees. The resources from the JESSICA and JEREMIE initiatives were allocated from the European Regional Development Fund, the European Investment Bank, and, in the case of JESSICA, also from the Council of the Europe Development Bank.

In compliance with the Polish Legislation Act of 11 July 2014 on the principles of implementation of the cohesion policy programs financed under the 2014-2020 financial framework repayable resources (the so-called financial engineering instruments, i.e. loans, guarantees) repaid by the recipients of EU assistance are then reused, and managed by the voivodeships (provinces)’ authorities. These new development funds are collected in the accounts of and mobilized by the State Development Bank of Poland (BGK) according to the priorities set by the voivodeships.

TARGET GROUP

Micro and small companies, urban areas.

AIM OF THE INITIATIVE

The goal of the Regional Development Funds is to support the industries and business projects that are considered a priority by the voivodeship’s authorities.

METHODOLOGY

The Regional Development Funds in Poland can only be managed by voivodeship’s authorities that form loan funds and/or guarantee funds.

The Regional Development Funds do not provide financial resources directly but make use of financial intermediaries, usually co-operative banks or small companies specialized in financial services. This is mainly due to the fact this activity is not profitable for large commercial banks as the scale is too small.

These funds only play the role of supporters to projects they finance. They do not have the capacity neither to be the main provider of capital nor have enough financial strength for that. They basically play the role of institutions filling the liquidity gap.

RESULTS ACHIEVED

Regional Development Funds that have been established:

The Pomeranian Voivodeship Development Fund established on April 1^st, 2016. It currently manages 70 operating agreements with 15 financial intermediaries with a total value of EUR142m.

The Kuyavian-Pomeranian Voivodeship Regional Fund established on January 26^th, 2017. It will have EUR103.5m for loans and guarantees targeting more than 4,000 enterprises.

The Lower Silesian Voivodeship Fund: in the Q3’ 2016 the fund launched the first loans – for a total of EUR16.4m. It will have EUR94m to be allocated from the old financial framework and a bit more from the new framework targeting enterprises.

The Opole Voivodeship Regional Development Fund established in March 2017. It is financed with the resources that in the financial framework 2007-2013 were allocated for loans granted by the Voivodeship Fund for Environmental Protection and Water Management in Opole. The regional authorities want to add EUR1.2m from the budget while in the future the company is also supposed to receive “recycled” money from the new budget perspective – for a total amount of EUR64m.

KEY CHALLENGES IN IMPLEMENTING THE INITIATIVE AND SOLUTIONS USED TO MITIGATE THEM

There are five main challenges related to the implementation of Regional Development Funds:

Cannibalization of Funds: the regional development funds should not support activities that can be supported from EU cohesion funds.

The legal form of the regional development funds should be adapted to the Polish and local realities. Being joint-stock companies, they are subject to the provisions of the Code of Commercial Companies but since their main aim is to develop policy they have to operate on a not-for-profit principle.

Corporate Income Tax: they are subject to the same taxation rules as other legal entities. Tax offices may raise objections regarding the fact that operations carried out by the funds determining that they are intentionally lowering their profits with the aim of maximizing tax revenues. This is of course in contradiction with the not-for-profit principle according to which the funds should operate. The suggestion on this regard was to provide them with a special legal form, enabling the funds to operate with the highest flexibility while exempting them from corporate income tax.
There is no doubt that the Funds operate as public entities and a challenge related to it is the intention to exclude them from public procurement law.

Significant capital differences: the resources allocated to regional development funds depend on:
– the extent to which voivodeships preferred repayable assistance in their development policy and
– the possibility that the repayable assistance would not return to them after “recycling” and that the state government would find a way to take over these resources in contradiction to the legislation. This is the main reason why loans are not the preferred way to support local development.

This lack of trust could impact considerably on the resources available to the regional development funds. The Pomeranian Voivodeship Development Fund is an example of avoiding this risk by applying the funding in a recyclable manner, so that resources repaid by companies return to the fund and are reused. However, this mechanism is not employed by all the Polish regions.

LESSONS LEARNED

So far experiences with implementing regional development funds show that stable, long-term contract conditions for operators are required to ensure both their willingness to take risks and grant repayable funds, and to evoke trust in potential clients. Another lesson was to develop a more systematic approach to issuing re-guarantees, which was successfully implemented by the JEREMIE initiative and served as pattern to follow.

SUSTAINABILITY OF THE INITIATIVE AND POTENTIAL REPLICABILITY

Sustainability of this initiative is strictly related to stability of sources of funding. The more “recycling” of the applied funds, the more sustainable the initiative. The Regional Development Fund in Pomorskie is a good example of such practice, where resources once granted to a company, after being repaid go back to the fund and are granted to next clients, ensuring the initiative’s durability.

Source: https://financialobserver.eu/poland/new-development-funds-to-help-the-regions-of-poland/