President Arzeni was invited as a speaker at the panel “Small and Medium-sized Enterprises in the Face of the Challenges of the 21^st Century”, which analysed the significant constraints, failures and cost rises which have affected the SME sector over the course of the past year. The panel also discussed which policies could better stimulate entrepreneurial culture, as aid programmes have proven not sufficient.

Please find more information on the event here.

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/