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“Current Experience under the EAFRD”
General information on the use and uptake of FIs and findings of the NRN joint task force on access to rural
finance
Coordination Committee Workshop Financial Engineering
26th October 2012
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This presentation
• The EAFRD Financial Instruments
• The ENRD Rural Entrepreneurship Thematic
Initiative: Rural Finance
• The challenge - bringing supply and demand together
• Preparing for the future - scope for action
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Financial instruments – current budget and expenditure
0 20 40 60 80 100 120 140 160 180
LT
LV
RO
BG
IT
EL
EAFRD (foreseen commitment) EAFRD (actually paid)
In million €
Total EAFRD commitment: € 618 million
Total EAFRD payments: € 370.5 million
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Financial instruments – who benefits?
Supported groups at present:
– Farmers (all agricultural sectors)
– Farmers in rural areas developing non-agricultural
businesses (all sizes)
– Food industry enterprises (all sizes)
– Rural tourism enterprises (all sizes)
– Other non-agricultural micro-businesses operating in
rural areas
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Scope of NRN Rural Finance task force
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NRN Rural Finance task force – actions & outcomes
Final report on RF theme (February 2012)
14th NRN meeting (Greece, February 2012): presenting the
findings
Seminar in Latvia: raising awareness, sharing experiences
(June 2012)
Coordination Committee FI workshop (October 2012)
13th EU Rural Review: further analysis, raising awareness,
building common understanding
Continuous updating of Rural Entrepreneurship Gateway -
Rural Finance
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Final report on the ENRD Rural Entrepreneurship Thematic Initiative: Rural
Finance
extensive literature review
analysis of trends in SME and rural finance
analysis of supply and demand patterns
three surveys
survey of Managing Authorities on FI in the RDP / activated
survey on other financial instruments operating in EU MS
survey of financing institutions (commercial banks)
recommendations for next steps
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A reminder!
(Eurostat 2011)
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Information gap
No territory specific classification in relevant surveys:
SMEs are not classified by area of operation or registered
headquarters, e.g. predominantly rural, peripheral, urban, etc.
SMEs are classified in surveys by size and activity:
some surveys exclude SMEs whose activities relate to
agriculture, forestry or fisheries
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The challenge…
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The perspectives of Managing Authorities on FIs (ENRD Survey outcomes)
Responses to why FIs have not been adopted
– lack of knowledge and information
– the need for additional resources
– complicated rules, uncertainty of control implications on
sanctions applied, higher risk of financial corrections
– availability of rural finance from the financial markets
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The perspectives of commercial banks on rural finance
(ENRD Survey outcomes)
Responses from 6 banks in 4 MSs (Hungary, Latvia, Malta, UK)
Results
• no special criteria for rural SMEs
• rural risk equal or only slightly higher
• EAFRD funding a positive factor
• strong preference for manufacturing
• tightening of credit (collateral, guarantees)
• balance sheet, credit history, quality of business are important
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Conclusions from final RF report
Main findings:
– an information gap exists relating to rural specific access to
finance - surveys/rural SMEs specific data at EU-27 level a
necessity
– business support services, self-assessment tools,
networking and training is important for improving access to
finance and building trust
– a great diversity of SME funding schemes exist to learn
from and share experiences of and amongst NRNs and MAs
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Some practical examples • Adopting international equity and venture capital valuation guidelines
(Finland)
• Municipalities ‘team up’ with a commercial bank for micro-credit in an
underdeveloped area (Latvia)
• Pooling local resources for a cooperative credit union (Latvia)
• Advice and help with networking among supported beneficiaries (Germany)
• Decoupling from financial markets declared as a goal of the Fund
(Germany)
• Guarantees amounting to 80% of the credit borrowed to support people
living in underprivileged areas (France)
• Involving banks as financial intermediaries in a micro-credit scheme
(Portugal)
• Providing advanced, web-based support tools to potential beneficiaries to
help credit worthiness assessment (Italy)
• Targeting a niche market (rural women entrepreneurs) (Latvia)
• Setting up local investment companies for the development of local
economies (Sweden)
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Scope for action
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Thank you for your attention.
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