Another 427 million euros from IPA funds remain unused

Somewhere there has been a hold-up in utilizing funds from the European Union. While about 90 percent of funds from the four pre-accession programs (CARDS, PHARE, ISPA, and SAPARD) have been utilized, only 2.42 percent has been contracted from the new IPA instrument that replaced these programs so far.

written by Kristina Kardum
[email protected]

Although there is still time for results to improve significantly, delays are occurring. This is not very encouraging for entrepreneurs who wish to apply for non-repayable financial aid. However, there are many reasons to persist, specifically, 438 million euros. Although most of this money is intended for infrastructural and institutional development, entrepreneurs can compete for substantial amounts. Non-repayable grants ranging from 50,000 to 300,000 euros per project are allocated for the development and strengthening of entrepreneurship competitiveness. However, it is important to note that the opportunities are much greater as companies can apply both as contractors and project holders where the fund user is, for example, a ministry. – More and more of our companies are project holders, so the situation is improving rapidly. A few years ago, most companies that, for example, performed consulting work were external – says Vesna Perović Vrga, a consultant from the Life Long Learning Academy.

Why the delays?
Croatia is failing to draw funds primarily due to delays in announcing tenders. Additionally, due to the extremely complex procedure, tender cycles take a long time, and Croatian institutions are not prepared. The Central Agency for Financing and Contracting (SAFU), responsible for managing money, tender procedures, contracting, payments, accounting, and reporting on financing the entire procurement in the decentralized system of program implementation from EU funds in Croatia, was established only in 2007. Such a delay in infrastructure construction has contributed to the slowdown. The result is that many tenders are announced simultaneously today, which simply cannot be applied for in time. Currently, about 40 new projects have been announced. If they had not all been announced at once, some entrepreneurs or organizations could have applied for more than one or two tenders. As it stands, even if they may be qualified, they do not have time because the process simply requires too many resources – says Perović Vrga. More companies than available funds usually apply for entrepreneurship tenders, so selection is necessary. To encourage applications, the Ministry of Science provides modest financial incentives for entities that exceed the threshold in their applications and continue to compete. Despite this, there are many examples of less than stellar results.

Consulting services
In one of the last programs for promoting ecological innovations, only one out of ten applications was close to meeting the threshold. To improve their chances, those applying who are not well acquainted with the process should utilize the services of professional consultants. Although they cannot guarantee success, it is even less worthwhile to waste time on applications that may go in completely the wrong direction. If unsuccessful, feedback can be a great help as one learns best from mistakes. The company Bernarda from Pušćina was successful on the first try. It signed a contract for 120,000 euros in non-repayable funds. The goals of Bernarda’s project include familiarizing management and sales staff with the characteristics of the Serbian and Macedonian markets, defining marketing priorities and activities for the market, and showcasing products at international fairs and events. The owner of Bernarda, Cecelja, did not take risks but hired the services of consultants.

– The problem is the technical language in which the application is drafted. The rest went more or less smoothly. We recently had an audit, which we passed successfully – says Cecelja. The biggest obstacle in applying, she believes, is that everything must be planned down to the last detail. – From planning to realization is a long road. It is difficult to predict everything accurately, and today that is sometimes a problem for us. Namely, we must ensure that every detail is as we outlined, and that to the decimal. This is certainly a very big challenge for most companies. Intra Lighting is a manufacturer of lighting equipment focusing on public and business space lighting. It accounts for 18.4 percent of exports from the Bjelovar-Bilogora County. The goal of its project is to increase exports by 10 percent. The contract with the European Union is worth approximately 105,000 euros. The company’s CEO, Marica Tičak, says that the project was carried out by the company’s team with external consultation. – For us, it was a challenge. We prepared the project to test our knowledge and quality. I really couldn’t believe it when we received a positive decision – recalls Tičak. She advises companies to prepare a project if they have a clear goal and vision for their business, and the results will surely follow.

Experiences from Slovenia
Most companies that have utilized money from EU funds have allocated it for development and export to foreign markets. The company Presenta Nova received 118,000 euros to increase the export of new products by 30 percent to the European market. The project was written in collaboration with external consultants, a company that gained experience with pre-accession projects in Slovenia, and submitted about two weeks before the deadline. The money was invested in a new website with online purchasing capabilities and presentations at international fairs in Milan, Paris, and Munich. But it did not stop there with ambitious plans. – We just signed a contract for the arrangement of a store with the largest German optical chain Apollo Optik, which has 710 stores. This contract is important for us because its conclusion means that we have gained the trust of a well-known and large German company – says Iva Pintur from Presenta Nova. – For the EU Commission, it is important whether the project will continue, that its money was not spent on something one-off. Our company continues the activities that were financed by this project, so we continue to exhibit at optical fairs. We have supplemented our new website with new content that was not planned in the project. We have designed new products that will further contribute to our competitiveness in the EU market – explains Pintur.

Collaboration is the name of the game
Given the crisis times, many entrepreneurs are inquiring about EU funds to secure money for easier survival. However, the funds are not intended to solve such problems. To increase the utilization of reserved funds from the programs, they should try to learn something from others’ examples. Croatia is not doing well in this regard either. – We lack a culture of collaboration. It would be much better for us if we learned more from the experiences of our neighbors because collaboration is not only welcome, it is a necessity according to European rules of the game. State institutions should provide a platform for such collaboration – believes Perović Vrga. How fruitful learning from more experienced countries can be is illustrated by the example of the Tourist Information Center project in Biograd, for which the European Union will allocate 660,000 euros. The project was prepared based on Slovenian examples and was declared a good practice example in competition with 69 submitted projects from Croatia.

Entrepreneurs applying for projects independently are greatly assisted by local development agencies. Workshops and training on European funds, as well as other types of financing and assistance, are organized. Round tables and seminars on funds aimed at professional development are increasingly held, as well as info days open to potential users. At such open training sessions, entrepreneurs should receive concrete, detailed information from experts on-site, rather than just general data about the programs, which often discourages them. The latest information on future EU fund tenders can be followed on the websites of the Ministry of Economy, Labor, and Entrepreneurship. – We would recommend all interested entrepreneurs to regularly monitor the Ministry’s websites and attend seminars on EU funds that it organizes. Before the application for the PHARE 2006 tender, the Ministry of Economy organized several workshops. We attended a full-day one several months before the application deadline. Similar seminars are organized by the Croatian Employers’ Association and other institutions – advises Iva Pintur from Presenta Nova.