Episode 3: ESF financial instruments tackling COVID-19 impact in Poland

Welcome everybody to a new episode of the fi-compass Jam Sessions podcast. I am Eugenio Saba and I will be your host today.  

Today’s guest is Piotr Krasuski, Director of the Department of  the European Social Fund, Ministry of Funds and Regional Policy - Poland. A warm welcome to Piotr and thanks for joining us.

Thank you Eugenio for inviting me and hello to everybody.

You represent the managing authority of the Polish National Operational Programme, co-financed by the European Social Fund (ESF). You have been implementing the National Fund for Social Entrepreneurship for a long time now; which is a financial instrument that supports the social economy enterprises in your country. Could you give us some highlights?

This fund was implemented for the first time in 2016 and its objective was to provide professional loans for socio-economic entities. At first it was financed by the ESF from the previous programming period, from the perspective of 2014-2020, also from the state budget resources and private capital. It was not the first programme of repayable instruments for social economy, because we started, in fact in 2012 with a pilot project supporting the sector of the economy, that social entities with the financial perspectives from the money coming from the 2007-2013 perspective. What is important for the management of the National Fund for Social Entrepreneurship  was entrusted to BGK – which is an abbreviation for state owned national bank, responsible for public investments and also for the financing of economic developments.  The total budget was EUR 37 million throughout the country. This fund is estimated to finance at least 1 200 loans for many social enterprises, which is expected to create at least 1 200 new jobs. Loans provided under the fund support both start-ups, new companies and new entities, as well as developed social enterprises. By the end of April, 800 loans with the total volume of  EUR 20 million were granted. The borrowers declared the creation of almost 2 000 new jobs and at least 60% have been already created.

What are the challenges that social economy enterprises are currently facing as a result of the COVID-19 pandemic?

The situation was and still is very serious, because the vast majority of Polish social enterprises found themselves in a very difficult situation caused by the epidemic state and the total lockdown in April and May. The restrictions introduced to stop the COVID-19 outbreak resulted in limitation or even complete suspension of the social entrepreneurs business activities. The social economy entities that lost entirely the opportunities to earn, lost totally their financial liquidity and have very serious problems to retain their staff.

Recently, fi-compass hosted a webinar on the Coronavirus Response Investment Initiative - or CRII - and its extended version called CRII+. For our listeners who want to know more about the flexibilities introduced by these measures, we invite you to listen to the first episode of the fi-compass Jam Session podcast.

In this webinar, colleagues in BGK - the National Promotional Bank of Poland - presented the National Fund for Social Entrepreneurship. So Piotr, can you explain to us how did financial instruments assist the social sector during the COVID-19 outbreak?

I will start with the general assessment of the CRII and later the CRII+ because it gives all the member states around Europe the very needed flexibility of how to use, how to reprogram not only the ESF, but also all the EU funding. We decided to follow this way, to follow this opportunity. What is the most important in order to preserve existing jobs in the social economy sector is that we decided that the liquidity loan can be partially written off up to 25% of the loan capital if the jobs will be maintained. We do hope that such measures will help to preserve jobs in the sectors, providing employment to people at risk of exclusion from the labour market.

In this respect, could you give us an overview of how your measures are performing and also an example of a final recipient who benefitted from your very timely support?

There are already 272 loan agreements that benefitted from the new anti-COVID-19 solutions.  The most popular seem to be the maturity period prolongation and repayment holidays. What is very important is that from the very beginning we are looking for those solutions and those cases that allow us to combine the support for the social entity with the support for the local communities  affected by the COVID-19 outbreak. I mean those situations in which many social entities decided to shift their production and services into, for example, sewing masks, producing gloves, helmets, providing decontamination services and so on. These services are delivered to the hospitals, to the social care centres and so on. I can say that this way we are able to double the layers of support, not only for business, but also for the anti-COVID-19 outbreak in general. If you are asking about  examples of social entities, I can give an example of Naleśnikarnia from the Śląskie region – southern Poland – a small restaurant which serves crepes. We all know how difficult it was and still is the situation of the gastronomy and catering business during the lockdown. This restaurant benefitted from the repayment holidays for 6 months and they will continue with the repayment of the loan this coming autumn.

Another example is the association Karuzela from Radom – a big city in the centre of Poland. Association Karuzela runs primary schools for children with autism. Similarly to the rest of Europe and the rest of the world, schools in Poland were and are still closed until the end of the school year. This association benefited from the possibility to prolong the deadline for the creation of job places due to the instable situation on the labour market.

It is very good to know that your financial instrument is working well and already providing some relieve to your social economy sector. Now for the last question, we would like to know more about you and your colleagues in the managing authority. How have you been impacted by this crisis and how has this new situation changed your daily work?

I think the best example of how we have been affected, is that now I am speaking with you form my home. I have seen many companies trying to maintain business continuity, also in our case during the COVID-19 spread, a rapid shift to remove work was necessary, following all the limitations and restrictions given by the government. It was the first time in the history of public administration in Poland and also in my personal career, when all the teams and resources had to very quickly switch to virtual communication, collaboration and operation through the remote ways of work. It was really amazing how quickly we discovered the power of technology, of internet and so on. It has been a great work place revolution, and I think we have succeeded to keep operations perfectly going, while minimalizing the risks to our employees and colleagues. Judging by the number of tasks we have succeeded to carry during this period, we have fully succeeded in the remote job and we learned a lot.  

I am glad to hear that all your colleagues are fine and hopefully we will go back to a new normal very soon. Thank you for your time today, Piotr and for sharing your experience and your useful insights. I hope you enjoyed this short interview at least as much as we did.

Thank you very much for this interview and I wish you and all our listeners a lot of health and optimism and hope that we will soon be back to a new normality.

Thanks again, Piotr. This is all for today, so stay tuned for the next episode of the fi-compass Jam Sessions. If you have any questions or want to suggest a new podcast topic just send us an email at info@ficompass.eu.