Exploring the scope of European Social Fund financial instruments

Published on 18 December 2017
Exploring the scope of European Social Fund financial instruments

October saw the fi-compass advisory services for European Social Fund (ESF) financial instruments focus on opportunities for 'social banking' as well as the importance of capacity building services for ESF final recipients and managing authorities.

Madrid was the location for a fi-compass ESF workshop in early October that raised awareness about a variety of topics of interest for our ESF stakeholders. These included information about managing life cycle stages of ESF financial instruments and the capacity building services (CBS) available from fi-compass for ESF managing authorities.  Main sessions during the Madrid workshop presented ESF case studies from Poland and Spain featuring national and pilot EU-level financial instruments.

Experiences from Poland's National Fund for Social Entrepreneurship underlined the potential for ESF financial instruments targeting social inclusion as well as the advantages of using a revolving fund. As a second case study, the Spanish experience was shared with the fi-compass audience, who learned about how ESF resources could be delivered through the EU-level EaSI financial instrument for microfinance and social entrepreneurship purposes. Ms Guadalupe de la Mata, the Resident Representative for Spain and Portugal for the European Investment Fund (EIF), outlined the main characteristics of this pilot programme and considered that: “For managing authorities, the advantage of using EaSI as a delivery mechanism for this ESF programme is that it’s well tested with clear demand.

Ms Kremena Grigorova, Fund Manager of financial instruments in Bulgaria found the Madrid ESF workshop useful commenting that: “The two case studies were very interesting because in Bulgaria we are in the process of implementing a financial instrument supported by the ESF. The specific questions were interesting. Beyond that, what is very useful is the opportunity for networking and finding people with similar experiences." 

See the Madrid workshop's web pages for all the presentations and more detailed coverage of this fi-compass event.

Social financial intermediaries

Social banks and other providers of social credit were the main topic for discussion during another ESF event organised last month by fi-compass with DG Employment, Social Affairs and Inclusion in Brussels. This well-attended gathering of ESF interests centred on the role of social financial intermediaries (SFIs) in the set-up of national or regional level ESF financial instrument products.  

Presentations and discussions during the seminar promoted opportunities and explored common challenges for SFIs from loans, guarantees, equity, or quasi-equity financial instruments containing ESF contributions.  Presentations and advice about microfinance, as well combining ESF resources with the European Fund for Strategic Investments (EFSI), were also appreciated by the seminar's delegates.

The seminar was opened by Mr Baudouin Baudru, Cabinet expert from DG Employment, Social Affairs and Inclusion, European Commission, who gave an overview on the use of financial instruments and EFSI as an important complement of additional resources to boost investments and deliver public policies in the social field. Ms Silvia Costa, Member of the European Parliament, stressed the need for a change in the social and economic environment and for a closer relation between the public and private sector so that the social sector can have access to credit. Mr Brando Benifei, also a Member of the European Parliament, talked about the importance to work on outreach in order to fund social stakeholders who do not have access to standard banking systems. He concluded by stating that it is important to take the social dimension into account during the negotiations for the next Multi-annual Financial Framework (MFF), as "there is no Europe without social dimension"

Mr Nicolas Tritaris, from the European Bank for Reconstruction and Development (EBRD), and Ms Monica Brezzi, from the Council of Europe Development Bank (CEB), shared the EBRD’s and the CEB's roles and microfinance initiatives undertaken in order to tackle the inclusive growth and social infrastructure gap in some countries. Mr Loris Di Pietrantonio, Head of Unit from DG Employment, Social Affairs and Inclusion, European Commission, outlined the activities carried out by DG Employment and the European Investment Bank (EIB) through the fi-compass platform. He noted the benefits from a tailored CBS approach that accompanies ESF managing authorities throughout the life cycle of the financial instrument, so as to help them in the actual implementation. It was stressed that, in order to effectively implement financial instruments under the ESF, it is essential to invest in capacity building services.

Many relevant best practices were presented throughout the seminar in order for all stakeholders to learn how to address common challenges and foster collaboration. Mr Helmut von Glasenapp, from the European Association of Long-Term Investors (ELTI), presented the High Level Task Force on Financing Social Infrastructure and Maximising Public Value, which is investigating future situations and needs in the social sector. Mr Pedro Manuel Sasia Santos, President of the European Federation of Ethical and Alternative Banks and Financiers (FEBEA), highlighted the importance of creating an enabling environment for social innovation and for public policies to better support and involve the sector, while Mr Marc Schublin, presenting the concrete experience of Microlux, underlined the importance of providing complementary non-financial services, such as business advice, in order to boost the success of microfinance activities.

Mr Frank Lee, Head of the EIB's Financial Instruments Advisory Division, highlighted advantages from combining ESF and EFSI resources for the benefit of EU Member States and regions, as well as, outlined the outlook and vision of fi-compass to fully exploit the potential of financial instruments under the ESF. Mr Ulrich Grabenwarter, from the EIF, showcased the EIF equity programmes, the use of the EFSI programme, and the provision of capacity building to Business Angels in order for them to bring social enterprises to scale.

Among the case studies explored in the afternoon, Mr Alessandro Messina, from Banca Popolare Etica, put under the spotlight the sustainability of socially-addressed projects, followed by Mr Michał Radziwiłł, from the Towarzystwo Inicjatyw Społeczno-Ekonomicznych SA (TISE), Poland, who presented two ESF co-financed projects. These unique programmes funded many different social enterprises and created an impressive number of jobs.

Mr Jorge Ramirez Puerto, from the European Microfinance Network (EMN), and Mr Giampietro Pizzo, from the Italian Microfinance Network (RITMI), talked about the importance of supporting microfinance in the EU. They underlined that funding is essential, however it is also important to prepare new products in order to cover the operational costs of non-financial services.

The seminar concluded with Ms Andriana Sukova-Tosheva's final remarks. The Director from DG Employment, Social Affairs and Inclusion highlighted the peculiarity of this unique event: by gathering all stakeholders, the European Commission helped create awareness about financial instruments and the social sector across Europe. SFIs can play a key role in the deployment of financial instruments under the ESF in order to achieve broader objectives. During this seminar, participants were able to network and interact with the speakers and the success of the event clearly demonstrated that all stakeholders have a strong interest in the implementation of financial instruments to support the social economy.

Search the fi-compass website's resource library for a wide range of additional advice and information about ESF financial instruments.