Updated | Maltese companies missing out on using EU loan fund, European Commission vice-president says

Maltese companies are not making enough use of a European Union loan fund available for businesses, because of a lack of information on it, European Commission vice-president Jyrki Katainen said.

Katainen – who was speaking at an event on Tuesday hosted by PN MEP Roberta Metsola on how Malta’s SMEs and industry can better utilise the EU’s investment plan – said local businesses might be avoiding using the European Fund for Strategic Investment (EFSI) because they thought applying for it was a cumbersome and excessively bureaucratic process.

EFSI is a scheme which provides loans and equity financing, either directly to the company or via financial intermediaries, such as banks, Katainen, who is the Commission’s vice-president for jobs, growth, investment and competitiveness highlighted.

Contrary to what businesses might believe, no approval from local of central government is needed to apply for EFSI funding, he said.

He underscored that the EFSI application process was not as complicated as most imagined it to be.

“EFSI can be used by companies which want to invest in something, and who cannot get support from banks to finance the entire project,” he said, “They can contact the European Investment Bank (EIB), and, after a due diligence process is carried out, they can be given funds which would help Maltese banks in organising the required financing.”

Companies in Greece, Estonia, Bulgaria, Portugal and Spain are the greatest users of this loan mechanism, he said, as he acknowledged that the fact that the Maltese financial sector is strong might be another reason why businesses in Malta do not see the need to apply for EFSI.

“But, when looking at certain projects where venture capital is needed, I think EFSI can play a bigger role in Malta in the coming years,” he said.

EFSI has already contributed to the creation of over 700,000 jobs, and this should rise to 1.4 million by 2020, he emphasised. “Everything EFSI has supported has a real entrepreneur behind it – not a government.”

More uptake by SMEs needed

Addressing the event, Roberta Metsola pointed out that Malta’s year-on-year economic growth since joining the EU was testament to the steady steering of the economy during the last recession, and to the efforts of former Prime Minister Lawrence Gonzi and ex-finance minister Tonio Fenech.

However, she said that it was important for businesses to increase their uptake of EU funds. “The process has to be less cumbersome, and funding must be made more accessible, even for smaller firms,” she said.

In a similar vein as Katainen, Opposition leader Adrian Delia, also speaking at the event, underlined the lack of information as the principle reason behind the poor uptake of the EFSI.

“My gut instinct from what I am seeing on the ground is that there is a massive lack of information about this opportunity. It is certainly not Maltese entrepreneurs who lack initiative,” he said.

Businesses making good use of other EU initiatives - Aaron Farrugia

In a reaction, EU funds parliamentary secretary Aaron Farrugia said that while Maltese businesses are not making use of EU loans through EFSI, they are making use of other EU loans through the SME initiative. 

He said that this initiative was so successful that Malta's government signed another agreement with the EIB to increase the amount for Maltese businesses after the initial allocation was used up. 

“It would have been more appropriate and helpful if, during the conference organised by Roberta Metsola, it was discussed how the new programmes could continue to assist Maltese businesses,” Farrugia said.

“The conference which should have been a positive one which compliments Malta’s successful management and use of EU funds, was instead used to criticise Malta in regards to a sector which was particularly successful in our country. In fact, recently, EU Commissioner Corina Cretu said that Malta should serve as an example to other countries for its good management of EU funds,” he said.