Samples of funding applications

Transcription

1 Samples of funding applications Annex I. SUMMARY PROPOSAL FOR FIRST INITIATIVE FUNDING OF SPI ALBANIA (December 2008) 1. Brief summary of the objectives of the proposed technical assistance The objective of the proposed technical assistance is to make available three local experts that will assist the Albanian banking community to prepare about ten regulatory or selfregulatory proposals in 2009 under the SPI Albania program (details below). The reform proposals address important financial sector modernization issues in terms of five market efficiency criteria as follows: 1) asymmetry of information, 2) completeness of markets and products, 3) possibility to engage in financial transactions, 4) cost of transactions and competition issues. The reform proposals, which are presently being finalized through an extensive consultation process, include the following topics: A. Issues raised by the Governor of Bank of Albania in his Banking Forum addresses. These are as follows: The publication of the results of banks activity/transparency in bank-customer relationship The publication of the results of banks activity/transparency in bank-customer relationship The recognition of and protection from the various risks The strengthening of internal control Introduction of new products The functioning of the interbank market The increase of funds circulation through the system The building of full technological capacities The increase of ALL denominated lending Improvement of bank s governance B. Projects that have already been assigned top priority selected in These are as follows: Facilitating leasing transactions Developing credit scoring cards for individuals C. Projects that the authorities want to undertake as part of the Doing Business 2009 Reform package. They comprise the following: Closing of business Contract enforcement Credit registry Private investor protection Page 111 of 335 1

2 The 2009 program will be finalized in January By that time SPI Albania intends to submit the Project Application to the FIRST Initiative. SPI Albania is a public-partnership to promote large-scale financial sector modernization in Albania which has started operating in May 2008, with initial World Bank s Convergence Program technical and funding support. SPI Albania runs projects aiming at proposing regulatory and self-regulatory (industry) solutions for business development, reducing transaction costs and increasing reputation. SPI Albania handles public private interest modernization projects, as proposed by stakeholders and agreed by the SPI Committee. The SPI Committee gathers top level representatives of Bank of Albania, Ministry of Finance, Ministry of Economy (the consumer protection representative), Authority for the Financial Market and Albanian Association of Banks. The solution finding to the existing problems is entrusted to Project Working Groups (PWGs), gathering representatives of all stakeholders, with support from a full-time SPI Secretariat. 2. Issues to be addressed by the proposed technical assistance The recipient of technical assistance is the SPI Albania Secretariat that works under the oversight of the SPI Albania Committee. The SPI Albania Secretariat consists of a Director for Analytics and Policy and a Director for Operations, coordinated by a General Manager. The financing request refers to cover the cost of the SPI Albania staff for one year starting from March The SPI Secretariat is the executive manager for SPI Albania projects. It performs research in the local and international experience on specific issues, plans the project, runs banking surveys and consultations with involved parties, performs Regulatory Impact Assessments for the proposed amendments, prepares all documents based on before mentioned and on individual contributions of the PWGs members, using EU Better Regulation methodology. The SPI Secretariat plans, prepares the meeting and SPI Committee documents (as a technical secretariat). SPI Albania staff is currently Convergence Program s World Bank consultants, with contracts running through February 2009 for the professional staff and through June 2009 for the acting General Manager. SPI Albania is planning to hire a full-time General Manager as from March Recipient agency s role in the area to be addressed by the proposed technical assistance The SPI Albania Committee considers that the most suitable SPI Albania partner institution to become the employer-of-record of the SPI Albania Secretariat staff is the Albanian Association of Banks. The SPI Albania staff, employed by the Association of Albanian Banks, will operate exclusively under the oversight of the SPI Committee. The SPI Albania proposals will continue to be prepared by experts mobilized from Albanian public institutions and financial intermediaries. In 2008, SPI Albania has mobilized 14 experts from 6 public institutions. The inter-agency cooperation is regulated by the SPI Committee Operating Guidelines (available on the website). Page 112 of 335 2

3 4. Financial sector development context SPI Albania projects address regulatory obstacles to financial intermediation in terms of the market efficiency criteria outlined under 1. above. SPI Albania 2008 projects are: Improving Auction Procedures for Immovable Collateral under Foreclosure, The impact on the banking regulation of the IFRS implementation, Reducing Cash Transactions, Reviewing the Capital Adequacy Regulation, Consumer Financial Education. In less then 6 months of activity, SPI Albania succeeded to prepare recommendations on modifying the Civil Procedure Code in respect of auction procedures for immovable collaterals under foreclosure, on the bailiff service and on implementing IFRS in the banking regulations. The Project Working Group proposals have been endorsed by the SPI Committee and sent, under SPI Committee signatures, to the respective regulatory bodies for enactment. Extensive information on the projects and their outcomes can be found on SPI Albania website The website contains also documents on SPI Albania and SPI Committee governance, approved by the SPI Committee in its first meeting in June The documents are showing the commitment and responsibilities assumed by all the parties participating in this private-public partnership. 5. Are there any efforts being undertaken by the recipient, other government agencies, domestic stakeholders, bilateral or multilateral development partners to address the issues identified in 2? Why are other sources of funding not available? As stated above, all public and private partners of SPI Albania assumed their contributions to the partnership, being financial and/or by providing their staff s expertise to the PWGs for solution identification and for proposal enactment. AAB approved the extension of its financial support for ensuring the office facilities and for organizing events for AAB started also to discuss on the possibility to set up a SPI Albania NGO financed out of the banks contributions and from international funds. Based on the SPI Albania 2008 results, AAB will engage in consensus-building among its members in 2009 with a view to raise the membership fees in 2010 to cover the SPI Albania Secretariat expenses. 6. Expected outputs of the proposed technical assistance and how they are expected to contribute to achieving the stated objectives of the recipient. As shown also on the website, the outputs of the SPI Albania activities are regulatory or self-regulatory PWG recommendations that are promoted to the regulatory authorities for enactment or throughout the banking community for application. 7. Expected outcomes [results] of the proposed technical assistance The outcomes of the SPI Albania activities are enactment of actual regulatory and legislative changes. Based on the SPI Romania benchmark ( it is reasonable to estimate that 75% of the SPI outputs turn into SPI outcomes with a time lag of about one year which is the time span in parliamentary democracies to enact legislative proposals. Furthermore, each regulatory proposal is associated with an estimated quantitative impact calculated through Regulatory Impact Assessment techniques, in terms of net benefits consisting of cost savings and/or additional lending. Page 113 of 335 3

4 8. Support/endorsement of the government agency or entity exercising oversight of the recipient The SPI Committee, with membership from Bank of Albania, Ministry of Finance, Ministry of Economy, Energy and Trade, Authority for Financial Market and Association of Albanian Banks, is fully committed to the SPI Albania activities as shown by the cover letter to this summary proposal. II. INITIAL INQUIRY ABOUT FIRST FUNDING (May 2009) 1. Brief Summary of the objectives of the proposed technical assistance The main objective of the proposed technical assistance is to promote financial market development and Albania s economic development by establishing a guarantee scheme for SMEs, by facilitating lending to PPPs and by modernizing the movable collateral register. All three projects are intended to contribute to a better access to finance under manageable risk conditions and with lower costs. These projects will contribute further to SMEs development and to infrastructure building in Albania. 2. Issues to be addressed by the proposed technical assistance Most of the businesses in Albania is SME type, but banks are reluctant in lending to them because of high risks associated to SMEs. The coverage of a guarantee scheme would boost SMEs expansion. Many of high value infrastructure projects are undertaken by PPPs and in Albania there is no specific PPPs regulatory framework. The lending procedures against moveable collateral are not rapid and the evidence is not very reliable. The moveable collateral register is not accessible online. On the other hand, even if the registry exists, as there is no compulsoriness to check with this register before purchasing, pledged goods can be sold with negative consequences on buyers and banks. The proposed technical assistance consists in identifying solutions in order to establish a SMEs guarantee scheme, to revise the existing regulations on PPPs in order to improve the credit mechanisms for these partnerships, and to improve the functioning of the moveable collateral register as well as its regulatory framework. The solutions should be identified based on the international experience adapted to the local realities and through extensive consultations with stakeholders. The enactment of the solutions should be supported by quantitative impact assessment showing the net benefits for the stakeholders. 3. Recipient agency s role in the area to be addressed by the proposed technical assistance The recipient is Ministry of Finance, as part of the SPI Albania partnership (gathering also Bank of Albania, Albanian Association of Banks, Financial Supervision Authority, and the Ministry of Economy, Trade and Energy the consumer protection department). MoF will contribute with members in the Project Working Groups and will undertake ownership of projects, by appointing a Project Owner and a Project Manager for each of the projects. Albanian Association of Banks/Ministry of Justice will appoint a Co-Project Manager. Given the nature of the projects, representatives of SMEs or corporate Page 114 of 335 4

5 professional associations, of the Ministry of Economy, Trade and Energy, and of Bank of Albania will be invited to join the PWG. MoF and AAB will play an important role in identifying the solutions that would answer best to the needs, will provide data for the impact assessment and will act for enacting the solutions. 4. Financial sector development context The financial sector is the most advanced area of the Albanian economy, with the banking industry at the top. The banking community s role in supporting the real sector development should enhance but under a robust risk management framework, in order to prevent the occurrence of systemic crisis. The proposed SPI Albania projects are addressing financial intermediation efficiency issues by creating more opportunities to engage in business transactions under better risk management conditions. They match also the priorities raised in Banking Forum speeches by the Bank of Albania Governor (the recognition of and protection from various risks, the introduction of new products and the building of full technological capacities) and to the Government of Albania development strategy. Their implementation should also produce an improvement of the World Bank Doing Business ranking and should promote the economic development of Albania through increased access to finance by SMEs, through mobilization of additional financing sources for infrastructure investments) and through the improvement of the capacity of market participants to manage risks. 4. Are there any efforts being undertaken by the recipient, other government agencies, domestic stakeholders, bilateral or multilateral development partners to address the issues identified in 2? Why are other sources of funding not available? FIRST s technical assistance would complement the human and other resources of the local stakeholders (through PWGs) and of the Convergence Program (SPI Secretariat). SPI Project Working Group involvement will consist of the following: a) validation of the project s ToR to ensure it meets the information requirements to prepare a sound actionable proposal in the local context; b) definition of the coverage of the note on international experience to meet local needs; c) agreement with the Scoping of Problem note to ensure adequate identification of issues as stake and possible policy options; d) input into the design of the impact questionnaire to cover relevant economic drivers; e) discussion of the implications of the impact questionnaire findings for the proposed solution; f) discussion and validation of the detailed proposed solution elaborated by the expert. The estimated value of in kind contribution of the local stakeholders is the opportunity cost for about 25 experts dedicating a total of 800 hours. Convergence Program s contribution is the cost of SPI Secretariat s following activities for the 3 projects: a) convening the PWGs that are entrusted with the projects; b) preparing the minutes of the PWG meetings; c) distributing questionnaires and collecting the findings; d) assisting FIRST consultants in consensus-building activities with local stakeholders; e) organizing enactment support activities. Page 115 of 335 5

6 6. Expected outputs of the proposed technical assistance and how they are expected to contribute to achieving the stated objectives of the recipient The projects proposed outputs are: - a feasibility study on the establishment of a guarantee scheme, including identification of financial structures; - a position document with the proposals for legislative amendments and regulatory actions by the relevant line Ministry to facilitate lending to PPPS; - a position document with the proposals of regulatory amendments and implementation of actions to modernize the movable collateral registry. 7. Expected outcomes [results] of the proposed technical assistance The outcomes of the projects will be more loans granted to the real economy through SMEs and PPPs, the development of Albania s private sector and of its infrastructure, as well as an increase in the general welfare. 8. Support/endorsement of the government agency or entity exercising oversight of the recipient The SPI Committee, with membership from Bank of Albania, Ministry of Finance, Ministry of Economy, Energy and Trade, Authority for Financial Market and Association of Albanian Banks, is fully committed to the SPI Albania activities and to the proposed projects undertaken as part of its Annual Financial Modernization Program. SPI Committee Members: Mr. Fatos Ibrahimi First Deputy Governor Bank of Albania Mr. Libero Catalano Chairman Association of Albanian Banks Mr. Nezir Haldedaj General Treasury Director Ministry of Finance Mr. Keler Gjika Deputy Chairman Financial Supervisory Authority Ms. Anila Jani Market Surveillance Director Ministry of Economy Page 116 of 335 6

7 1. Project identification 1.1 Project title (max 200 characters) Special Projects Initiative for the Financial Sector Modernisation of South-East Europe 1.2 Project acronym (max 50 characters) SPI SEE 1.3 Priority Axis Priority Axis 1: Facilitation of Innovation and Entrepreneurship AoI 1.2: Develop the enabling environment for innovative entrepreneurship 2. Number of participants in the project EU Member States N. Non EU Member States N. AUSTRIA ALBANIA 2 BULGARIA 1 GREECE HUNGARY ITALY 2 BOSNIA-HERZEGOVINA CROATIA FORMER YUGOSLAV REPUBLIC OF MACEDONIA REPUBLIC OF MOLDOVA ROMANIA 1 MONTENEGRO 2 SLOVAKIA SLOVENIA SERBIA UKRAINE Total number of project's participants 8 3. Project Applicant 3.1 Official name of the Institution (in original language) Regione Puglia - Settore Mediterraneo 3.2 Official name of the Institution (in English) Region Apulia - Mediterranean Department 3.3 Type of Institution Regional public authority Legal status (select) : Cofinancing Sources State Public Governed by public law Governed by private law 3.4 Full address and contact references Via Gobetti, 26 Street and Number Post code City Bari Country ITALY Location according NUTS II Puglia Telephone No Fax No settore.mediterraneo@regione.puglia.it Web Site Contact person Title Mr. Family Name Notarangelo First Name Bernardo Position Director of Department Telephone No Fax No b.notarangelo@regione.puglia.it Page 117 of 335

8 4.Project duration from year month 10 to year month 09 Number of months of duration 24 Project implementation has not started prior to the submission of this Expression of Interest 5.Project description 5.1 Short project description (max 1000 characters) SPI is a process, based on the experience gained by EU institutions in building the Single Financial Market, aimed to modernise a territory s financial system. Using evidence-based analysis supported by market consultations (Better Regulation), the SPI helps public and private stakeholders identify various policy options to achieve the intended policy goal supported by an assessment of costs and benefits of each option. The SPI approach is characterised by: an ex-ante agreement among stakeholders on issues needing reforms; quantification of the economic impact of the proposed changes; analytical and consensus-building discussions within public-private working groups supported by expert advise; on going focus on enactment of the proposals. The main beneficiaries of the SPI process are: enterprises active in SEE, financial intermediaries and national/eu policy makers. SPI applies at both national and transnational level. 5.2 Main problem(s) or challenge(s) to be addressed (max 2000 characters) SEE countries are characterised by large disparities in economic development, as new member, candidate and SAA countries are still a long way to go in their process of economic convergence with old EU Countries of the same Area. Their enterprises need large investments to strengthen their capacity to innovate and grow and thus participate in the growth process, and reap the fruits of economic growth. This cannot be achieved without developing a strong, vibrant and modern financial system: a system where information is of better quality and more easily accessible; where a wide range of markets for products and services is available to users; where agents have growing opportunities to access resources and engage in international transactions at competitive prices; and in a geographic context where the law is based on shared rules. Nowadays, the financial sectors in South-East Europe continue to provide limited support to entrepreneurial and innovative activities, despite considerable quantitative growth and qualitative progress towards EU practices this decade. Their main business focus remains large enterprises and the vastly under-serviced household sector. The flow of debt and equity financing to higher risk client segments, namely the small and medium-sized enterprises, is constrained by a combination of financial infrastructure weaknesses (legal, regulatory and information-sharing) and an ill-suited banking and financial products. All this represents an obstacle to the internationalisation process of the SMEs located in less developed areas of the South East Europe, as well as an obstacle to the process of actual economic cooperation among the whole Area. 5.3 Main objectives of the project (max 2000 characters) The main objective of the SPI SEE initiative is to implement a co-ordinated programme aimed to modernise the financial systems of the Partner Countries in order to create a positive environment for the development of SMEs of EU and neighboring partner countries and reap common benefits for businesses and local communities. As defined by the European Central Bank, financial sector modernisation is a long-term process through which the financial sector strengthens its structure to address asymmetric information, incompleteness of market structures, lack of products for borrowers and depositors, high transaction costs and increased competition. As the EU-15 experience shows (e.g., the Financial Sector Action Plan by EU), modernisation involves a large number of legal, regulatory and self-regulatory changes over a protracted period of time to have a collective impact on the behaviour of banks and users. The SPI SEE initiative is aimed to: catalyse cooperation among financial authorities, local banking communities, and civil society in promoting and implementing a strong framework of regulatory reforms designed to improve financial intermediation, with particular emphasis on the needs of SMEs; support an informed dialogue between regulators and regulatees on the technical aspects of the identified reforms through fostering local analytical and business implementation culture; facilitate consensus building among stakeholders and public communication before official action is initiated and making it last during its implementation; monitor implementation of the SPI process undertaken. These objectives are pursued by management and operational project s bodies: the Management Committee - MC and its Secretariat; the SPI Technical Committee - TC, transnational Team of experts ; SPI National Committees NC, local stakeholders representatives; SPI national Secretariats NS, operational local teams. Page 118 of 335

9 5.4 Overview of the main activities (max 1000 characters) Set up of the MC and its Secretariat, project preparation and management-all partners. NSs prepare the national reform proposals(functional to the projects success of regional financial modernisation),coordinating local Working Groups of experts, to be approved by NCs. TC selects 3 regional financial modernisation projects and helps NSs and NCs developing the SPI process finalised to achieve the common goals. National SPI proposals are enacted. Location:Albania,Bulgaria,Romania,Montenegro-BoA,AAB,FSC,RBA,BoM,AMB. To support the above, Better Regulation Capacity Building transnational (location:italy-ifoc, R. Apulia)and national (location:bulgaria,montenegro FSC,BoM,AMB) sessions to strengthen the policy analysis and consultation skills of partner Countries. Financial institutions and enterprises information actions-location:italy-ifoc. Horizontal activity:communication Location:all partner Countriesall partners; Monitoring and Evaluation-Location:all partner Countries-R. Apulia 5.5 Main expected outputs and results (max 1000 characters) Project s main outputs and results are directly deriving from the abovementioned activities: - operational planning of project s activity; -MC meetings minutes;- 4 national financial modernisation operational planning; 10 projects of national reform proposals for each location; agreements for the implementation of 3 joint transnational financial modernisation projects; enactment of the projects;- 1 transnational training session for about 50 trainees from authorities and market participants of the partner Countries;- 2 national training sessions (1 Bulgaria, 1 Montenegro) for a total of about 80 trainees from local authorities and market participants;- 10 information seminars for financial institutions and enterprises; -project communication plan; 1 transnational launch event; 8 national communication events; 1 transnational final event; project s web site; communication materials: brochures, posters, roll-ups, publications, etc; -monitoring and evaluation plan, tools and reports. 5.6 Transnational approach (max 1000 characters) The rigorous transnational governance of the project ensured by the management bodies allows the enacting of national processes in a wider transnational cooperation perspective. The organisation of the project activities is based on a continuous exchange of competencies and experiences. This favours the homogenisation of the capacities of Partner Countries to intervene into the national modernisation processes and get to the operational standards need by the single EU market. In fact, all partners share the responsibilities of the project implementation. SPI process is characterised by: the participation methodology, ensuring the joint responsibility of the actions; the organisational asset of the activities, ensuring the joint staffing, even for national activities; the cooperation framework of EU funds and national co-financing, ensuring the joint financing among Partners. All this is finalised at gaining those regional policy goals on which success is built the whole project. 5.7 Relevance of the project to the programme's strategy (max 1000 characters) SPI SEE initiative is fully aligned to the Programme s strategy as:- it can rely on a high quality partnership, committed to achieve the project s objectives;- it will be able to gain transparent and measurable outputs and results, standardised and transferable to other Programme s areas; - it has a clear transnational focus, aimed to produce common benefits for the involved Countries and their local communities. In accordance with the SEE Programmes general objective, this initiative fosters economic integration of the partners areas, therefore contributing to cohesion, stability and competitiveness of the markets of these Countries. Furthermore, the proved success of the SPI process ensures the good use of the EU and national funds. After the completion of this initiative, the involved areas will have a robust infrastructure to process financial sector modernization which will result into more sustainable economic results and overall attractiveness to conduct innovative activities. 5.8 Synergies with other EU funded projects, programmes, policies and initiatives (max 1000 characters) SPI SEE initiative is coherent with the EU Financial Sector Action Plan : it is aimed to modernise the financial sector of the partner Countries, fostering their convergence to a consistent international regulatory framework, with the aim of making SEE Area more attractive and competitive. In fact, EU financial integration is a process which calls for a very attentive monitoring as regards its impact in terms of financial stability of the whole area. Project applicant Region Apulia, Managing Authority of NPPA Italy-Albania , has funded 2 projects having the improvement of financial sectors transnational co-operation process and the development of credit access transnational facilities as main aim. Within the framework of the Italo-Albanian Centre for Socio-Economic Researches, Region Apulia has supported activities of the World Bank s Convergence Programme focused on awareness-building for the benefits of public-private cooperation in financial sector modernisation 6. Budget 6.1 Estimated total budget 1,920, ERDF contribution 1,445, IPA Contribution Albania Bosnia Herzegovina Croatia 51, former Yugoslav Republic of Macedonia Montenegro 136, Serbia 0.00 Page 119 of 335

10 7. Partnership Members of the partnership and implemented activities don't have an industrial or commercial character 7.1 List of partners from EU Member States Partner official name and location phone number and Country Type Status Cofinancing Sources address I.FO.C. Agenzia Formativa (IFOC) ITALY Chamber of commerce, collective business Governed by public law m.it support actor State Financial Supervision Commission (FSC) BULGARIA National public authority Public State Romanian Banking Association (RBA) ROMANIA Non-governmental or non profit organisation Governed by public law State 7.2 List of partners from EU candidates or potential candidate countries Partner Country Type Status Cofinancing official name and location phone number and address Sources ALBANIA National public authority Public Bank of Albania (BoA) State ALBANIA Non-governmental or non profit organisation Governed by public law Albanian Association of Banks (AAB) State MONTENEGRO National public authority Public Central Bank of Montenegro (BoM) State MONTENEGRO Non-governmental or non profit organisation Governed by public law Association of Montenegrin Banks (AMB) State 7.3 List of partners from neighbouring countries Partner official name and location phone number and address Country Type Status The potential beneficiaries will cooperate in at least two of the following ways (tick the boxes) Joint development of the project's idea Joint Implementation of the activities Joint staffing Joint financing 7.4 Relevance of the partnership (max 2000 characters) The SPI is not devoid of risks: firstly, the follow up on the completion of the SPI goals and the mechanisms to implement the regulatory changes might be resisted by some interest groups; secondly, the partnership among local stakeholders involved into regulatory changes can be fragile. To handle these risks, the involvement of subjects, nationally recognized as authoritative organizations, having the institutional operational competence, is necessary. SPI SEE Applicant, Region Apulia - Mediterranean Department, in the first half of 2008, has participated into awareness-building actions for the modernization of the financial sector of Adriatic Countries, originally promoted by the World Bank s Convergence Program. This experience has paved the way for the setting up of relations among key Institutions of SEE Area operating in the financial sector. Hence, the justification for the composition of SEE SPI partnership, made of National Central Banks, National Banks Associations, other Page 120 of 335

11 public organizations of the financial sector (Bank of Albania, Association of Albanian Banks, Bulgarian Financial Supervision Commission, Bank of Montenegro, Association of Montenegrin Banks, Romanian Banking Association).The involvement of I.FO.C, company of the Chamber of Commerce of Bari, is functional to the SPI financial institutions and enterprises information actions, with regard to the increased opportunities of business cooperation offered by the modernization of the financial sector of SEE Area. Region Apulia and I.FO.C can rely on a long experience of management of EU funds, and will support other partners in the correct fulfillment of the procedures foreseen in Interreg SEE. Furthermore, Region Apulia Mediterranean Department will make available to the partnership the knowhow gained in its own long lasting experience as Managing Authority of Interreg IIIA Italy/Albania Programme and NPPA Italy/Albania, and as National Executive Body within Interreg IIIA Italy-Greece. Page 121 of 335

12 8. Self-assessment of the project idea 8.1 Justification for the project s approval (max 1000 characters) SPI SEE initiative is strategic to the EU objective of a single, cohesive and secure financial market, as SPI process is based on dialogue and collaboration between public authorities and market participants, local and transnational, which are key undertakings to marry private sector incentives and public policy measures. Market participants, on one hand, have to recognize the public policy dimension of their profit making activities, by understanding how the authorities look at the short and long term risks of these activities. The authorities, on the other hand, have to understand how regulations can be designed in way which do not unnecessarily harm, and possibly enhance, the value-creation capacity of the markets. Both parties must learn to speak the same language, and become partners in financial sector modernization. Moreover, this initiative is coherent in its micro-objectives, activities, eligibility criteria of the partnership and quality of the contents to SEE Programme. TO BE FILLED IN BY THE JTS Date of submission 00/01/2008 Time of submission 0:00:00 Reference number Page 122 of 335

13 Annex VI-3 1. Project Identification 1.1 Priority Axis Priority 1 Economic, Social and Institutional Cooperation Measure 1.4 Institutional Cooperation 1.2 Project Lead Partner Apulia Region Mediterranean Department Bank Enterprise Adriatic Observatory Project Draft 13 September Project Summary The project is designed to identify the main causes of the ineffectiveness of the Adriatic Eastern Countries financial markets to supply financial services towards local Small and Medium Enterprises (SMEs) and to make workable proposals to address them through regulatory actions, institutionbuilding activities and professional training. As a consequence, it will be possible to define and implement institutional actions aimed at supporting banks in supplying services for SMEs. These empirical assessment activities related to the themes of financial modernisation (according to the definition adopted by the European Central Bank to measure progress in financial integration) and support of innovation will be carried out by National Bank - Enterprise Observatories. Such activities will be oriented to the outlining of strategic intervention measures as well as to the preparation of regulatory reform proposals to be implemented in order to allow the approximation of the Balkan Countries financial characteristics to EU standards. The setting-up of National Observatories will create the opportunity for the establishment of a regional Bank - Enterprise Adriatic Observatory. Its main goal is to summarize the previous activities carried out through the Observatories at national level, as well as to provide the required information to facilitate Balkan Countries banks and financial systems modernization in a regional context. The activities of the Adriatic Observatory will provide incentives for the launch of a Programme supporting financial modernisation within the Adriatic basin. To this end, the Adriatic Observatory will coordinate the project activities and will be responsible for promoting reference work and research activities addressed to the launch of the above mentioned financial modernisation (e.g. drawing up of Special Studies). 1.4 Project Duration from year: 2010 months: 06 to year: 2013 months: Partnership 2.1 of the partnership 1 2 Page 123 of 335

14 To promote financial sector modernisation in selected South-East European (SEE) Countries, the project partnership is composed by both Banking Associations and Central Banks and institutional bodies such as Apulia Region. Financial modernisation requires a set of sophisticated analytical, organizational and consultation skills and a mix of competences to achieve the project's objectives and allow a sound implementation of the project itself. Considering the technical issues the project faces, the partnership involves technical partners able to operationally contribute to the effective project management. This notwithstanding, a strong commitment by public institutions is necessary. To strengthen institutional cooperation, it is envisaged that the Apulia Region will be in charge of leading the whole project. At the same time, the geographical balance is well guaranteed. The project partners come from both sides of the Adriatic sea according to the IPA Programme requirements. Finally, the partnership distinctive approach is based on a flexible cooperation between technical and institutional partners. 2.2 Lead Partner Abbreviation and Name of the Lead Partner's Institution in English - Apulia Region Mediterranean Department Name of the Lead Partner s Institution in original language Regione Puglia Assessorato al Mediterraneo Type of institution Public Authority Legal Status Public Street and Number Via Gobetti 26, BARI (ITALY) Aquifalc project (INTERREG IIIA Italy-Albania/CARDS Programme) promoting the strengthening of economic and institutional governance between Albany and EU Member States. In the framework of Adri.Eur.O.P project (NTERREG IIIA Adriatic Programme) aimed at supporting the ongoing political process of the Adriatic Euroregion, Apulia Region coordinated the Euroadriatic Communication Network. Moreover, it has supported World Bank Convergence Programme's activities focused on awareness-building in financial sector modernisation and led and participated in several INTERREG projects within MEDOCC, CADSES, ARCHIMED, INTERREG IIIC. This previous experience represents a real added value and a sound professional background. 2.3 Contribution of the LP to the project Thanks to its previous experience and to the lessons learnt from it, Apulia Region is able to bring a real contribution to the project implementation. In particular, following the process of Balkan Countries financial sector modernisation supported by the World Bank s Convergence Program, the Apulia Region acquired operational competencies, in-depth knowledge and real awareness on the very technical sector to which the project is addressed. At the same time, thanks to its nature and to its own network the Region can contribute to obtain a sound institutional cooperation to achieve project's objective and to make cooperation among projects partners effective considering the different bodies involved. As already underlined, the financial modernisation requires a strong commitment by regional Governors and, for this reason, Apulia Region will contribute to the project, supporting a collaborative approach between authorities and market participants. 2.4 Competences, capacity, and know how of the LP in implementation project activities and results 2.3 LP Organisation (human resources, equipment, budget, other) The LP organisation is fully in line with the project's requirements. Within the Apulia Region, the Mediterranean Department is in charge of managing several European Programmes and projects with particular reference to the European Territorial Cooperation Objective. As a consequence, the Region can manage the project thanks to its technical competencies and its structured organisation as follows: Human Resources: The Apulia Region can count on a skilled working group composed manly by the Region staff with a further support guaranteed by external experts. 2.4 of the previous experience in INTERREG and other relevant EU funded projects Apulia Region - Mediterranean Department relies on a long experience of management of EU funds relevant for the project. It has been Managing Authority of INTERREG IIIA Italy/Albania and NPPA Italy/Albania and National Executive Body within INTERREG IIIA Italy-Greece. It has been LP of the 3 The Apulia Region has a sound experience in implementing projects activities and results. The Mediterranean Department, actually, is the office responsible for managing Programmes and cooperation projects. It is highlighted that Apulia Region has been eligible in a very high number of INTERREG Programmes allowing the participation to many projects. Thanks to this significant experience, the Apulia Region developed specific competences, technical capacities and an effective know how to be transferred to its project partners. Pursuant to its experience and professional skills, the Region has developed an efficient methodological approach to draw up and implement project activities and results. This method allows to reach general and specific objectives of the project thanks to a logical interconnection among activities and results. 3. Project 3.1 Problem and/or challenge to be addressed 4 Page 124 of 335

15 While featuring different levels of economic development and different economic structures, Balkan Countries need to diversify their economies through the strengthening of their respective financial systems in order to promote a process of catching up with the reality of the EU Western Countries. These Countries are facing serious challenges in the financial sector, including a chronic shortage of financial products and services that adequately meets the needs of a competitive and knowledgebased economy. Such weaknesses create great obstacles to SMEs internationalisation process, hindering their economical cooperation development within the whole Adriatic area. Moreover, the financial sector of Eastern Adriatic Countries provides limited support to entrepreneurial activities. SMEs in particular need large investments in order to strengthen their capacity to innovate and grow and thus participate to the economic convergence process, considering EU integration as a strategic perspective. 3.2 Logical Framework Activities Creation of National Bank-Enterprise Observatories Creation and submission of a questionnaire Analysis of the data emerging from the survey Setting-up of National Bank-Enterprise Roundtables Drawing up of Strategic National Documents Creation of an Adriatic Bank-Enterprise Observatory Setting-up of Cross-border Bank-Enterprise Roundtables Updating of the questionnaires by the National Observatories Drawing-up of a Cross-Border Strategic Document Updating of the Strategic Documents by the National Observatories Start up of the Financial Modernisation Programme Creation of the Adriatic Observatory (with a participation of 50% of the Aoulia Region sbank-enterprise Observatory, with the balance covered by Albanian, Bosnia-Herzegovina and Montenegro Institutions) in order to transfer: the decades-long experience and Know-how of the Apulia Region s Banks-Enterprises Observatory in socioeconomic research, monitoring and studies; the deep knowledge of connections and relations between Banks and Enterprises; the definition of policies addressed to the economic development of local territory. Global Objectives Specific Objective The project s main objective is the establishment of an area of growth, development and cooperation throughout the Adriatic Countries involved in its implementation. As a long term objective, it aims at supporting the arrangement of Eastern Countries SMEs economic-financial characteristics to create an Italian-Balkan free trade area through the financial systems modernisation. To reach this goal, the project intends to strengthen and support Balkan banks in supplying services to local SMEs thanks to the implementation of activities addressed at reaching a better knowledge of their needs. The project aims to the identification of the ineffectiveness of local financial markets towards SMEs financial needs and of their main causes. Moreover, it will seek to identify the measures to be promoted in order to support the financial modernisation process of the partner Countries. This objective will be reached through the setting up of a network of National Banks-Enterprises Observatories providing a wide-range of activities supporting local SMEs financial modernisation. SMEs will be steadily supported to reach European economic-financial standards. In particular, the Observatories activities will be functional to the understanding and subsequent resolution of banks-enterprises relationship issues, which is considered a key issue for the enhancement of financial system modernisation. Thus, it represents the starting point for the strengthening of financial policies supporting SMEs efficiency. In such a way, a correspondence between public actions objectives and private sector needs will be achieved and the project partners will be provided with appropriate tools to promote financial modernisation. Training courses for involved people aiming at the enhancement, from the side of Enterprises, of the capacity to make industrial and financial planning; from the side of the Banks, of the assessment and supporting of the such industrial and financial planning; from the side of the Public Institution, of the capacity to identify effective policies that remove inefficiencies and bottlenecks in the bank-enterprise relationship. Workshops, cultural exchange, know-how transfer addressed to the understanding of dynamics that underline the complexity of the connections among Public Institution, Banks and Enterprises, such as the creation of mutual forms of union based on Italian model Consortium of Warranty or the setting up of Warranty Fund to support Enterprises access to finance whether for investment creditor for cash credit 3.3 Correspondence between activities and outputs Activities Creation of National Bank-Enterprise Observatories Bank-Enterprise Observatories Outputs Expected results 1. Enhancement of the knowledge of SMEs main economic-financial characteristcs and of the context in which they operate, as well as of the obstacles occurred during their process of financial modernisation. 2. Identification of new local development scenarios and options of regulatory reforms as a basis for the approximation of the economic-financial characteristics of Balkan Countries to EU s standards. 3. Creation of a cross-border network which allows to establish the basis for the gradual approximation of economic-and-financial characteristics of SME s operating in the Balkan area to EU s standards through the exchange of experiences and the setting up of joint initiatives. This network is connected to the launching of financial modernisation Programmes to be implemented throughout the Eastern Adriatic Countries, based on the successful methodology of the World Bank s Convergence Programme ( Strengthening of capacities about micro-macro economics and financial studies and research of the Albania s, Bosnia-Herzegovina s and Montenegro s socioeconomic actors. Creation and submission of a questionnaire Analysis of the data emerging from the survey Setting-up of National Bank-Enterprise roundtables Questionnaires Documents on the survey results Documents concerning the National Bank-Enterprise roundtables Improvement of the skills of personnel in Istitutional, banking and SMEs to increase the effectiveness of the bank-enterprise relationship. Enhancement of a dialogue between banks and enterprises to facilitate the connections and operative aspects such as the access to finance. 5 Drawing up of Strategic National Documents Strategic National Documents 6 Page 125 of 335

16 Creation of an Adriatic Bank Enterprise Observatory Adriatic Bank - Enterprise Observatory SMEs investing in Balkan countries, will benefit from the arrangement of the economic-and-financial characteristics of Eastern Countries to EU ones. Setting up of Cross-border Bank - Enterprise Roundtables Documents concening the Cross-border Bank -Enterprise Roundtables 3.6 Level of Cross Border Cooperation Joint Development Yes Joint Staff Yes Updating Activity of the questionnaires by the National Observatories Updated questionnaires Joint Implementation Yes Joint Financing Yes Drawing up of a Cross-Border Strategic Document Cross-Border Strategic Document 3.7 Cross Border Approach (how the project will realize one/more of the previous joint cooperation system Updating Activity of the Strategic Documents by the National Observatories Start up of the financial modernisation Programme 3.4 Methodological Approach Action Plan Special Studies/ Comparison Studies The methodological approach, which builds on the World Bank s successful experience within the Convergence Programme ( is mainly based on flexible cooperation between technical and institutional partners. The project methodology relies on an in-depth and field analysis oriented to gather important information on partner Countries SMEs' needs. It would be possible to achieve the necessary knowledge to define the financial regulatory reform proposals supporting Balkan Countries in the arrangement of their financial characteristics to EU standards. Such proposals will be coherent with on-going SMEs financial needs and will be discussed and detected in the framework of Bank-Enterprise Roundtables comprising financial stakeholders, SMEs' representatives and other experts, including from International Financial Institutions. The financial regulatory reform proposals will be organised into concrete intervention recommendations to be followed at both national and Adriatic level. 3.5 Target groups / Final Beneficiaries The main project s beneficiaries are SMEs located in participating Regions of the Balkan Area that face difficulties in accessing the financial modernisation paths, as well as banks proving financial services to them. Moreover, Local and Regional Authorities, policy as well as decision makers and local, national and European stakeholders and business support organisations responsible for ensuring economic and financial development and cohesion of their regions supporting SMEs will benefit from the project's implementation. In addition, the whole economy of the Adriatic area, included Apulian's 7 The project promotes the development of joint frameworks to address common financial-andeconomic challenges realised by the National Observatories. To reach this goal the Observatories activities will be carried out in tight and steady cooperation and dialogue among them, through the Apulia Region s Observatory who will coordination their activities. Moreover the survey, analysis, study, documents editing and regulatory proposal activities at national level will be, from time to time, updated as a result of their cross-border review to maximize the development potential of national activities for the whole cross-border area. The setting up of the Adriatic Observatory, as well as the definition of a common strategic Action Plan at regional level represent key tools in order to define actions to be realised at territorial level, allowing the subsequent definition of a common strategy of action throughout the whole regional Adriatic macro-area. 3.8 Capitalisation of the results A transition time is foreseen to translate the work output of the Adriatic Observatory into the financial Modernisation Programme, whose setting up will represent the main instrument to convert analyses into financial modernisation reforms. The Observatory will carry out Special Studies to deepen the understanding of SMEs characteristics, particularly at the cross-border level, as an input into policy formulation. After project closure, the Observatory will continue to develop the monitoring activities of the financial systems modernisation carried out at national level and the fulfillment of further specific comparison studies. 3.9 Coherence of the Project Coherence of the Project with the Programme s overall objective/strategy The project deals with the main objective of the IPA Programme, namely the strengthening of the sustainable development capacity of the Adriatic Region through an agreed strategy of actions among the partners of the eligible territories, with a particular emphasis on the improvement of competitiveness through economic, social and institutional cooperation (Priority 1). As far as it is concerned, the project strategy is built in order to contribute to sustainable regional development and competitiveness of the Adriatic area both in its approach and in the extensive involvement of regional 8 Page 126 of 335