Presentation from the capacity building seminar “Financing business start-up by under-represented groups”, 27-29 June 2012, Trento – Italy; organised by the Local Economic and Employment Development (LEED) Programme and its Trento Centre at the OECD in collaboration with the Directorate-General Employment, Social Affairs and Inclusion of the European Commission. See www.trento.oecd.org
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EC-OECD financing start-up seminar 27-29 June2012 (Trento, Italy) - Key conclusions by Jonathan Potter, Senior Economist, OECD LEED Programme
1. EC-OECD Financing Start-Up Seminar -
Key Conclusions
1. Importance of entrepreneurship in ESF programmes
• Entrepreneurship is an avenue for economic recovery and job
creation; critical at a time of high unemployment.
• There is under-exploited potential in disadvantaged (youth,
unemployed, handicapped) and under-represented groups (women,
seniors).
• Support should be focused on the barriers facing these groups : lack
of access to loans, poor financial literacy, lack of credit history,
negative attitudes to entrepreneurship, weak entrepreneurship skills
• These people have different needs and need adapted or specialised
support
2. EC-OECD Financing Start-Up Seminar -
Key Conclusions
2. Entrepreneurship support systems are more effective than
individual actions
• A weakness of current support is a series of disconnected, short-
term measures with only partial coverage of the needs
• Integrated programmes fill gaps and make links, ensure that
bottlenecks are addressed
• Measures are needed across the whole entrepreneurship ‘life cycle’:
orientation/gestation; start-up; growth/crisis – with clear ways
forward and increasing intensity
• A menu of measures exists from previous programmes, e.g. EQUAL:
training, business development services, access to finance, access to
markets, legal frameworks, welfare bridge, entrepreneurship
education
• An action planning process can be used to conceive the system and
involve stakeholders
3. EC-OECD Financing Start-Up Seminar -
Key Conclusions
3. A foundation of specialist intermediaries must be nurtured
• Some of the most successful interventions have been realised
through specialist agencies like IQ Consult and Fair Finance
• They have understanding of the market, ability to reach the target
groups and a drive to innovate
• ESF support can be used to generate these types of new business
model
• It is important to scale up the best initiatives of this kind – and
share best practice models
4. EC-OECD Financing Start-Up Seminar -
Key Conclusions
4. Microfinance initiatives are needed
• Finance is one of the biggest barriers to start-up – for living
expenses (welfare bridge) and business expenses (grants and loans)
• Most current ESF programmes use grants – but these not as
efficient as loans; they are expensive to the public and do not use
private sector expertise
• Traditional banks are unlikely to enter the microfinance loan
market – their model is of low interest rates and low transaction
costs; but misses those with no credit history
• Interest rates are not the key factor in success – outreach is more
important
5. EC-OECD Financing Start-Up Seminar -
Key Conclusions
5. Evaluation has a central role to play in programme
development
• Ex ante evaluation results must be attached to the Partnership
Contract
• It must include data on the rationale for proposed actions,
indicators for monitoring and estimates of expected results
• Logical frameworks are the key tool, together with appropriate
indicators
• Bear in mind the counterfactual