|IMPORTANT LEGAL NOTICE: The information on this site is subject to a disclaimer and a copyright notice.|
Local financing in rural areas
[ Summary ]
Access to funding is a key local development issue. Indeed, difficulties in securing finance may seriously hamper the emergence of projects - especially small-scale ones - and new business creation.
The ability to grant funding and/or facilitate the search for such funding is the primary lever which LEADER groups are able to use in their area.
However, despite the existence of a wide variety of potential financing instruments, we have noted that virtually all LEADER groups since LEADER I have confined themselves to a sole financial instrument, namely subsidies. Even though this has enabled them to exploit the diverse possibilities afforded by this formula, by focusing on the beneficiaries’ levels of co-partnership, LEADER has largely ignored the multiple advantages offered by other forms of financing, including ethical alternatives, guarantee funds, venture capital, etc., as well as a carefully considered combination of these various formulas.
LEADER’s lack of experimentation has not been due to insufficient resources or financial engineering possibilities. Indeed, ever since they were created, Community regulations have authorized the use of the European Structural Funds for financial engineering purposes. However, only a few of the 217 LEADER I local action groups (LAGs) and the thousand LEADER II groups have seized this opportunity to create financial engineering structures suited to specific needs that subsidies fail to address.
At a time when we are drawing lessons from LEADER II (1994-1999) in order to prepare the new LEADER+ Initiative (2000-2006), it appears essential to analyse these financing experiments which have been all too isolated and little-publicized. This dossier addresses a number of questions, including: What lessons can be drawn from these interventions today? What are their limitations? And what are the challenges for the future, in particular for LEADER+?
With respect to the limitations encountered by these formulas, have any alternative experiments been conducted in another context which may be of use to rural development and to LEADER LAGs? For example, at present most of the consultations, initiatives and innovations in local financing are emerging in urban areas. In what ways could this proliferation of experiments in the towns interest rural areas? What are the limitations? Which points require further experimentation?
The purpose of this dossier, which results from discussions during the seminar on local financing held in Tarazona (Aragon, Spain) in January 1999, is to sketch out answers to these various questions.
The document has been structured into four chapters: