Good Practice Project
For years, the local fishermen have been enduring the effects of the financial crisis. The region’s banking system is limited to a few operators with strict constraints for attributing loans. Fishermen cannot necessarily provide a typical guarantee, making it difficult for them to obtain loans. Because fishermen do not always fit the standard profile of a borrower, they can be categorised as ‘non-bankable’. Recent discussions with these local fishermen made clear the need to provide them with a more accessible credit system to help fund their initiatives.
This is why the FLAG with one of its partners has decided to establish a microcredit fund to respond to fishermen’s financial needs and support initiatives related to the fisheries sector. Such small investments are easily monitored thanks to the “proximity” of the recipients and the fund’s managing institution. This system will contribute to the implementation of the FLAG’s local strategy through the creation of new businesses, and improving the efficiency and production of existing ones.
A private credit company, a member of the East Sardinia FLAG, made available the resources for the credit fund. This company registered as a microcredit provider to be able to allocate micro-credit in accordance with national regulations.
The first stage of the credit fund operation will involve a small pilot project in the coastal region of Eastern Sardinia. The results of the pilot project will then be evaluated to potentially be replicated on a larger regional scale with more active involvement of third parties and the FLAG partnership. The FLAG will contribute an added value to the project by providing direct support to the borrowers and facilitating contact between the credit company and the fishermen.
Once the fund’s regulations are drafted and the cooperation agreement is signed between the micro-credit company and the FLAG, candidates will be able to apply for funding. The project will offer financing for business initiatives (including mentoring) and promote them. Monitoring and evaluating the activities will be done to assess the success of the micro-credit fund.
The FLAG expects to help develop between five and eight microcredit applications from cooperatives for an average of €10 000 each in 2018. The project is currently limited to cooperatives, start-ups, and companies with a maximum of five years of experience.
The project is interesting for other fisheries and coastal areas where credit access problems exist, and could be adapted to the local situation. It is crucial to find a financial intermediary who is willing to work with minimal third-party guarantees and who has the financial means available. This is more likely to be a public authority or an institution with the mission to support small enterprises.
|Total project cost||€103 000|
|Timeframe of implementation||From Jan 2017 to Dec 2019|
|Type of area|