EU e-commerce investment ‘not value for money’

7 Jan 15
By Judith Ugwumadu | 7 January 2015 European Union funding to help small and medium-sized enterprises scale up their e-commerce activities has not been value for money, auditors said today.

The European Court of Auditors examined whether the European Regional Development Fund (ERDF), which supports e-commerce investments, was effective.

It found that, although online business availability had increased, projects selected by member states for investment were weak, resulting in poor value for money. A lack of comparative selection of applications and comprehensive business information resulted in over one-third of the cases offering low or no value for money.

Auditors highlighted shortcomings in the European Commission’s monitoring instruments, which made it impossible to assess to what extent ERDF support had contributed to the achievement of national and EU information technology goals as well as to SME’s own business plans.

Ten of the 30 co-funded projects audited were carried out in the absence of public co-financing. Also, five of these projects had started well before the grant had been notified and three of them started before the enterprise had even submitted a co-financing application. 

‘All these projects represent deadweight,’ the Has ERDF support to SMEs in the area of ecommerce been effective? report stated.

Oskar Herics, the ECA Member responsible for the report, reminded member states that ‘e-business is still business’ and therefore business needs needed proper planning, clear objectives and ways of measuring them.

‘Too many of the projects we audited did not have these elements,’ he said.

‘The commission should make sure that member states monitor the actual impact of their grants on small business development and, wherever possible, link payments to results. It’s good to be on the information super-highway, but we have to know where we are going.’

The ECA is making several recommendations to the commission including, ensuring that it obtains consistent and reliable information from the member states on operational programmes’ progress, with a particular emphasis on result indicators and targets.

It also suggested that the selection criteria and procedures put in place by member states ensure that the projects selected maximise added value.

And member states’ managing authorities should put management tools in place to monitor the impact of the grant on the business development of the SMEs supported.

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