Every year, Portugal receives billions of euros in European Funds with a clear objective: to modernize the economy, increase productivity and reduce regional inequalities.
To get an idea of the scale of the opportunity, the Algarve has, in the period between 2021 and 2027, approximately 780.3 million euros, an amount approved by the European Commission and included in the Algarve Regional Program – Algarve 2030.
In comparative terms, this amount represents almost double the turnover of the entire Algarve industrial sector in 2024. We are, therefore, facing one of the greatest opportunities that the Algarve has ever had — and still has — to rethink its economic model, reinforce its business dynamics and face structural problems that have conditioned the region’s development for decades.
However, despite the size of these values, the program’s results fall far short of expectations. The Algarve 2030 execution rate is currently 6.2%, the lowest in the country, with only around 49 million euros implemented. These numbers reflect clear difficulties in accessing community funds, insufficient dissemination of support and, above all, a weak alignment of financing lines with the reality and needs of companies.
In practice, these lines still do not reach those who can execute them effectively: companies.
The reasons for this scenario are several and well known. First of all, the excessive focus on the public component, to the detriment of business investment. In addition, there are significant delays in approving projects, the bureaucracy inherent to the application processes, the reduced treasury capacity of companies, tight deadlines, constant changes in the timing of notices and poor publicity of available support.
It is clear that the model for targeting these incentives needs to be rethought — and, in some cases, it has already begun to be done. The extension of the deadline for opening strategic lines for the region, such as the Territorial-Based Incentive Line, was a positive sign. Still, it is far from being enough. We need to significantly reduce decision times, increase predictability and, above all, align incentives with companies’ real problems.
Companies need predictability and prudent risk management, especially when we talk about investment. This need conflicts with the current logic of incentives, in which reimbursements only occur after the investment has been made. When approval of an application takes months and the investment is urgent, many entrepreneurs choose not to move forward.
In practice, this model ends up favoring only highly capitalized companies with strong financial capacity, which does not reflect the reality of the majority of Portuguese business fabric — and much less in the Algarve, dominated by small and medium-sized companies.
From a financial point of view, the current incentive model transfers almost the entire investment risk to companies. An SME that moves forward with a co-financed project has to bear a large part of the investment for several months, with no guarantee of timely approval or predictable repayment. In a context of reduced margins, increasing operating costs and more demanding access to credit, this risk becomes a decisive factor. Many economically viable projects end up not moving forward, not for lack of merit, but for lack of financial conditions to assume this uncertainty.
Wasting European funds is not just about not using available funds. It generates a high opportunity cost for the regional economy, hinders private investment and postpones structural decisions. In an Algarve excessively dependent on tourism and with a fragile business fabric, each euro not spent represents lost growth, qualified jobs that are not created and competitiveness that is not gained. Without predictability, without a focus on companies and without a clear economic strategy, funds will continue to be available on paper — but absent in the real economy.
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