Long-term Rural Development is the Focus of EU and Ministry Initiatives

Over the next few years, a total of €69.29 million in European Union funds has been set aside for the upgrade of fixed internet connections via the mobile network in rural areas of eastern Estonia in particular, while a separate domestic initiative aims to encourage relocation to these often-deserted areas of the country. 

The financing will be available from 2021 through 2027, and the Ministry of Economic Affairs and Communications is working on plans to begin spending. 

The predominantly rural counties of Vru and Lääne-Viru have been used as a testbed for preliminary work. 

By 2030, the government’s “Estonian Digital Society 2030” initiative aims to provide fast, reliable, and inexpensive communication links throughout Estonia, regardless of location, for both fixed and mobile networks. 

The economics ministry asked the Consumer Protection and Technical Regulatory Authority (TTJA) to conduct a pilot project involving detailed measurements of mobile coverage in two counties and mapping areas where there is no coverage at all or where the quality is poor in collaboration with mobile operators. 

The initiatives are entirely supported by the European Union; €45 million comes from the European Regional Development Fund, €24.29 million from the European Resilience and Recovery Facility, and an extra €18.74 million is set aside for uninterrupted 5G coverage along vital transportation corridors. EU money can only be used to construct 5G networks, not older ones. 

Meanwhile, Minister of Rural Affairs Urmas Kruuse (Reform) has announced a separate regional development initiative to be piloted by the Rural Development Foundation (MES), with the goal of encouraging people to settle in rural areas. The initiative will focus on two regions: Vru County and other areas of southeastern Estonia, and Ida-Viru County. The loan’s target demographic is those who live in or plan to settle in the countryside and who, in addition to providing accommodation, will develop or find work in the area. 

The idea was accepted by the government in September, and the ministry and the MES are working on more specific terms and circumstances. 

The MES has also endorsed the terms and circumstances of mortgage co-lending with banks in order to make it easier for people to relocate to rural areas. The main issue so far has been the low market value of homes located far from population centers, as well as the increased collateral requirements for getting loans as a result. The MES is stepping in to help eliminate market failures. 

The MES plans to put €5 million of its own money into the project, with a potential co-loan amount of €100,000. If a bank agrees to put up 50%, the maximum amount that can be borrowed under the arrangement is €200,000. 

The primary elements in deciding which locations to focus on were population data, economic indicators, and price information from the region’s real estate market, according to Kruuse, who termed the step “important” in helping to remove barriers to buying a home in a remote area. 

Settlements with a population of up to 1,000 people in the counties of Plva and Valga, as well as Vru and Ida-Viru, are eligible for assistance. A loan can be used to acquire, construct, or renovate a home, including semi-detached or terraced home. 

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