Support to Entrepreneurship and Employment Development Along the Azov Sea Coastline in Donetsk and Zaporizhzhia Regions
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Annual Progress Report SUPPORT TO ENTREPRENEURSHIP AND EMPLOYMENT DEVELOPMENT ALONG THE AZOV SEA COASTLINE IN DONETSK AND ZAPORIZHZHIA REGIONS December 2019 – December 2020 Table of Contents Acronyms 03 Context Overview 04 OUTCOME 1. MSME SECTOR ALONG THE AZOV SEA COASTLINE IN DONETSK 07 AND ZAPORIZHZHIA REGIONS GROWS, GENERATING NEW JOBS Activity 1.1.1. Support the development of effective business information systems, 08 communication network and network of advisory services Activity 1.1.2. Develop and deliver a skills enhancement programme for potential 10 and existing entrepreneurs, farmers and cooperatives Activity 1.2.1. Design and launch a business grant scheme 12 Activity 1.2.2. Provide small-scale financing through the grant scheme 14 Activity 1.2.3. Develop and deliver consultancy support services for business 17 development, product or service improvement, and promote experience sharing OUTCOME 2. MSMES, IN THE SOUTH OF DONETSK AND ZAPORIZHZHIA 18 REGIONS, SUCCESSFULLY INTEGRATE INTO NEW OR EXISTING MARKETS, WHICH PROVIDE THEM WITH IMPROVED PERSPECTIVES FOR SUSTAINABLE BUSINESS OPERATIONS AND LONG-TERM BUSINESS DEVELOPMENT Activity 2.1.1. Identify key agriculture/non-agriculture sectors for market entry 19 Activity 2.1.2. Facilitate access to identified markets and value chains 20 Activity 2.1.3. Promote formation and development of clusters, business groups 23 and associations Lessons Learned 24 Risk Analysis 26 Annex 1. Results Framework 27 Acronyms B2B Business-to-business EECP Entry-exit checkpoint GCA Government-controlled area HACCP Hazard Analysis and Critical Control Point IDP Internally Displaced Person IT Information Technology LAAS Light Model of Agricultural Advisory System MSME Micro, small and medium enterprise NGCA Non-government controlled area NGO Non-governmental organisation TC Territorial community UNDP United Nations Development Programme UN OCHA United Nations Office for the Coordination of Humanitarian Affairs UN RPP United Nations Recovery and Peacebuilding Programme 04 Context Overview The socio-economic impact of the armed conflict and incomes could signify the largest reversal continues to drive uneven and perpetuate non- in human development on record. The fall-out inclusive development across the country, from the pandemic is expected to hit poorer particularly in eastern Ukraine, including with economies and regions harder, as they are less regard to the protection of human rights and able to deal with the socio-economic impacts of gender equality, equitable access to social and the virus. In mid-March 2020, the government- economic benefits, access to quality healthcare, imposed quarantine restrictions to minimize the and freedom of movement for civilians living in risk of the coronavirus transmission across the the conflict zone. The ongoing conflict has had a country, including in the conflict-affected areas of major effect on the national, and in particular, on eastern Ukraine. In May 2020, these restrictions the local economy, with the loss of livelihoods and began to ease, and an adaptive quarantine was employment, and led to an overall deterioration introduced to counter the spread of the virus. The of macroeconomic conditions. In November 2018, COVID-19 restrictive measures are implemented in the regional security landscape has been further each oblast in accordance with its risk level. The affected with the capture by Russian forces of adaptive quarantine currently in place has been three Ukrainian navy vessels in the Kerch Strait extended until 30 April 20212. As of 31 March (Sea of Azov). This incident resulted in increased 2021, there are 1,674,168 confirmed COVID-19 tensions between Ukraine and Russian Federation cases (32,825 deaths) in government-controlled and in the invocation of the Martial law in several areas (GCA) of Ukraine, including 59,206 and regions of Ukraine, including Donetsk and 78,386 cases in Donetsk and Zaporizhzhia Zaporizhzhia oblasts for a 30-day period. The oblasts respectively. The pandemic, combined continuous limitations of freedom of passage with the impact of the six-year long armed conflict across the Kerch strait has also accelerated the in the region, is further challenging people, economic downturn in urban centres along the households and businesses in unprecedented Azov coastline, limiting freight traffic through ways. Moreover, the COVID-19 pandemic further Azov Sea ports (Mariupol and Berdiansk), as well exacerbated existing vulnerabilities, in some as limiting employment opportunities for those cases further compounding them. Intertwined engaged in the fishing industry. These conflict- with multidimensions of discrimination and related issues have significantly contributed to the marginalisation, it also created new vulnerable overall decline of the country’s socio-economic groups, such as healthcare workers, the frontline situation. Despite United Nations Secretary- staff of the response and workers in high-contact General’s appeal for a global ceasefire, hostilities sectors and occupations, as well as informal in eastern Ukraine initially intensified, leading to workers who lost their jobs and remained without an increase of civilian casualties until the renewal social protection. of the ceasefire came into effect on 27 July 2020. From March to June 2020, all entry-exit The novel coronavirus outbreak has starkly checkpoints (EECPs) in eastern Ukraine were exposed inequalities worldwide and could set closed in an attempt to contain the spread of back human development for the first time since COVID-19 in communities along the 420-kilometre 1990. According to the UNDP’s report “COVID-19 “contact line” as well as in the rest of Ukraine. and Human Development: Assessing the Crisis, Before the closure, approximately 1.2 million Envisioning the Recovery1”, the combined impact people crossed the “contact line” every month of different shocks affecting health, education to obtain services, social benefits, education, 1 http://hdr.undp.org/en/hdp-covid 2 https://zakon.rada.gov.ua/laws/show/1236-2020-%D0%BF#Text 05 Context Overview employment, healthcare or visited their family unemployment rate constituted 9.7%, compared members. As of today, the EECP remain only to 15.2% and 11% in Donetsk and Zaporizhzhia partially operational. According to UN OCHA oblasts respectively. Agricultural output fell by estimations, the closure has impacted more 14.2%, amid drought, and by 3.7% and 11.2% in than one million people, including over 300,000 Donetsk and Zaporizhzhia oblasts respectively. elderly and 163,000 vulnerable persons who have According to the Assessment of the impact of the not been able to visit their families and friends, COVID-19 pandemic on micro, small and medium access essential services or withdraw cash since size enterprises in eastern Ukraine3, a significant late March. February 2021 saw a small increase percentage of local companies (56%) have not of civilian movement across the “contact line”, been able to adapt to the new conditions caused with almost 40,000 individual crossings recorded by the pandemic or have adapted only partially. compared to 29,000 in January, representing just The combination of a high level of informality, 4% of the almost 990,000 crossings in February widespread unemployment, low savings rates 2020. To a large extent, crossings have been and strong reliance on remittances highlights the limited to those people who have been granted vulnerability of large segments of the society to humanitarian exemptions negotiated by the a prolonged lockdown impacted by economic humanitarian community. In addition, people have downturn. been allowed to cross based on the pre-approved Traditionally, the role of MSMEs in the targeted lists issued in NGCA. oblasts have been limited due to historic factors Communities living close to the “contact line” and the structure of the local economy reliant on were particularly impacted by the introduction large enterprises in heavy industries. However, of stringent restrictions to movement, imposed the key to inclusive and sustainable development as a result of COVID-19. Access to adequate is through promotion of MSMEs, who are, in the healthcare services, including emergency medical overwhelming majority of advanced economies, care remains challenging for people of all ages, the main source of productive employment and especially for older persons and people living with innovation. Unfortunately, the socio-economic disabilities in rural hard-to-reach settlements close assessment of the impact on businesses and to the “contact line”. Farmers were unable to travel households, conducted by the United Nations to their fields to plant essential food crops, and System in Ukraine, showed that the smaller the this resulted in a spike in food prices and income business the more they are impacted by external decreases for them and the small traders who shocks, such as the COVID-19 pandemic. This, in rely on their produce. Unemployment, increased a way, triple predicament – post-conflict situation, food insecurity and restricted access to healthcare, unfavourable economic structure and economic social assistance and other basic services made slowdown and recession caused by the pandemic– conflict-affected people even more vulnerable and calls for particular efforts to support development dependent on immediate assistance. of a thriving MSME sector. The crisis and the imposed lockdown have had The socio-economic assessment of the impact significant negative economic consequences; it of