USAID ECONOMIC RESILIENCE ACTIVITY: QUARTERLY PROGRESS REPORT October 01, 2019 – December 31, 2019 This publication was produced by the USAID Economic Resilience Activity under Contract No. 72012118C00004 at the request of the United States Agency for International Development. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government.
Quarterly Progress Report (Fiscal Year 2020 Quarter One)
Program Title: USAID Economic Resilience Activity
Sponsoring USAID Office: USAID Ukraine
Contract Number: 72012118C00004
Contractor: DAI Global, LLC
Submission Date: January 30, 2020
Author: DAI Global, LLC
CONTENTS
ACCRONIMS AND ABBREVIATIONS 1 I. INTRODUCTION 3 BRIEF SUMMARY OF ACTIVITY 3 II. CONTEXT UPDATE 4 INCLUSION 5 INCREASING CAPABILITIES 5 INCREASING OPPORTUNITIES 6 GROWTH 7 MARKET EXPANSION 7 INVESTMENT ACCELERATION FOR MSMES 10 TRANSFORMATION 11 DRIVING VISION 11 SUPPORTING INFRASTRUCTURE INVESTMENT (ERA CONSTRUCTION) 12 III. PROGRESS AGAINST TARGETS 13 IV. PERFORMANCE MONITORING, EVALUATION AND LEARNING 14 DATA QUALITY ASSESSMENT 14 AMELP REVISION 15 SPECIAL STUDIES 15 PAUSE AND REFLECT SESSIONS 16 V. LESSONS LEARNED 17 VI. FINANCIAL INFORMATION ERROR! BOOKMARK NOT DEFINED. CASH FLOW REPORT AND FINANCIAL PROJECTIONSERROR! BOOKMARK NOT DEFINED. PROJECT FINANCIAL PROJECTIONS FOR USAID ECONOMIC RESILIENCE ACTIVITY FY 2020 Q1 ERROR! BOOKMARK NOT DEFINED. VII. ADMINISTRATION 17 VIII. SUB-AWARD DETAILS 18
ACCRONIMS AND ABBREVIATIONS AMELP Activity Monitoring, Evaluation, and Learning Plan APS Annual Program Statement ATO Antiterrorist Operation B2B Business-to-Business CdA Chargé d’Affaires CDM CDM Engineering Ukraine CDC Career Development Center CEP Competitive Economy Program COP Chief of Party DAI DAI Global LLC DG-East Democratic Governance East DOSA Donetsk Oblast State Administration DNTU Donetsk National Technical University DQA Data Quality Assessment DRC Danish Refugee Council EBRD European Bank for Reconstruction and Development EIB European Investment Bank ERA Economic Resilience Activity EUR Bureau for European and Eurasian Affairs EU European Union FHI 360 Family Health International 360 (NGO) GoU Government of Ukraine GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH IDP Internally Displaced Persons IFC International Finance Corporation IFI International Financial Institutions IOM International Organization for Migration I4M Innovations for Manufacturing IT Information Technology JFO Joint Force Operation LGBTQI Lesbian, Gay, Bisexual, Transgender, Queer, Questioning and Intersex LNAU Luhansk National Agrarian University
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LOSA Luhansk Oblast State Administration MEL Monitoring, Evaluation, and Learning M&E Monitoring and Evaluation MIF Mariupol Investment Forum MoES Ministry of Education and Science MoU Memorandum of Understanding MSME Micro, Small, Medium Enterprises MSRA Market Systems Resilience Assessment NGCAs Non-Government-Controlled Areas NGO Non-Governmental Organization OTI Office of Transition Initiatives PWD People with Disabilities Q&A Questions and Answers SMEs Small and Medium Enterprises UITT Ukraine International Travel and Tourism Exhibition ULA Ukrainian Leadership Academy UNDP United Nations Development Program USAID United States Agency for International Development VET Vocational Education Training
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I. INTRODUCTION
DAI is pleased to submit this Quarterly Report for the USAID Economic Resilience Activity (ERA/Activity) covering the period of October 1 to December 31, 2019. The Activity aims to improve the overall economic resilience of eastern Ukraine in response to Russia’s aggression, which has left industry ransacked, communities divided physically and politically, and the social, financial, and physical assets that underlie resilience nearly nonexistent. The Activity will directly contribute to USAID/Ukraine’s Development Objective 2: Impacts of Russia’s Aggression Mitigated and Intermediate Results 2.1: Conditions Improved for Reintegration and 2.4 Common Civic Values Increasingly Embraced.
This report details the Activity’s accomplishments during the first quarter of the second year and describes the interventions completed, benchmarks achieved, and performance standards.
BRIEF SUMMARY OF ACTIVITY
Over the next five years, ERA will help eastern Ukraine reorient its economy toward sustainable, diverse, and inclusive growth by working through three interrelated objectives:
OBJECTIVE 1: PROVIDE ASSISTANCE TO STABILIZE THE ECONOMY OF EASTERN UKRAINE. This objective will build on previous work under Office of Transition Initiatives (OTI) programming and U.S. Government humanitarian assistance. ERA will continue to support quick- response, high-impact interventions that address the immediate needs of conflict-affected individuals, including internally displaced persons (IDPs), returnees, women, youth, veterans, IDP host communities, and businesses (likely microenterprises with up to 10 employees and small enterprises with 10 to 50 employees).
OBJECTIVE 2: SUPPORT THE SUSTAINABLE DEVELOPMENT OF SMALL AND MEDIUM- SIZED ENTERPRISES (SMES). This objective will support medium-term results by starting with end markets, improving SMEs’ ability to deliver in-demand goods and services, and building the surrounding market infrastructure—from information to finance to knowledge and skills—that enables longer-term growth. Objective 2 will focus primarily on SMEs with up to 250 employees, in select cases, will support innovative western-leaning companies with up to 1,200 employees that are near the line of contact and provide much-needed employment in stressed areas.
OBJECTIVE 3: BUILD CONFIDENCE IN THE FUTURE OF THE EASTERN UKRAINIAN ECONOMY. This objective will play a critical role in the integration and coordination of all ERA interventions and culminates in the most important result: a path forward to a viable economic future for the eastern region as an integrated part of the Ukrainian economy, one that is understood and supported by the population and energizes people into entrepreneurial action. By orienting interventions under Objective 3 around current and potential end markets for growth sectors that are a combination of traditional and new, ERA will simultaneously promote the diversification that will lead to a more resilient economy and create opportunities for innovations and transformative ideas.
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II. CONTEXT UPDATE
To help mitigate the ongoing conflict in eastern Ukraine, Ukrainian President Volodymyr Zelenskyi met with Russian President Vladimir Putin on December 9, 2019, per the Normandy Format in Paris, France. This meeting, attended by leaders of the Normandy Four countries (Russia, Ukraine, Germany, and France), was the first in-person meeting between presidents of Russia and Ukraine since 2016. In the lead up to this meeting, the GoU successfully restored and repaired a bridge connecting Stanytsia Luhanska to the Non-Government-Controlled Areas (NGCA) in an effort to build confidence in the negotiation process. After a day of closed-door deliberations, the four leaders emerged with a joint declaration of their reaffirmed commitment to peace and a series of agreed-upon steps to de-escalate hostilities and lessen the suffering of those affected by the war, including a newly-promised ceasefire, a comprehensive “all-for-all” prisoner exchange, a renewed program to safely extract mines from the conflict zone, and other steps to disengage troops along the contact line. The leaders also affirmed a commitment to meet again for another summit in March 2020. At the concluding press-conference, President Zelenskyi announced that his commitment to peace would not come at the expense of diminishing Ukrainian sovereignty over its entire territory and declared that any comprehensive settlement was “impossible without ensuring security in eastern Ukraine.” While this issue was not resolved at the summit, Zelenskyi promised to return to the question at the next Normandy summit in four months.
Following the Normandy meeting, another successful diplomatic victory was realized by President Zelenskyi. On December 29, 2019, the Ukrainian authorities swapped 124 prisoners for 76 prisoners held by Russian-backed separatists in the NGCA. The latest swap comes three months after Ukraine carried out a long-awaited exchange with Russia of 35 prisoners each. The positive recent diplomatic negotiations have created some optimism about further stabilization in eastern Ukraine that might lead to expanding the impact of Activity-supported interventions. The ERA team continues to monitor the security situation in eastern Ukraine and has taken the extra step of hiring a security officer, coming on board in January 2020, to enable real-time assessment of security in the east.
KEY NARRATIVE ACHIEVEMENTS
As ERA kicked off its second year, the team began implementing under the new technical structure presented in the Year 2 Implementation and Coordination Plan. The matrix-style structure shown below in Figure 1 aims to achieve more synergy and integration across Activity interventions and is organized around the following workstreams: 1) Inclusion, 2) Growth, and 3) Transformation. The Inclusion team works with individual private entrepreneurs, micro and small businesses, primarily from ERA’s targeted vulnerable populations and collaborates with NGOs also supporting those populations. The overall goal of this team is fostering more inclusive economic growth. The Growth team takes a value chain approach to strengthening five key sectors of eastern Ukraine, thereby helping to diversify the economy and contributing to the region’s resiliency; they also work with innovative, medium-sized manufacturers to reach new markets, expand their client base, grow and create new jobs. Finally, the Transformation team is focused on any and all interventions driving the local visioning process and supporting infrastructure investment to build confidence in the future of the eastern Ukraine.
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REORG MATRIX SHOWING TARGET SECTORS MATRIXED WITH RESULTS
INCLUSION
INCREASING CAPABILITIES
GENDER AND VULNERABLE POPULATIONS ASSESSMENT AND INCLUSION STRATEGY. During the reporting period, the Inclusion team conducted desk research and reviewed Gender and Inclusion studies produced by various organizations including IOM, REACH (Canadian NGO), UNDP, Chirikli, and DG-East. ERA also held focus-groups with vulnerable population representatives1 and interviews with NGOs specialized in working with these groups.
Having analyzed the collected data, the Inclusion team drafted an assessment report and integration strategy. This complex analysis provides ERA cross-cutting teams with concrete recommendations of support they should provide based on the current socio-economic situation and needs of specific vulnerable groups. An ERA Pause and Reflection Session to discuss the conclusions of the assessment report and to develop targeted interventions for each group based on the findings and recommendations is scheduled at the beginning of next quarter.
1 The team conducted eight focus group discussions with the following groups: PWDs, IDPs, LGBTQAI+, Women, ATO and JFO veterans and Roma minorities.
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INCREASE SUPPORT TO VULNERABLE POPULATIONS AND WOMEN. The Inclusion team continued providing specific business training for individuals, including representatives of micro and small businesses owned by or benefiting vulnerable populations and women. Between October and November 2019, ERA conducted 33 training sessions on “Entrepreneurial Mindset,” “Improving Business Processes,” and “Teamwork,” reaching 330 residents in the Donetsk Oblast alone. The training sessions equipped participants with business development strategies, identifying actions and steps for attaining specific business goals, and focused on ways to ensure an inclusive, team-oriented approach to business decision-making. Trainers also walked participants through the process of assessing the economic feasibility of starting a new business and applying different tools to help increase sales.
In addition to the above, the team held 28 simulations known as “business games,” including: “Life Manager,” “Wecanomy,” “Family Pizza,” and “A Tale of Two Cities” for 215 business and individual representatives from the Donetsk and Luhansk Oblasts to help develop and reinforce their skills and techniques in project and financial management, business analysis, time management, work-planning and so forth.
Although only recently introduced, these training sessions have already produced results. Overall, 644 out of 854 (75%) who took part in the planned progress survey confirmed an active use of skills and new practices obtained as a result of the training sessions organized by ERA. The skills most applied included business planning, job-searching, strategic planning, and analysis.
Finally, in December 2019, in response to requests from entrepreneurs, the team launched its “business breakfast,” a networking and informational event for new micro and small businesses, offering a setting for entrepreneurs to gather, make new contacts, exchange experiences and ideas, and learn from one-another. The first of these events took place in Kramatorsk on December 12 and attracted 26 entrepreneurs. The feedback was positive, and participants agreed to meet regularly, with the next gathering scheduled for January 17, 2020.
During the reporting period, ERA continued assisting key stakeholders and target populations with building and strengthening their technical and entrepreneurial skills and capabilities.
From December 16-19, at the request of the Luhansk Oblast Employment Center, the team conducted the “Effective Approaches for Employers” training for the center’s staff in Sviatohirsk. The training is part of ERA’s effort to improve employment center services to members of the community seeking employment by providing their staff with new skills and knowledge on case- management, communication, individual and corporate support.
INCREASING OPPORTUNITIES
ERA continued working with institutions and actors such as firms, universities, vocational training schools, and industry associations that provide opportunities for individuals in the Activity’s growth sectors. The ERA team made significant progress towards building a working partnership with the Ministry of Education and Science of Ukraine (MoES). On October 10, 2019, the team met with MoES Minister Hanna Novosad to discuss ways to meet the needs and requirements of a changing local economy within the context of national educational reform. ERA and MoES also discussed approaches to supporting three displaced eastern Ukrainian universities (Luhansk National Agrarian University, Donetsk National Technical University, and Volodymyr Dahl University), key aspects and achievements of ongoing interventions, their impacts, current and planned reform processes, goals and expected results in education sector according to labor market and economic needs.
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As a result of this meeting, MoES Vice Minister for High Education, Mr. Yehor Stadnyi, took part in an information sharing and training event focused on Career Development Centers (CDC) with universities and VET (Vocational Education Training) schools in Kramatorsk on November 14, 2019. He emphasized the importance of a life-long learning approach and invited the ERA team to cooperate further on CDC activities. At this event subcontractor FHI 360 employee, Snizhana Leu, presented the findings from her study on existing Ukrainian CDC resources, which identified the baseline capability and status of CDCs in the region. FHI 360 also brought Alexandra Balafrej, former Chief of Party to the Morocco based USAID Career Centers program, to present an in-depth case study of the successful implementation of best practice career center activities, and their feasibility and potential for transfer to the eastern Ukraine context. The event concluded with several intensive training sessions aimed at developing skills important for running different aspects of CDCs. Findings and results have been used as the basis for developing a grant with People in Need for the development of CDCs across universities and VET schools in the Donetsk and Luhansk Oblasts. It is planned to provide the series of trainings to CDCs staff, design CDC toolkit and develop career pathways content for IT, tourism and IM sectors.
GROWTH
MARKET EXPANSION
BIOFUELS GROWTH SECTOR. During this quarter, the ERA team worked on finalizing the Workplan for Biofuel Growth Sector 2019-2021. The strategy, approved by USAID on December 27, 2019, focuses resources on four to six trial projects across the Luhansk and Donetsk Oblasts to test different models of producing solid biofuels from agricultural and forest waste for use in public buildings. ERA had identified these models through the value chain assessment conducted in April- May 2019 and through the concept notes submitted under the first Annual Program Statement (APS). The models cover a broad geography, including very rural, isolated and depressed communities such as Kalmykivka (Starobilsk Raion) or Velyka Chernihivka (Stanytsia Luhanska Raion) that are unlikely to be served by other ERA growth sectors. The Activity team anticipates launching grants co-creation processes with identified companies and communities as early as March 2020. For this purpose, ERA will hire a qualified biofuel engineer who will provide required technical support. By May-June 2020, the team anticipates developing several grants applications for USAID consideration and approval.
HONEY GROWTH SECTOR. Grand Expert, an ERA grantee, has initiated the introduction of an online platform to improve the interaction of beekeepers and farmers. The platform is a communication tool which allows beekeepers to be informed in real time about planned area crop treatment activities, warns beekeepers of use of nearby pesticide and plant protection products as well as the presence of honey plants. A large-scale information campaign for beekeepers and farmers of the Pokrovsk and Velyka Novosilka districts of the Donetsk Oblast and the Svatove and Troyitske districts of the Luhansk Oblast was launched. Thirteen trainings (seven in Donetsk and six in Luhansk Oblast) organized by the grantee were cumulatively attended by 135 people, 76 of whom completed ERA M&E baseline questionnaires. As a result of these trainings, 54 new users appeared in the Grand Expert Online Pesticide Monitoring System. ERA will closely monitor the level of participation and will work with Grand Expert to ensure efficacy of the system. Additionally, 950 information leaflets were distributed in the target oblasts with brief guidance on how to register and use the Grand Expert System. A dedicated hotline was created to assist with the registration in the System as well as to advise potential grant activities' beneficiaries on legal issues related to beekeeping business.
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During this quarter, ERA continued training activities within the Professional Beekeeper School, adding a second group of participants. As of the end of December 2019, 41 beekeepers attended four out of five two-day trainings, half of which reported that they had already applied new knowledge and skills such as Partnership & Cooperation, Bee Management and Production Quality Control. ERA will conduct the final trainings of the first round in February and March 2020.
INNOVATIONS FOR MANUFACTURING (I4M). In the runup to the Mariupol Investment Forum, ERA hired three consultants that prepared nine partner companies for participation in the Forum. This included investment pitch training and assistance in preparation of marketing materials. The following industries/sectors of economy were represented among the training participants: machine building, pharmaceutical packaging, furniture production, honey processing, fruit production, and dairy processing.
On November 12-14, 2019, ERA organized and coordinated a visit of a French journalist to the Luhansk Oblast to familiarize him with successful local companies. This visit resulted in printed reports in La Libre Belgique (the biggest Belgian newspaper), radio recordings at Radio France International (an international French radio channel) and Swiss radio RTS, which will contribute to the international promotion of Ukrainian businesses.
On December 5, 2019, ERA promoted and coordinated participation of Luhansk and Donetsk Oblasts partner companies Kontakt, AGK, TerraWatt Group, Tandem Ltd and Promdex Ukraine in the Annual General Meeting of the American Chamber of Commerce in Ukraine in Kyiv, which was an important step in helping these companies develop new markets in central and western Ukraine.
IT GROWTH SECTOR. The Mariupol Investment Forum coincided with the launching of ERA grantee Social Boost’s “1991” IT incubator, co-funded by USAID, EIB, Mariupol City Council, and Mariupol Development Foundation. Opened on October 29 in the building of the former Mariupol Central Library, the hub provides a large co-working space for the city’s current and future IT specialists and operates several IT educational programs for young start-ups and established specialists. By the end of December 2019, the IT hub team had held several information-sharing events, including 1991 Mariupol Hub Open Doors Day, Open Data Forum, Nomination of “The Best student of the Donetsk Oblast”, the Startup Workout Launch Event, and launched a 1991 IT Hub Certificate Program. Currently, 40 trainees participate in the Program, having already attended two training sessions, namely Startup Workouts “City Sore Spots” and “Design Thinking”.
SEA OF AZOV TOURISM GROWTH SECTOR. On October 30, 2019, ERA supported a tourism workshop initiated by the Berdiansk City Council. The workshop brought together 29 representatives of the regional and local government, hospitality industry, tourism informational centers, agencies from the Donetsk and Luhansk Oblasts, and the Ministry of Community and Territory Development of Ukraine. The following issues were discussed: cooperation for destination marketing, industrial partnership, development of new tourism products, and quality of provided services. For each topic, participants developed roadmaps of cooperation between stakeholders and the Activity. The results were presented to USAID Mission Director Susan Fritz and State Department EUR/ACE Assistance Coordinator Jim Kulikowski.
After a short presentation on the Sea of Azov Rapid Assessment’s findings and a summary of the Year 2 tourism workplan, the participants broke into small groups covering product development, destination marketing, service improvement, and association development. The groups then identified development priorities and local industry stakeholders in advance of the full workstream launch in December 2019. Besides providing additional market information to the ERA team, this
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was the first step in building cooperation among the various communities in order to develop a regional brand for the Sea of Azov region.
As a result of the workshop, the city of Berdiansk made a formal proposal to the Ministry to designate the Sea of Azov as an official region for tourism development support. The Ministry declined to do so in early 2020, although it said that it welcomed local initiatives for joint action. ERA conducted additional kick-off meetings with the city administrations of Berdiansk and Melitopol, the Meotyda and Pryazovskyi National Nature Parks, and the Stone Grave National Historical and Archeological Reserve. At the end of December 2019 in Berdiansk, ERA held the first of a series of focus groups with industry representatives to identify their hospitality training needs for the workforce development component of the tourism workstream. These focus groups will continue into March 2020.
ERA began plans for participation in the Ukraine International Travel and Tourism Exhibition (UITT) on March 25-27 in Kyiv with representatives from the tourist boards of the four major cities/resorts in the Azov region (Mariupol, Berdiansk, Melitopol, and Kyrylivka), the two major national parks (Meotyda and Pryazovskyi), with a possible inclusion of Henichesk and the Arabat Spit (Kosa Arabatska Strilka). ERA also began the process of identifying consultants for product development training and nature park tourism.
VEGETABLES GROWTH SECTOR. During this quarter, ERA supported beneficiaries working in the vegetables growth sector in two business-to-business (B2B) events that allowed them to establish new contacts with representatives of retail chains and wholesale customers, learning best practices in growing and logistics of vegetable products, networking with various suppliers, as well as learning about up-to-date requirements for pre-sale requirements, packaging and branding.
On November 13, twenty farmers and producers participated in the B2B event held in Sievierodonetsk, resulting in a better understanding of customers’ needs and market requirements. Another positive outcome of the event is the communication initiated regarding the cooperation between regional producers and major businesses including the Lysychansk-based wholesaler O. Tretiakov. The wholesaler supplies hundreds of small produce stores and has the region’s largest vegetable storage capacity and the Absoliut Supermarket chain, which has its own fleet of trucks and can buy farmers’ products and deliver to its own stores directly.
With ERA’s support, the Ovochi Stanychnykiv Greenhouse Cooperative, Sady Donbasu Apple Orchards, Perspektyva Vegetable and Fruit Farm, and Berestovyi Greenhouse Complex representatives participated in the Vegetable and Fruit Ukraine 2019 Expo held on December 5 in Kyiv. During the B2B session of this largest of its kind expo in the country, the companies held 12 meetings with national retail chains, during which they received concrete proposals for commercial relations in the 2020 season that they are presently assessing. For instance, Ovochi Stanychnykiv received a proposal from the Velyka Kyshenya supermarket chain to establish a logistics center in Sievierodonetsk from which their produce could be sent to stores across the country.
Additionally, there was a social study conducted among Sievierodonetsk residents and vendors with regards to their attitude to farmers market in front of the Ice Palace. This survey revealed that consumers were very loyal to the current, informal farmer market, where very durable vendor- customer relations have developed. Nevertheless, both surveyed groups, i.e. 56 market vendors and 206 customers, see room for improvement in the layout and infrastructure of the market. The idea of moving the farmers market to the semi-active Radost Market (approximately one km away) is
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very unpopular, partially due to the current absence of good public transportation options. This suggests either that such a move should be avoided, or that significant changes need to be made to transport patterns and other public concerns in order to make such a move viable (it would have advantages in making compliance with sanitary laws more feasible). Finally, the survey showed that the majority of market vendors self-identify as smallholder farmers, in contrast to public perception that the majority are middlemen. The survey findings will be used for due diligence as the team considers where to make investments in agricultural market infrastructure in Sievierodonetsk, a key urban market for smallholder farmers.
INVESTMENT ACCELERATION FOR MSMES
SUPPORT INVESTMENT PROMOTION FORUMS. On October 29, ERA hosted the landmark RE:Think Mariupol Investment Forum (MIF), whose participants included Ukrainian President Zelenskyi, Prime Minister Oleksiy Honcharuk, US Chargé d’Affaires (CdA) William Taylor, USAID Mission Director Susan Fritz, and a number of ministers, top management of IFC, World Bank, EBRD, and many other financial institutions and big foreign investors. The event was important for contributing to the improvement of eastern Ukraine’s image, opening prospects for new foreign and domestic investments, and reviving interest of general public towards current business opportunities in the region.
During the forum, 12 memoranda of understanding or cooperation for one billion USD in investments were inked. Four mobile communications operators signed an agreement to ensure fourth generation broadband cellular network coverage providing fast-speed mobile web access across 90 percent of Ukraine’s vast territory. The European Bank for Reconstruction and Development (EBRD) signed a memorandum with the government kicking off the initial public offering process of Ukrainian Railways that will allow UkrZaliznytsia to raise capital from public investors.
The participants, international and Ukrainian attendees, were impressed by the organization of the event, its hi-tech furnishing, strong PR support and smooth logistical operations, that made the event comfortable, effective, bright and memorable, which crucially changed the perception of those who attended, as well as reached out to an audience of 20 million people (via media) about opportunities in Ukraine and the east in particular. Over 200 media outlets sent their journalists to highlight the event including Bloomberg, Atlantic Council, Voice of America, Wall Street Journal, among many other world-known media influencers. An inspirational video, created by the ERA team about investment opportunities in eastern Ukraine, opened the MIF and was especially well-received and gathered favorable comments from President Zelenskyi, CdA Taylor, forum participants and the general public.
The Mariupol Investment Forum produced concrete results for partner SMEs that attended with ERA support. Communication with participants has shown the following: Mir Medu and VRM Agro, two honey aggregators from Starobilsk and Melitopol, made an agreement with EBRD to cost-share the design of a new production facility; moreover, a follow-up visit and dialogue with Turkish investors have been agreed. AG&K Ukraine, a pharmaceuticals packaging company based in Rubizhne also may potentially benefit from EBRD support in cost-sharing ISO 9001 certification, as well as a loan to support production expansion.
ERA’s primary beneficiaries, the Luhansk and Donetsk Oblast State Administrations (LOSA and DOSA), took advantage of significant interaction with International Financial Institutions (IFIs) including EBRD, EIB and the World Bank about their priorities for large-scale infrastructure. LOSA
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moved forward the dialogue around the railway connector project in the Luhansk Oblast and received concrete assurances from EIB that it is looking to make significant investments through the Ministry of Regional Development. DOSA discussed the extremely complex issue of Voda Donbasu, a state-owned water company, and received advice on how to properly package their proposals. Both administrations left the Investment Forum satisfied with the resulting dialogue.
ACCESS TO FINANCE. On 15 November, the proposed ERA grant for the Ukrainian United Credit Union was finalized and submitted to USAID for review. The implementation of this grant will allow credit unions in the Luhansk and Donetsk Oblasts to provide loans to micro and small farms at a preferential interest rate. A similar grant for National Association of Credit Unions, which will enable reputable credit unions in the Donetsk and Luhansk Oblasts as well as in the Azov Sea region to finance MSMEs, specifically in tourism business, at favorable conditions, is currently under development.
In December 2019, negotiations were conducted with leading leasing companies of Ukraine on the possibility of creating a joint subsidized credit product to finance on special conditions the acquisition of foreign and domestic agricultural equipment. The results of these negotiations are expected in the next reporting period.
TRANSFORMATION
DRIVING VISION
CREATE VISIONS AND STRATEGIES AT REGIONAL AND LOCAL LEVELS TO IDENTIFY AND PRIORITIZE INVESTMENTS. In collaboration with the Luhansk State Administration and USAID-funded projects DG-East, PULSE, and CEP, the Activity held the first Luhansk Regional Coalition Forum “From Common Vision to Economic Growth” on November 20-21 in Sievierodonetsk. The Forum’s key objective was to establish goals and priorities for the socio- economic transformation of the Luhansk Oblast. More than 100 individuals participated in the two- day event, including the newly appointed Governor of the Luhansk Oblast, members of Parliament, mayors, heads of consolidated communities, business leaders, representatives of public and private sectors, and international organizations including UNDP, GIZ, EBRD, and the World Bank.
Participants discussed implementation challenges and solutions for proposed strategic shifts in the following areas: priority economic sectors, key economic clusters and innovative businesses; economy in rural areas; infrastructure and energy security; governance, services and social cohesion. Over the course of the two days, the attendees developed a list of projects to be included in the new Strategic Development Strategy of the Luhansk Oblast, including the repair of bridges and roads, the construction of a railway branch, creation of digital agriculture centers, adaptation and marketing of engineering projects, provision of professional dual education (work-study) programs through universities and VET centers, to name a few.
Partners4Growth’s lead expert, Linda Nemec, conducted the “Study of Regional Economic Transformations around the World” to Inform the Strategy of ERA Transformative Initiatives. The study provided a comparative analysis of regional economic transformations, including the experience of Pittsburgh, Pennsylvania and other cities and used this information to inform fresh thinking for the Activity’s Transformation team initiatives. The first Luhansk Regional Coalition Forum was used as a platform for ERA to present key findings from the research including successes
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and drawbacks of each city or regional transformation studied as well as potential development models and their applicability to cities in eastern Ukraine.
Based on recommendations made in the report that resulted from the study, ERA plans to organize a series of study tour visits for regional and local leaders to inspire them to "think bigger." The exchange tours for tentatively 50 leaders from 10 mining towns and other partner cities of Donetsk and Luhansk Oblasts will be arranged to towns in the US and EU that faced similar challenges of post-industrial locations and their transformation into modern and innovative cities. The tours participants will meet with local stakeholders, e.g. authorities, nonprofits, businesses and universities, to collect inputs and valuable feedback to later integrate it into their transformational strategies. The study tours will be followed by a Regional Learning Forum to discuss study tour learnings, city visions and strategies, exchange knowledge and facilitate networking among participants in order to develop new projects for the regional transformation.
YOUTH FORUM “EVERY TOMORROW STARTS TODAY.” In the runup to the Mariupol Youth Forum that ERA organized and hosted with grantee the Ukrainian Leadership Academy (ULA), the Activity cooperated with the GoU and Ukrainian Railway to transform the outside of an 11-car Ukrainian Railway train with the “СХІД Можливостей” (CXID Opportunities) logo and ULA branding. The train transported 500 young leaders representing all 24 Oblasts of Ukraine from Kyiv to Mariupol. Their sendoff was attended by CdA William Taylor, along other high-profile participants and was highly publicized. ERA also designed sweatshirts, bags and notebooks for the forum and shared CXID Opportunities concept with young participants willing to contribute their own creativity, time and knowledge to develop a vision for “Ukraine 2030” that will help the region flourish and become a thriving place to live and work. The Forum received national attention and came to a close with the Mariupol Investment Forum attended by President Zelenskyi, CdA William Taylor, and Ukrainian cabinet ministers who were presented the vision developed by the young participants.
SUPPORTING INFRASTRUCTURE INVESTMENT (ERA CONSTRUCTION)
During the reporting period, the ERA Senior Infrastructure Manager revised and submitted the Construction Plan to USAID for review and approval.
The assessment of identified infrastructure priority projects proposed to ERA by partner communities and municipalities in 2019 continues. More than 500 project concepts or proposals from throughout the Luhansk and Donetsk Oblasts, 70 of which have expert reviewed designs, were collected since ERA began operations in 2018. The ERA infrastructure team conducted 18 site visits and reviewed existing technical documentation to prepare to submit pre-feasibility documentation to USAID in the next quarter. Of these 18, the seven listed below are the most aligned with ERA objectives. The following updates on the status of projects include information on priority infrastructure objects (Tier 1) as well as new ones requiring further assessment and review (Tier 2):
Tier 1
1. 90% design documentation of Rubizhne Phytosanitary Laboratory received in mid-December 2019; 2. Design for LNAU premises in Sloviansk is 60% complete; 3. Evaluation of existing design for Spalakh IT Hub Facade in Mariupol;
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Tier 2
4. Vuhledar City Market evaluation is underway (approximately 30% complete); 5. LNAU premises in Vesele village technical evaluation completed; 6. Rural Roads in front-line communities concept is under research; 7. Berdiansk Tourist Information Center assessment in progress.
In addition, ERA has informed USAID of additional potential projects currently under investigation such as the DOSA Exhibition Center and Kramatorsk Tramway conversion, that, while promising economic initiatives, do not yet have the political alignment needed to warrant expending program resources on detailed design.
III. PROGRESS AGAINST TARGETS
The following table presents year two, quarter 1 achievements towards ERA performance indicators. For details, including disaggregation of each performance indicator, see Annexes 1.1 through 1.4
PERFORMANCE INDICATOR FY2 Q1 FY2 TARGET
1.2 Number of individual beneficiaries from vulnerable and hard-to-reach 1,412 2,500 populations in the target regions
GNDR-2 Percentage of female participants in USG-assisted programs 62%2 30% designed to increase access to productive economic resources (assets, credit, income, or employment).
2.1 Total amount of new investments secured by MSMEs supported by USAID $2,719,728 $5,000,000
2.2 Number of individuals with new or better employment as a result of USAID- 190 2,000 assistance
3.1 Number of contacts made through informational and communications events 23,846,539 150,000
Social media outreach (ERA/USAID Facebook pages) 149,624
Online media 8,193,874
Traditional media 15,500,420
Attendees of informational and communication events 2,621
CC.1 Number of people trained during the Activity 1,390 1,800
CC.2 Number of beneficiaries utilizing new practices, techniques, or business 565 1,150 management skills as a result of USAID assistance
2 Numerator = 871, denominator = 1423
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IV. PERFORMANCE MONITORING, EVALUATION AND LEARNING
The MEL team grew with the Activity bringing one more Monitoring and Evaluation (M&E) Officer: Oleksandra Mukhamedova, based in Sievierodonetsk.
In October 2019, the MEL team ran an M&E training for recently joined technical staff. In addition, during the quarter the MEL team conducted several ad hoc training sessions on baseline and progress data collection for DRC staff actively involved in data collection. Considering the growing pool of ERA beneficiaries, the team is working on an approach to engage an outsourced company for regular support on data collection and data quality control. This will help to ensure timeliness of data collection as well as appropriate quality of collected data. The team anticipates also hiring data analyst or data management specialist who will support the team in database maintenance, troubleshooting and building new visual reports as well as in data analysis using various up-to-date approaches and techniques in PowerBI.
DATA QUALITY ASSESSMENT
On November 18-19, 2019, USAID Ukraine’s Larissa Piskunova and Resonance’s Justin Lawrence conducted a Data Quality Assessment (DQA), reviewing of the following eight Economic Resilience Activity Monitoring, Evaluation and Learning (MEL) Plan indicators:
1.2 Number of individual beneficiaries from vulnerable and hard-to-reach populations in the target regions.
GDNR-2 Percentage of female participants in USG-assisted programs designed to increase access to productive economic resources (assets, credit, income, or employment).
2.1 Total amount of new investments secured by MSMEs supported by USAID.
2.2 Number of individuals with new or better employment as a result of USAID assistance.
2.3 EG.5-1 USD sales of firms receiving USG-funded assistance.
3.1 Number of contacts made through informational and communications events.
CC.1 Number of people trained during the Activity.
CC.2 Number of beneficiaries utilizing new practices, techniques, or business management skills as a result of USAID assistance.
Overall, the DQA team was impressed with the level of development and detail within ERA’s MEL system. The DQA team assessed the indicators across the five USAID data quality criteria of validity, reliability, timeliness, precision and integrity (with a total of 14 sub-criteria). Of the eight indicators, the team found that ERA passed 88.9% of the sub-criteria. Seven out of eight of the indicators pass for a sufficient level of quality, although one (3.1) only passed 10 out of 14 criteria. The ERA’s received detailed recommendations regarding data quality issues and is addressing them, taking into account input from USAID.
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AMELP REVISION
During the reporting period, the MEL team revised and resubmitted the AMELP based on feedback from USAID on December 12th. Currently the team is working on AMELP finalization and addressing additional comments received on December 27, 2019. The team will submit amended AMELP by January 31, 2020 including setting targets for 3.3 Percent of population in target communities who think that in five years there will be more or better economic opportunities in the region which allow residents to stay/live in the region. The revision was triggered by: 1) the need to align the AMELP with the ERA Year 2 Work Plan; 2) the setting of targets for selected indicators now that relevant baseline survey work has been completed (see next section, below); and, 3) adjustments due to the findings of the aforementioned DQA.
SPECIAL STUDIES
GENERAL PUBLIC SURVEY ON PUBLIC PERCEPTION REGARDING ECONOMIC OPPORTUNITIES IN THE REGION IN FIVE YEARS.
During October – November 2019, ERA subcontracted the research company “Tailor Nelson Sofres Ukraine Ltd” (widely known by its public name “Kantar”) to conduct the survey among residents of governmental-controlled areas of the Donetsk and Luhansk Oblasts and residents of two settlements of Zaporizhzhia Oblast in order to set a baseline for the ERA performance indicator “3.3 Percent of population in target communities who think that in five years there will be more or better economic opportunities in the region which allow residents to stay/live in the region”. 4091 respondents from 19 settlements in total took part in the survey.
In general, respondents have evaluated the economic opportunities in the coming five years more positively than negatively:
• 39% of the respondent believe that in five years there will be more or better economic opportunities in their region, which allow residents to stay/live here, whereas 35% of the respondents do not believe in that.
• In Donetsk Oblast: 41% of the respondents expressed positive expectations and 32% do not believe there will be an improvement in economic opportunities.
• In Luhansk Oblast the situation is opposite: 34% of the respondents thought in five years there would be more or better economic opportunities in this region, 40% disagreed with the statement.
• In Zaporizhzhia Oblast respondents expressed positive expectations more often (44%) than negative (32%).
The detailed results of the survey are presented in the report, which will be circulated to USAID in the first half of the coming quarter. The ERA team discussed the survey results at a Pause and Reflect session that took place on December 12, 2019 (see details below). Based on these results, the ERA team set targets for the mid-life and end-life of the Activity, which will be presented in the amended AMELP.
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MARKET SYSTEMS RESILIENCE ASSESSMENT (MSRA)
ERA continued its work on a pilot of the market systems resilience assessment (MSRA) framework, which defines market resilience along a continuum of characteristics (domains): connectivity, diversity, power dynamics, rule of law, business strategy, decision making, cooperation and competition. Each domain has its own indicators. Before beginning the baseline data collection slated for November 2019-February 2020, the team reviewed the planned indicators for each domain, as well as the potential data sources, and it came to the conclusion that the indicators needed to be further adapted to the Ukrainian fruit and vegetable sector. The team also determined that a market survey of participants should play a greater role in data collection than the numerous focus groups originally planned. In December 2019, the MSRA team developed questions for the survey that were formulated to most effectively obtain information on each indicator. These questions are being vetted in January 2020 by specialists from the Fruit and Vegetables Sector so that baseline data collection can begin in February 2020. This will allow a baseline score to be completed by May 2020 and ERA will be able to use the findings in Year 3 work planning. The research team currently consists of a technical team lead, research coordinator, a Ukrainian economist, and MEL staff.
PAUSE AND REFLECT SESSIONS
PAUSE AND REFLECT ON MARIUPOL INVESTMENT FORUM
On December 11, ERA team gathered to discuss achievements and lessons learned of Mariupol Investment Forum that took place on October 30. As the result of the discussion the team agreed:
• To be attentive and open to similar opportunities, including potential support to the idea of an annual MIF;
• To stay in close contact with GoU partners, especially the President’s Office to be available to support similar initiatives;
• When possible, ERA needs more advance planning time for potential future large-scale events;
• Prepare SME’s for interaction with international clientele well prior to an event; including training and TA preparation for those who have the most potential to benefit;
• To identify a new public outreach activity, which highlights Eastern Ukraine Economic Resilience;
• To follow up on good ideas that emerged from the MIF / Youth forums.
Additional information regarding this pause and reflect is contained in the out-brief / action plan that will be circulated under separate cover.
PAUSE AND REFLECT ON THE RESULTS OF GENERAL PUBLIC SURVEY
On December 12, ERA technical leads and senior management gathered at the Kramatorsk office to hear a presentation of the results of the general public perception survey conducted by Kantar. As mentioned above, the survey’s main purpose was to ask the population of ERA target regions if there will be more or better economic opportunities in this region which allow residents to stay/live here in five years mirroring ERA indicator 3.3. After the Q&A session the participants discussed three types of potential scenarios (worse-case, status-quo and best-case) and provided projections towards the mentioned indicator till April 2021 and June 2023 (end of ERA implementation) in order
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to help with target setting. While collecting the estimates, the Kantar representative suggested acquiring analysis of other economic-related perception surveys to decide whether it is reasonable to have the numbers increasing through ERA implementation for an indicator with extremely low level of predictability. This analysis was carried out and is presented in the revised AMELP alongside the new indicator targets.
V. LESSONS LEARNED
As the team focused on launching Year 2 technical interventions, staff reflected on several lessons learned throughout the quarter:
• Having conducted a series of beekeeping trainings and solicited feedback, the Honey Value Chain team discovered that the curriculum would require more extensive revisions than originally anticipated. Based on participant feedback from several trainings organized in Year 1, the ERA team decided to increase the number of topics covered by the trainings from seven to 10 to include the following: first response to injuries and first aid kit building; bee breeding; and the technology of organic honey production. The updated training curriculum was introduced in December 2019. This adaptive approach to designing and implementing trainings allows for the development of a curriculum tailored specifically to the attendees’ needs.
• The IT Value Chain team discovered that local IT sector leaders lacked motivation to establish IT clusters or associations because they perceived no value in such structures. To change this perspective, the ERA team decided to test the hypothesis that study tours were an effective tool to show IT sector actors the benefits of the cluster model. ERA sponsored a study tour for IT professionals from Mariupol and Kramatorsk to an IT Arena Conference and ENABLER Camp in Lviv to motivate them to join or establish functional IT clusters or associations locally. Following the study tour, the team received a very positive feedback from the participants regarding the idea of forming IT clusters. The trip allowed IT sector leaders to see what an IT cluster as strong as the Lviv IT association could provide for the IT companies under its umbrella, including international visibility, ability to arrange international conferences and exchange experiences, and engagement in policymaking. The IT Leaders from Mariupol and Kramatorsk showed a real change in perspective that demonstrated in higher turnout of companies and their engagement in discussions during the Mariupol IT Association meetings, and their desire to take next steps to strengthen the Association. The IT leaders also started using the Mariupol IT Association as a way to engage with ERA. The team received three different requests for a training, a trade show, and marketing support coming through the Association instead of specific IT companies. The team is currently assessing opportunities for a similar trip to visit the Dnipro IT Association. While smaller in size as compared to the Lviv and Kyiv Associations, it can serve as a valuable role model to the Mariupol IT Association and share knowledge on how to achieve effectiveness and greater impact.
VI. ADMINISTRATION
Recruitment efforts to strengthen Technical and Operations teams continued for all four offices. As of December 31, 2019, the Activity had a total of 72 full-time staff members, including 56 employees
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hired directly by ERA, 12 staff hired by DRC, three by FHI360, and one by CDM Engineering. All new hires were given a customized orientation and systems training upon arrival.
Through the next quarter of implementation, as Activity interventions continue to scale up, recruitment will be focused on further expanding the teams in Kramatorsk (Quality Assurance Expert, Document Controller, Environmental Officer, Inclusion Network Coordinator, Interpreter/Translator, Security/Fleet Supervisor, and Office Administrator), Sievierodonetsk (Honey Sector Specialist, SME Development Officer, and Administrative & Logistics Assistant), and Mariupol (Tourism Development Sector Lead, Human Resources Officer, and Community Development Officer).
VII. SUB-AWARD DETAILS
On September 27, 2019 ERA announced an early closure of its Annual Program Statement released in February 2019. During the seven-month period it was open, the Activity received an exceptionally large number of concept notes with a total monetary worth exceeding the value of grant funds allocated for the year. To allow the team sufficient time to evaluate the concept notes already in the system and distribute Year 1 funds accordingly, starting October 8, 2019 the team decided to pause accepting new submissions until further notice.
On the date of the APS closure, the number of registered users was 1,520 as reported in the Annual Report. ERA’s Technical and Grants teams reviewed the remaining 421 concept notes and selected 98 with a total value $9,658,662 for further development into full grants applications. The following six grants with an approximate value of $1.2 million were approved by USAID during this quarter:
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APPROVAL GRANT AMOUNT USD COMPONENT AND ORGANIZATION AND GRANT DATE SECTOR DESCRIPTION
Ukrainian Leadership Academy grant to launch a branch in Mariupol thus Transformation/Driving offering the city and region’s youth an 3-Oct $383,996 Vision opportunity to learn new skills that will equip them with the tools to become successful leaders.
NGO Social Boost grant to contribute to the growth of the IT sector in Mariupol 3-Oct $452,366 Growth/IT through the creation of an incubator for IT startups as well as an internship program and a career center for young people interested in careers in the sector.
NGO Grand Expert grant to modernize, upgrade, and maintain the 10-Oct $37,237 Growth/Market Expansion system for monitoring chemical treatment of crops in order to better coordinate with beekeepers.
Luhansk National Agrarian Inclusion/Increasing University grant to expand 11-Oct $268,794 Capabilities opportunities in eastern Ukraine through improved infrastructure and upskilling employees’ and students’ competencies.
Private Entrepreneur Vnukova Alla Oleksandrivna grant to modernize embroidery equipment and a loop Inclusion/Increasing machine to expand the range and improve 5-Nov $7,443 Opportunities the quality of goods produced, create new jobs for vulnerable people, and improve working conditions for current workers.
Private Entrepreneur Kosilkyn Dmytro Volodymyrovych grant to assist a small-scale sewing manufacturer in Inclusion/ Increasing expanding the range and improving the 16-Dec $53,715 Opportunities quality of goods produced, and in increasing sales through production automation and expansion to new markets.
By the end of the reporting period, several other grants applications were under development or pending USAID approval, including:
• Global Compact Network Ukraine grant to assist in creating an online IT educational program for vulnerable population and students (approx. $236,033)
• Ukrainian United Credit Union grant to increase the capacity of local credit unions operating in Donetsk and Luhansk Oblasts by providing credit support to their members through an injection of liquidity. The credit union members can include Micro, Small, Medium Enterprises (MSMEs) working in small farming, tourism and other areas (approx. $161,737)
• Private Entrepreneur Seheda Olha Volodymyrivna grant to assist the private medical practice in expanding the range of services and improving their quality (approx. $13,006)
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• State Vocational Educational Institution “Kramatorsk Center for Technical and Vocational Education” grant to create additional opportunities for graduates of the “Kramatorsk Center for Technical and Vocational Education” to develop practical skills by reinforcing technical skills of the workshop center for selected specialties (approx. $149,992)
• LLC “Online Ukraine” grant to expand its market reach by providing Internet services to the residents of the localities in the Avdiivka and Yasynuvata Raions (Donetsk Oblast) that have suffered the most from the armed conflict (approx. $52,490)
• Velykonovosilkivskyi Vocational Lyceum grant to create additional opportunities to develop practical skills of lyceum graduates by modernizing the technical approach for the “Vehicle Service Technician. Category C driver” specialization (approx. $76,062)
• State Higher Education Institution “Pryazovskyi State Technical University” grant to assist in establishment of vocational education coworking center ‘Univer’- a new form of vocational educational space for common use (approx. $65,000)
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