Linking the Tourism Industry to Productive Activities in the Issyk-Kul Region of the Kyrgyz Republic Terminal Evaluation

UNIDO EVALUATION GROUP UNIDO project SAP ID: 150245

Linking the tourism industry to productive activities in the Issyk-Kul region of the Kyrgyz Republic Terminal Evaluation

By IMACON Consulting Group Gikalo 7a, office 14, Minsk Belarus, 220085 web: www.imacon.org e-mail: [email protected] +375 (29) 634-62-30

Final draft for UNIDO review and feedback Version April 29, 2020

VIENNA September 2019 – April 2020

The designations employed and the presentation of the material in this document do not imply the expression of any opinion whatsoever on the part of the Secretariat of the United Nations Industrial Development Organization concerning the legal status of any country, territory, city or area or of its authorities, or concerning the delimitation of its frontiers or boundaries. Mention of company names and commercial products does not imply the endorsement of UNIDO. The views and opinions of the team do not necessarily reflect the views of the Governments and of UNIDO.

PROJECT TITLE: Linking the tourism industry to productive activities in the Issyk-Kul region of the Kyrgyz Republic Terminal evaluation of UNIDO project (UNIDO SAP) ID: 150245 AUTHORS:

Sergei Gotin Uladzislau Vialichka UNIDO International Consultant UNIDO International Consultant Team leader Evaluation Expert

IMACON Consulting Group IMACON Consulting Group Minsk Minsk Belarus Belarus +375 29 6346230 +375 29 6346230 e-mail: [email protected] e-mail: [email protected]

Version: Final Draft for UNIDO feedback Date: April 29, 2020

AСKNOWLEDGEMENTS The IMACON Evaluation Team would like to thank UNIDO project team in Bishkek (National Project Coordinator Nurgul Baiburaeva and PR manager Zhanybek Saatov) for their most forthcoming attitude and help in the process of the evaluation mission. Timely and effective provision of information and project documentation, as well as logistical support, including arranging meetings with a wide range of stakeholders in Kyrgyzstan made our work more fruitful and easier. We are also grateful to the UNIDO HQ Team in Vienna for ongoing support and guidance during all phases of the evaluation. The Evaluation Team (ET) would also like to thank all the counterparts, beneficiaries and stakeholders of the project whom we met while on mission. We especially appreciate support and input to this evaluation from the Minister of Culture, Information and Tourism of Kyrgyzstan (MoCIT) Azamat Zhamankukov and First deputy of Plenipotentiary representative of the Government of Kyrgyz Republic in Issyk-Kul Oblast Damir Monoldorov. We express our gratitude to all the stakeholders who provided valuable opinions about the project performance and context and shared ideas and recommendations for the future. Finally, it was a pleasure for us to see the results of the dedication and enthusiasm of many people all over Kyrgyzstan involved in the project activities to support the development of productive industries and strengthening linkages with tourism sector in the Issyk-Kul region.

Sergei Gotin, Ulad Vialichka IMACON Consulting Group, Minsk, Belarus www.imacon.org [email protected]

TABLE OF CONTENTS AСKNOWLEDGEMENTS ...... 4 TABLE OF CONTENTS ...... 5 ABBREVIATIONS ...... 7 EXECUTIVE SUMMARY ...... 8 The Project Background ...... 8 The Evaluation Approach...... 9 Summary project results ...... 11 Summary DAC Criteria Assessment ...... 12 Summary rating ...... 12 Summary conclusions ...... 16 Summary recommendations ...... 22 Lessons learned and good practices ...... 23 EVALUATION OBJECTIVES, METHODOLOGY AND PROCESS ...... 24 Evaluation objectives ...... 24 Scope of Evaluation ...... 24 Methodology and process ...... 24 Evaluation Team ...... 31 Data collection ...... 32 Limitations ...... 32 COUNTRY AND PROJECT BACKGROUND ...... 34 Population and macroeconomic context ...... 34 National Development Framework ...... 35 Project background and context ...... 37 Tourism sector ...... 37 The key stakeholders ...... 38 Project objectives (theory of change) ...... 39 ASSESSMENT ...... 42 Project design ...... 42 Field mission and Direct Observation ...... 43 OSKO company ...... 43 EcoFloris (Bishkek) ...... 46 Guest House Eldos Ata ...... 50 Agricultural cooperative Arashan (Novopokrovka) ...... 53 Guest House Altyn Jeek (Cholpon Ata) ...... 56 Commodity service cooperative “Ichke-Suu” ...... 58 Agricultural processing company “Egin” ...... 61 Cooperative Issyk Kul Organic ...... 63 Cooperative Agro Tour Park (Air Dom Project) ...... 67 Multi-enterprise Activities and Capacity Building ...... 71 Event summary ...... 71 Beneficiary activity Analysis ...... 74 Conclusions supported by findings ...... 78 R1. Are the activities and results of the project relevant to UNIDO’s long- term objectives and national government priorities? ...... 78 R2. Is the project and its theory of change relevant to the country and regional context? ...... 79

E1. What have been the project’s key results (outputs, outcome and impact)? ...... 79 E2. To what extent have the expected results been achieved or are likely to be achieved? ...... 80 E3. What are the key drivers and barriers to achieve the project objectives? ...... 81 E4. Has the project done the right things? ...... 82 E5. What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? ...... 82 Y1. How well has the project performed? ...... 83 Y2. Has the project done things right, with good value for money? ...... 84 I1. What have been the project’s key impact? ...... 84 I2. To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long term objectives? ...... 85 S1. To what extent will the achieved results be sustained after the completion of the project? ...... 86 S2. What were the major factors, which influenced the achievement or non- achievement of the sustainability of the project? ...... 86 Gender mainstreaming ...... 87 Results Based Management, Monitoring and Evaluation ...... 88 Rating ...... 89 RECOMMENDATIONS ...... 95 Lessons learned and good practices ...... 96 ANNEXES ...... 98 Annex 1. Evaluation ToR ...... 98 1. BACKGROUND INFORMATION ...... 98 2. SCOPE OF THE SERVICES AND DELIVERABLES ...... 98 3. TIME SCHEDULE ...... 100 4. EVALUATION DELIVERABLES ...... 100 5. LANGUAGE REQUIREMENTS ...... 100 6. PAYMENT SCHEDULE ...... 101 Annex 2. Evaluation Schedule ...... 102 Annex 3. Program of evaluation mission ...... 103 Annex 4. Interview questions ...... 105

ABBREVIATIONS CA Central Asia CSO Civil Society Organization DAC Development Assistance Committee DO Direct Observation DoT Department of Tourism DR Desk Research ET Evaluation Team EAEU Eurasian Economic Union GR Government Relations HACCP Hazard Analysis and Critical Control Points ID Identification Number IMACON Innovation Management Consulting IOM Integrated Organizational Model ISO International Organization for Standardization KII Key Informant Interviews KG Kyrgyzstan LFA Logical Framework Approach MoCIT Ministry of Culture, Information and Tourism of Kyrgyzstan MoE Ministry of Economy MSME Micro-, Small- and Medium Enterprises M&E Monitoring and Evaluation NGO Non-Governmental Organization NSSD National Strategy for Sustainable Development OECD Organization for Economic Co-operation and Development PCM Project Cycle Management PO Purchase order PR Public Relations PTE Project Terminal Evaluation RBM Result Based Management SDG Sustainable Development Goals ToC Theory of Change ToR Terms of Reference UNIDO United Nations Industrial Development Organization

EXECUTIVE SUMMARY The present report is developed as a result of the evaluation of the project “Linking the tourism industry to productive activities in the Issyk-Kul region of the Kyrgyz Republic”, Project ID: 150245 (PO 3000078099 dated December 16, 2019).

The Project Background In 2015 The Ministry of Economy (MoE) of the Kyrgyz Republic requested UNIDO’s support to develop and implement a development project aimed at strengthening linkages between tourism and productive industries in the Issyk- Kul region. Following consultations, the Permanent Mission of the Russian Federation expressed interest in funding the proposed project and supporting the new member of the Eurasian Economic Union to benefit from the development opportunities made available following its accession to the single market. A UNIDO field mission was carried out in September 2015 and a project proposal was prepared and validated in a roundtable meeting in Bishkek by the government counterpart. The project “Linking the tourism industry to productive activities in the Issyk- Kul region of the Kyrgyz Republic”, with a total budget of USD 2,000,000 (over 3.5 years of the implementation), followed UNIDO’s Linking Productive Activities and Tourism (LPAT) approach, which employs a rigorous step-by-step process, tools and methodologies. The project was divided into three comprehensive stages. The project started in April 2016 and ended in December 2019. The first phase was the Inception Phase, which entailed extensive analysis, the engagement of stakeholders, and detailed strategy development. Using an array of tools and step-by-step processes that engage and adapt to stakeholder input, UNIDO efficiently and transparently designed project interventions to accomplish shared objectives. As a result, two local productive supply chains (the fruits and vegetables processing industry as well as the herbal teas and remedies sector) were selected to be linked with the tourism industry based on value chain and cluster development methodologies. The second phase, the Establishment Phase, focused on the capacity building of key actors within the selected productive industries and the tourism sector. During this phase the project developed and implemented the tailored interventions that address sector-wide as well as individual enterprise’s challenges and opportunities. The third phase was the Rollout Phase, which involved the launch of new products supplying the tourism industry and national markets; advocacy of the project and its key performance indicators; capacity building training program; and implementation of the action plan for value chain upgrading. This project was intended to contribute to the envisaged Sustainable Development Goals (SDG), in particular SDG 9 (Build resilient infrastructure, promote sustainable industrialization and foster innovation) and SDG 8 (Promote inclusive and sustainable economic growth, employment and decent work for all). The core target group of the project were domestic micro, small

and medium enterprises (MSMEs), entrepreneurs, households and cooperatives in the tourism sector and in the selected productive value chains, which benefited from infrastructure investments and capacity building activities. The core target beneficiaries were mainly located across the Issyk-Kul Oblast. The project employed value chain and cluster development methodologies to identify the most prominent sectors for achieving the ultimate project goal of stimulating economic growth and employment generation. Accordingly, the project team considered a multitude of market actors—from farmers’ cooperatives and SME input suppliers to processors and traders to end markets and supporting services (including regulatory bodies), examining the interrelationships of market actors as well as the major bottlenecks to value chain development. During the project, a series of seminars, trainings and study tours for the beneficiaries were organized by UNIDO, during which they had the opportunity to get acquainted with the technologies that they had to introduce. The events were attended by representatives of OSKO company, EcoFloris (Bishkek), Guest House Eldos Ata, Agricultural cooperative Arashan (Novopokrovka), Guest House Altyn Jeek (Cholpon Ata), Commodity service cooperative «Ichke-Suu», Agricultural processing company «Egin», Cooperative Issyk Kul Organic and Cooperative Agro Tour Park (Air Dom Project). The results obtained indicate the benefits and the need for their implementation in the framework of similar projects. As experts and beneficiaries note, such experience is the most valuable and useful (see chapter “Multi-enterprise Activities and Capacity Building” for details). Study and training tours to the selected destinations were used as a tool for building national capacities in sustainable and eco-tourism, agro-processing, marketing and management, as well as food safety. With the assistance of UNIDO, a number of project activities were carried out. The main goal was to familiarize the Kyrgyz beneficiaries with best practices in the inter-related fields of agriculture and tourism. Thus, the representatives of the beneficiaries made four study tours abroad: Slovenia, Spain, Russia, Uzbekistan; and participated in four organized UNIDO seminars with the participation of highly qualified foreign specialists in Kyrgyzstan (see chapter “Multi-enterprise Activities and Capacity Building” for details).

The Evaluation Approach In order to meet the objectives of evaluation, the Evaluation Team (ET) presents a participatory and forward-looking approach. A participatory approach means openness and partnership with the project stakeholders at all phases of the evaluation, including the selection of appropriate data collection methods; analyzing, debating and reaching consensus about findings, conclusions and recommendations. Thus, the ET made efforts to ensure active and meaningful participation of stakeholders at all levels, from participatory planning of the evaluation process, flexibility during implementation to encouraging Key Informant Interviews (KII) with the program stakeholders, target groups and beneficiaries. In implementing a forward-looking approach, the ET formulated

lessons and practical and concrete recommendations for the project stakeholders, and suggested possible future interventions in this field. The ET used different methods to ensure that data gathering and analysis deliver evidence-based qualitative and quantitative information, based on diverse sources: desk studies and literature review, individual interviews, focus group meetings/discussions and direct observation. Based on the key evaluation questions, for practical purposes of this evaluation, the ET redesigned and clarified questions according to DAC criteria to be addressed to the main project stakeholders (See “Methodology and process” for more details). 1. Relevance. 2. Effectiveness. 3. Efficiency. 4. Impact. 5. Sustainability. After the Desk Review of the program documentation and preliminary consultations with the UNIDO team, the groups of stakeholders related to program activities were identified and proposed for targeted evaluation activities. After this, in order to collect data using a participatory approach to reach the widest available spectrum of stakeholders, respond to key evaluation questions and assess the overall relevance, efficiency, effectiveness, impact, sustainability of the program interventions, a set of different data collection methods were used with priority to qualitative ones. The ET used tools for data collection and triangulation desk research of the project documentation such as direct observation and key informant interviews of individual and group format (see “Evaluation tools” for details) The evaluation report is based on the analysis of over 35 documents as a part of the Desk Research (data provided by the Project Team before and during the field mission), and Field Mission (Direct Observation, KII and FGD). Visited locations include Bishkek, Novopokrovka, Cholpon-Ata, Karakol, Maman, Tasma and Novovoznesenovka. There were 13 individual interviews and one focus group (over 20 hours, 22 persons covered) with program partners and stakeholders. In the present section, the ET provides reflection on each project site visited during the field mission. In each location the ET conducted Direct Observation (DO), Key Informant Interviews (KII) with the main stakeholders/beneficiaries. In some cases, it was also possible to conduct group KIIs with community members. In the “Field mission and Direct Observation” section, each recipient of project support is provided with a brief analysis of the situation, a description of the UNIDO contribution, the results of observation and analysis of the outputs, an analysis of the usefulness of the UNIDO contribution from the point of view of the enterprise/subject - the recipient of support (social, economic and business effect, sustainability), analysis in terms of value chain and assessment of the contribution of specific enterprise to value chain development. This section contains an analysis of each of the support recipients. An analysis of the synergistic effects of the UNIDO project is provided in the section Conclusions and supported by findings.

Summary project results To summarize, according to UNIDO and ET findings, each stage involved a complex interworking of methodologies, tools and activities that resulted in the achievement of the following key project results: 1. Capacity building of more than 500 experts on issues related to food safety, product design, modern processing technologies, sustainable and eco-tourism, marketing and branding, and tourism management through specialized workshops, conferences, trainings and study tours. 2. Support to business linkages and partnerships with different value chain actors in the project roll-out phase. 3. The construction of two Tourism Information Centers in the Issyk-Kul region. 4. The creation of a common brand including provision of detailed guidelines, visuals and templates. 5. The establishment of new or the modernization of existing businesses (provision of equipment and construction work worth approximately USD 750,000):  The upgrading of herbal tea production value chain: a modern center for herbal tea production in Bishkek and production site in Karakol, as well as support to local household suppliers of herbs;  Two small scale production lines of jams for tourists to be provided at small local hotels;  An essential oil production facility;  Upgrading a dried fruit value chain: storage, transportation, processing and new product development;  Establishing a new local cooperative uniting agro-processors and tour operators and providing them with new modern energy- efficient production premises (air-dome structure of 100 m2);  Two calibration lines for the packaging of local fruits and a modernized fruit storage facility. 6. Tourist attraction and promotional activities: specialized TV show, engagement with social media, events, forums and festivals. 7. Introduction of the products produced by beneficiaries in supermarkets, hotels, and duty-free shops. 8. The attraction of additional investments worth more than USD 800,000. 9. Doubled exports and threefold increased threefold. 10. The generation of additional income for more than 900 households. 11. Promoted partnerships for prosperity by establishing partnerships with technical, educational and financial institutions; the private and public sectors, financial institution (EBRD) and other UN organization (FAO: UNWTO) to ensure smooth operation of the project initiatives. 12. The acknowledged by the Government of Kyrgyzstan that the project was best development assistance project in the year 2019.

Summary DAC Criteria Assessment Relevance and ownership relate to the national development priorities, the UNIDO mandate and government strategies, as well as to target groups, were assessed by ET as highly satisfactory. Effectiveness was assessed as Satisfactory as there were some cases where the ET was not able to collect evidence that equipment or machinery supplied to the beneficiaries are properly installed and consumed/used, at the time when evaluation was conducted. This refers to the cases such as: the Air Dome infrastructure, which was installed but was planned to be actively in use from spring-summer 2020, while no strategy or business plan is provided by the stakeholders; the Arashan, which received equipment but not yet installed properly by the beneficiary. Both financial and administrative Efficiency is assessed by the ET as Highly Satisfactory. The project was able to find a lot of good solutions to ensure high financial efficiency. The challenge for the project was time. A number of events were organized with a slight delay for reasons beyond the control of the project team. The ET confirms that the achieved Impact is Highly Satisfactory through the evidence that can be assessed immediately after the project implementation. The ET showed that the project contribution to SDG 9 and SDG 8 was as planned. It stimulated economic growth and employment in the Issyk-Kul region through the stimulation of the demand for goods from the agri-food sector. It simulated local policy actors to look for additional budget and investment opportunities to continue applying the UNIDO approach implemented in the UNIDO project. Summary rating

# Evaluation Definition Evaluation comments Rating Criteria

A Progress to Positive and negative, Achievements with HS Impact primary and secondary expected lasting long-term effects produced outcomes. Proved by a development contribution to SDG 9 intervention, directly or and SDG 8 as planned. indirectly, intended or Project stimulated unintended, including economic growth and redirecting trajectories of employment in the transformational process Issyk-Kul region via the and the extent to which stimulation of demand conditions for trajectory for goods from the change are being put into agricultural sector. place Local policy actors are looking for budget and investment opportunities to continue the approach implemented in the UNIDO project.

B Project design Formulation of the The project document HS intervention, the plan to was developed in achieve a specific purpose accordance with the standard UNIDO template, has a clear structure and includes all the components necessary and sufficient for high-quality implementation and project management.

1 Overall design Assessment of the design in The project document is HS general of a high quality with clear logic, short and clear justification of the strategy and management structure. The ET found a high level of local ownership of the project objectives and strategy. It was hardly possible to predict some minor shortcomings identified during project implementation and evaluation of the project.

2 Logframe Assessment of the logical The logical framework is HS framework aimed at of high quality and planning the intervention includes a clear logic and verifiable indicators.

C Project Functioning of a HS performance development intervention

1 Relevance The extent to which the aid The project is highly HS activity is suited to the relevant to UNIDO’s priorities and policies of the long-term objectives. In target groups, recipient and this way the ET confirms donor that the project is relevant to national government priorities in general as well. The ET found that the chosen project methodology and project strategy is highly relevant to the local conditions, level of enterprises and value

chains’ development.

2 Effectiveness The extent to which the Effectiveness was S/HS development intervention’s assessed as Satisfactory objectives were achieved, or with potential to Highly are expected to be achieved, Satisfactory as there taking into account their were some cases, where relative importance the ET was not able to collect evidence that equipment or machinery supplied to the beneficiaries are properly used.

3 Efficiency A measure of how The project was able to HS economically resources / find a number of good inputs (funds, expertise, solutions to ensure high time etc.) are converted to financial efficiency. The results chosen methodologies and expertise were highly efficient, especially when it comes to assessing efficiency in the focus of long-term objectives. The challenge for the project was timing. A number of events were organized with a slight delay for reasons beyond the control of the project team. This required additional efforts from the project team to ensure effectiveness and sustainability. Outputs 1 and 2 are 4 Sustainability The continuation of benefits HS assessed as sustainable of benefits from a development to a high extent. The intervention after major project’s immediate development assistance has objective is assessed as been completed. The highly sustainable. The probability of continued project’s long-term long-term benefits. The objective/impact is resilience to risk of the net assessed as sustainable benefit flows over time to a satisfactory extent, since institutional capacity building is needed. D Cross-cutting Other important criteria S/HS performance that cut across the UNIDO criteria intervention

1 Gender The extent to which UNIDO Project interventions S mainstreaming interventions have contributed to better contributed to better gender gender equality by equality and gender related involving the female dimensions were rural population of Issyk considered in the Kul Oblast in economic intervention relations, increased their incomes in several cases (primarily agricultural cooperatives and guest houses) and stimulated poverty reduction in the region. There is however scope for improvement as regards indicators, monitoring and reporting procedures, which are not gender- disaggregated.

2 M&E Refers to all the indicators, The M&E system S tools and processes used to ensured that activities measure if a development occur as planned and intervention has been remedial steps are taken implemented according to as deemed necessary. On the plan (monitoring) and is this basis, UNIDO having the desired result prepared project (evaluation) progress reports every six months. Financial monitoring was exercised by UNIDO as per UNIDO’s standard financial regulations, UNIDO’s applicable regulations, rules, directives and administrative instructions. Gender indicators were not included in the M&E tools.

3 Result-based Assessment of issues related The project established a HS management to results-based work result-based planning, results based M&E management (RBM) and reporting based on mechanism to ensure results timely identification of possible implementation challenges and provide support in addressing them. RBM results were distributed and

discussed during the SC meetings.

E Performance Assessment of partners’ S/HS of partners roles and responsibilities engaged in the intervention

1 UNIDO Assessment of the UNIDO used their HS contribution of partners to experience, expertise project design, and network of contacts implementation, monitoring highly effectively to and reporting, supervision ensure high quality and backstopping and design and evaluation. implementation support.

2 National National counterparts S counterparts demonstrated a high level of participation and ownership. Policy actors need additional capacity building on results based policy development, RBM, policy analysis to ensure a higher level co- ownership and scalability of project strategy

3 Donor A proper level of HS strategy-level results based monitoring is demonstrated.

Summary conclusions In the «Conclusions supported by findings» section of the report the ET provides answers to Evaluation Questions as prescribed in the ToR. For justifications on answers to the Evaluation Questions, see the «Conclusions supported by findings» section of the report. R1. Are the activities and results of the project relevant to UNIDO long-term objectives and national government priorities? The project is highly relevant to UNIDO long-term objectives. During Desk Review (DR) the ET found direct

links between the project documentation (design, reports etc.) with UNIDO strategy documents. In this way, the ET confirmed that the project is generally relevant to national government priorities as well. Direct Observation (DO) showed that the chosen project methodology and project strategy is highly relevant to the local conditions, level of enterprises and value chains’ development.

R2. Is the project and its theory of change relevant to the country and regional context? Yes, the ET confirms that the UNIDO project and its theory of change are highly relevant to the country and regional context, and interventions are well-timed. For justification see more in E4 as well as the section “Country and Regional Context” of the present report.

E1. What have been the project’s key results (outputs, outcome and impact)? During KIIs the respondents were addressed with a number of questions to find out their opinion on which project outputs have been the most valuable for them, how they consume them (outcomes evaluation) and what the long-term effects of such consumption (impact evaluation) are. When the ET identified any inconsistency (positive or negative) with the project plan, additional questions were asked. As result, the following project results have been confirmed:

Outputs: Outcomes: Impact:

 Trained and  Increased resilience and  Stimulation of new upgraded productivity of local services and offers in beneficiaries beneficiaries the tourist business

 New  New employment  Bridging production thinking/horizons  Pro-active behavior of and tourism requires more significant efforts  Positive some beneficiaries in

cases/success stories developing their  Increased trust of local businesses (loans, and national  Increased self- property, investments) stakeholders to UNIDO esteem and  Mobilization of  Motivation of regional motivation of the participants communities around the and national authorities beneficiaries to keep the dynamic  Personal horizontal  Stimulation of other  Potential of the Air connections/ cooperation around elements (participants) Dome flagship project the value chain of the value chain for promoting linkages between tourism and  Some elements of  More competitive productive activities clusters are production (requires more organized and  Steps in direction of significant efforts) developed standardization and certification

E2. To what extent have the expected results been achieved or are likely to be achieved? Output 1: Support for the infrastructure for agro- and light-manufacturing industries is fully achieved. The aspect of cluster establishment/development (as part of Output 2: Pilot clusters in selected industries developed and formalized) is fully achieved, while the aspect of formalization of the clusters/ cooperatives is partly achieved, since cooperatives or associations have no legal status or formal agreements yet and/or are at the stage of formalization. The aspect of capacity strengthening (as part of the Immediate objective: to strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk-Kul region) is fully achieved. The project made significant efforts to ensure the achievement of access to the markets for the agro-industry clusters in the Issyk-Kul region, but the present level of capacity among the beneficiaries is currently too low to absorb advanced opportunities of access to the market. The ET concludes that the aspect of market access is partly achieved and most probably will be fully achieved once installed equipment is fully used during the years following the project’s end. Long-term objective of the project: to stimulate economic growth and employment through promoting linkages between the tourism sector and related productive industries. The aspect of stimulating economic growth and employment is fully achieved. The aspect of promoting linkages between the tourism sector and related productive industries is partly achieved. In order to assess the establishment of such linkages, the ET concludes that additional interventions on capacity building, value chain analysis and investment are needed. The project successfully tested and piloted such linkages, obtained success stories and demonstrated the possibility of synergy from such linkages. The ET concludes that the contribution to SDG8 is fully achieved, as shown by the collected data. The contribution to SDG9 is definitely achieved although the ET notes that the baseline for the fostering of innovation and building a resilient infrastructure in the region was too low. At least one more project cycle of similar UNIDO intervention (2020-2022) is needed for the region to ensure the achievement of a proper level of growth and innovations and ensure the sustainability of project outcomes in the region.

E3. What are the key drivers and barriers to achieve the project objectives? The summary of key drivers and barriers provided in provided in the table below.

Drivers Barriers

 Good analysis at the inception phase  Weak engagement of some key stakeholders at the national level  Wide publicity at the inception

phase, interest of local target groups  Cooperation with some business associations proved to be difficult due  Good quality of beneficiary selection to their limited participation and  Direct investments to production inconsistent communication infrastructure  Connection between production and  Systemic approach to training and tourism has not been sufficiently sharing experience considered by the authorities,  Strong focus: One group of therefore it was hardly possible to beneficiaries through the whole address this issue with intensive project program activities  Motivation and support of MoC and  Absence of national strategies and local authorities of Issyk-Kul region analytics on agro-production and  Good quality, flexible and tourism development linkages sustainable efforts of the UNIDO  The Air Dome infrastructure project project implementation team was challenging in terms of planning (Kyrgyzstan and Vienna) and coordination and after installation created new expectations, but still requires well designed strategy and business plan

E4. Has the project done the right things? The ET confirms that project has done the right things with a correct and clear logic.

E5. What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? The ET comes to the following conclusions on lessons learned: 1. The project logic from market analysis and selection to training beneficiaries and then investment in their infrastructure is correct. Investment in infrastructure and equipment took place in the end phase upon agreement with the steering committee. It is recommendable to start with this in the middle of the project. 2. Procurement procedures for equipment by UNIDO HQ is a highly relevant approach for the country’s context (institutional and cultural). 3. There is a high level of trust in local communities, but lack of skills and on management is a barrier. 4. The status of cooperatives is not clearly defined legally in the country. 5. Assistance with the formation of micro-finance facilities in cooperatives and business communities + training and supervision for the clusters /cooperative communities is in high demand.

6. At the policy level, more involvement of key stakeholders, and formulation of sectorial / thematic strategies and plans are called for. 7. Agri-food cooperatives are doing a good job, but their connection with the tourism business is weak but with good potential and requires additional attention in the next project cycle. 8. Deeper stakeholders’ engagement and partnerships building is needed when a joint project like Air Dome) is planned and supported. Communications among stakeholders needs to be facilitated by a leading actor for some time. In the case of the Air Dome, it was fortunate that the role of such an actor was been taken by local government.

Y1. How well has the project performed? The project mostly performed well. There was good quality planning and management; high-quality expertise; high quality contribution to trainings and study tours. The investments provided by the project were organized in way to ensure the relevance of investment scale to the present level of the beneficiaries’ capacity. Most of the equipment was delivered in 2019, at the final stage of the last year of the project. Some delays with procurement were also caused by local customs procedures.

I1. What has been the project’s key impact? The key planned project impact (to contribute to SDG 9 and SDG 8) is fully achieved. As planned, the project stimulated economic growth and employment in the Issyk-Kul region through the stimulation of the demand of goods from the agri-food sector. The ET identified some additional key impacts, in particular: 1. The regional and national authorities have increased their faith in the effectiveness of certain international development interventions (UNIDO has strong level of trust). 2. Local policy actors are looking for budget and investment opportunities to continue the approach implemented in the UNIDO project.

Some smaller impacts were also mentioned during KII (more details see in E1), for example: − Stimulation of new services and offers in tourist industry − Partial bridging of production and tourism − Increased trust among local and national stakeholders in UNIDO − Motivation of the regional and national authorities to keep the development dynamic

I2. To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long-term objectives? For specific value chains and enterprises, the project helped put in place drivers and contributed to overcoming barriers to a high extent. The level of institutionalization of the project practices and methodology requires special efforts during the next project cycle. The contribution to overcoming barriers and the long-term objectives is very high in the processing sector, and satisfactory in tourism sector. The fostered linkages between processing and tourism were satisfactory and can be further strengthened in the next phase.

S1. To what extent will the achieved results be sustained after the completion of the project? Output 1 (support infrastructure for agro- and light- manufacturing industries) is judged as sustainable to a high extent, as is Output 2 (pilot clusters in selected industries developed and formalized). The project’s Immediate Objective/Outcome (strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk-Kul region) is judged to be sustainable to a high extent. Project’s Long-term Objective/Impact (to stimulate economic growth and employment through promoting linkages between the tourism sector and related productive industries) is judged to be sustainable to a certain extent and requires continuous institutional capacity building.

S2. What were the major factors which influenced the achievement or non- achievement of the sustainability of the project? The ET identified the following key factors, which influenced the achievement or non-achievement of the sustainability of the project outputs and outcomes: − Good value chain analysis and planning enabled high value of project results for money. − Good project strategy based on a balanced combination of capacity building interventions and investment in equipment and infrastructure in the pilot projects. − The factor of the government policy environment: the challenge of the institutional capacity of local policy actors and, as a consequence of such capacity, was a lack of a policy document (strategy and analytics) in the tourist and agriculture industries and linkages among them, including objectives and measurable targets. As a consequence, it was difficult to identify local actors that will be responsible for scaling-up

the practice of value chain analysis and management in institutionalized manner on a regional level. The relationship between tourism and processing is reflected in increased entrepreneurial activity and the improvement of living standards, but more interventions are required to foster the tourism sector upgrading and its linkages with local agro-processors. − The project design factor: the original project design envisaged the procurement of equipment in the third phase of the project and with co-financing with beneficiaries. Assessing the impact of these investments will be possible only in the short to medium term, after the project completion. Local skills and absorptive capacity: local stakeholders, especially at the cooperatives’ level have weak knowledge of value chain development and upgrading; lack management skills; and have low digital literacy, which is creating a barrier of using digital tools for scalability of community-based businesses. − Gender mainstreaming: Taking into account the cultural context of Kyrgyzstan, its traditions and the mentality of people, and attitudes to gender equality, the project approach also allowed for the raising the topic of gender mainstreaming to the agenda of discussions at different decision-making levels and demonstrating how it can be implemented in practice in the future. The fact that most of the project beneficiaries in cooperatives were women was also used by project as a way of women’s empowerment in local communities. The ET evaluated the gender mainstreaming aspect of the project planning and implementation as satisfactory.

Summary recommendations The evaluation findings are systemized in the following main recommendations: To the Donor (the Russian Federation) 1. To continue support to development of processing and tourism sector via supporting value chains and SME clusters and cooperatives’ development. Consider making available funding for the follow-up project to ensure it continuity, or, consider the allocation of an interim budget (bridge funding) to ensure the smooth transition to the follow-up project. To the Government of Kyrgyzstan (in particular the Ministry of Economy) 2. Ensure project’s Steering Committee memberships, representing all concerned stakeholders and ensure continuous presence of SC members during the whole project period. With project support, consider providing policy advice on tourism value chain’ upgrading and on linking tourism with productive activities.

To UNIDO

3. Finalize the preparation of the follow-up project document, taking into consideration the findings and suggestions of the present terminal project evaluation.

Lessons learned and good practices This ET’s review of the entire project (both its design and implementation) generated the following main lessons learned / good practices:  High-quality and in-depth value chain analysis with a focus on investment in critical links in value chains identified during the analysis allowed for high value for many outputs.  A very noticeable and significant effect on stimulating the development of the agricultural production and processing industry providing products to local tourism value chains was achieved with relatively small funding resources.  UNIDO Procurement ensured high-quality and cost- effective procurement of equipment costs (low risk of non-payment of bills ensured by UNIDO).  Partnership with private sector in investment in infrastructure and equipment ensured project ownership.  Sharing the experience with other countries in the region (Russia, Uzbekistan), allowed for ensuring a high rate of applicability of the best practices.

EVALUATION OBJECTIVES, METHODOLOGY AND PROCESS Evaluation objectives As prescribed in the ToR, the overall purpose of the Project Terminal Evaluation (PTE) is to assess whether the project has achieved or is likely to achieve its main objective and to what extent the project has also considered sustainability and scaling-up factors for increasing the contribution to sustainable results and further impact. The evaluation was carried out as an in-depth evaluation using a participatory approach whereby all key parties associated with the project will be informed and consulted throughout the evaluation. The PTE had an additional purpose of drawing lessons and developing recommendations for UNIDO, the government, donors, and the project stakeholders and partners that may help to improve the selection, enhancing the design and the implementation of similar future projects and activities in the country and on a global scale upon project completion. The key evaluation questions are the following: (a) What are the key drivers and barriers to achieve the long-term objectives? To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long term objectives? (b) How well has the project performed? Has the project done the right things? Has the project done things right, with good value for money? (c) What have been the project’s key results (outputs, outcome and impact)? To what extent have the expected results been achieved or are likely to be achieved? To what extent will the achieved results be sustained after the completion of the project? (d) What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? Scope of Evaluation As prescribed in the Terms of Reference (ToR), PTE covers the whole duration of the project (from its starting date up to the date of the evaluation) and assesses project performance against the evaluation criteria: relevance, effectiveness, efficiency, sustainability and impact. The project started in April 2016 and ended in December 2019. The period of May-December 2019 was a no-cost extension period of the project implementation. Methodology and process In order to meet the objectives of this evaluation, the ET presents a participatory and forward-looking approach. A participatory approach means openness and partnership with the project stakeholders at all phases of the evaluation, including the selection of appropriate data collection methods; analyzing, debating and reaching consensus about findings, conclusions and recommendations. Thus, the ET makes efforts to ensure the active and meaningful participation of stakeholders at all levels from participatory planning of the evaluation process, flexibility during implementation, and encouraging

Key Informant Interviews (KII) with the program stakeholders, target groups and beneficiaries. Implementing a forward-looking approach, the ET formulated lessons, practical and concrete recommendations for the project stakeholders, and suggested possible future interventions in this field. The ET builds a general framework for the evaluation process on principles traditionally used for evaluation of UN agency projects all over the world (Logical Framework Approach (LFA), Project Cycle Management (PCM), OECD\DAC criteria for evaluation, etc.). Data collection and the evaluation process covered all standard aspects of project evaluation (relevance, efficiency, effectiveness, sustainability, impact). We interpret the main evaluation questions within the focus of DAC criteria and taking into account some aspects of project design and implementation, which has become clear and important to the ET after the Desk Research phase and preliminary consultations with UNIDO team in Bishkek and Vienna. The evaluation uses a theory of change approach and mixed methods to collect data and information from a range of sources and informants. It pays attention to triangulating the data and information collected before forming its assessment. This is essential to ensure an evidence-based and credible evaluation, with robust analytical underpinning. The theory of change identified causal and transformational pathways from the project outputs to outcomes and longer- term impacts, and drivers as well as barriers to achieve them. The ET suggests approaching the evaluated project with a methodology that keeps in focus all main aspects of the program planning, monitoring and implementation (LFA, RBM, PCM). At the same time, as far as the main focus of the project is to strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk-Kul region, the use of the the methodology of the Integrated Organisational Model (IOM) 1 addresses key aspects of organizational development and capacity strengthening in the context of the general and specific environment. IOM is a model that is used to describe, analyze and diagnose the state and rules of functioning of the organization. Like any other model, IOM is a simplified version of a complex system comprising a plurality of mutually influencing factors. The model helps answer important questions concerning the operation of the organization. Key aspects for evaluation and evaluation questions The ET was required to use different methods to ensure that data gathering and analysis deliver evidence-based qualitative and quantitative information, based on diverse sources as necessary: desk studies and literature review, individual interviews, focus group meetings/discussions and direct observation. This approach provides reasons for why certain results were achieved or not and to triangulate information for the higher reliability of findings According to the UNIDO Evaluation Manual, the following criteria should be the focus of the evaluation and used for formulating evaluation questions:

1 Integrated Organisational Model (IOM) by MDF Training & Consultancy, The Netherlands, www.mdf.nl

# Evaluation Criteria Definition

A Progress to Impact Positive and negative, primary and secondary long- term effects produced by a development intervention, directly or indirectly, intended or unintended, including redirecting trajectories of the transformational process and the extent to which conditions for trajectory change are being put into place

B Project design Formulation of the intervention, the plan to achieve a specific purpose

C Project performance Functioning of a development intervention

D Cross-cutting Other important criteria that cut across the UNIDO performance criteria intervention

E Performance of Assessment of partners’ roles and responsibilities partners engaged in the intervention

F Overall assessment Overarching assessment of the project. Drawing upon the analysis made under Project performance and Progress to Impact criteria

As described in the UNIDO Evaluation Manual, the formulation of evaluation questions determines the breadth and depth of an evaluation. An evaluation should seek to answer only the number of questions required to satisfy its practical purpose. The evaluation questions are aimed to focus the evaluation work on a limited number of key points for more targeted data collection, more in-depth analysis and a more useful report. The key evaluation questions: 1. What are the key drivers and barriers to achieve the long-term objectives? To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long term objectives? 2. How well has the project performed? Has the project done the right things? Has the project done things right, with good value for money? 3. What have been the project’s key results (outputs, outcome and impact)? To what extent have the expected results been achieved or are likely to be achieved? To what extent will the achieved results be sustained after the completion of the project? 4. What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? Based on the key evaluation questions, for the practical purposes of this evaluation, the ET redesigned and clarified questions be addressed to the main project stakeholders according to DAC criteria to:

Relevance (R): According to the Cambridge Dictionary, Relevance is the degree to which something is related or useful to what is happening or being talked about. DAC defines Relevance as the extent to which the aid activity is suited to the priorities and policies of the target group, recipient and donor. Evaluation questions regarding relevance: R1. Are the activities and results of the project relevant to UNIDO long-term objectives and national Government priorities? R2. Is the project and its theory of change relevant to the country and regional context?

Effectiveness (E): USAID defines Effectiveness as the extent to which an intervention has attained its major relevant objectives. DAC defines Effectiveness as a measure of the extent to which an aid activity attains its objectives. Evaluation questions regarding Effectiveness: E1. What have been the project’s key results (outputs, outcome and impact)? E2. To what extent have the expected results been achieved or are likely to be achieved? E3. What are the key drivers and barriers to achieve the project objectives? E4. Has the project done the right things? E5. What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? Efficiency (Y): According to USAID’s official glossary of evaluation terms efficiency is a measure of how economically resources/inputs (funds, expertise, time etc.) are used to achieve results. DAC defines Efficiency as measuring the outputs - qualitative and quantitative - in relation to the inputs. It is an economic term, which signifies that the aid uses the least costly resources possible in order to achieve the desired results. This generally requires comparing alternative approaches to achieving the same outputs, to see whether the most efficient process has been adopted. Evaluation questions regarding Efficiency: Y1. How well has the project performed? Y2. Has the project done things right, with good value for money? Impact (I): USAID interprets Impact as results or effect that are caused by or attributable to a project or program. Impact is often used to refer to higher-level effects of a program that occur in the medium or long-term and can be intended or

unintended and positive or negative. DAC explains Impact as what has happened as a result of the project/program on the social, economic, environmental and other development indicators resulting from the activity. The examination should be concerned with both intended and unintended results and explain the positive and negative impact of external factors, such as changes in basic policy environments, and general economic and financial conditions. Evaluation questions regarding Impact: I1. What have been the project’s key impacts? I2. To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long term objectives? Sustainability (S): According to USAID, sustainability is the degree to which services or processes continue once inputs (funding, materials, training, etc.) provided by the original source(s) decreases or discontinues. DAC explains that Sustainability is concerned with measuring whether the benefits of an activity are likely to continue after donor funding has been withdrawn, and whether achievements are sustainable in the longer run is of critical importance. Projects need to be environmentally as well as financially sustainable. Evaluation questions regarding Sustainability: S1. To what extent will the achieved results be sustained after the completion of the project? Each of the DAC criteria will be evaluated based on UNIDO’s six-point rating system for the evaluation criteria (section 3.3. of UNIDO Evaluation Manual2). The aim of the system is to quantify the judgment of evaluators, identify good and poor practices, to facilitate aggregation within and across. The six-point rating system, with six (6) representing the best and one (1) the worst score, allows for nuanced assessment of performance and results. Analysis of the project stakeholders After the Desk Review of the program documentation and preliminary consultations with UNIDO team the following groups of stakeholders related to program activities have been identified and proposed for targeted evaluation activities: Group A: Program holders: - UNIDO - Ministry of Economy of Kyrgyzstan Group B: Key institutional stakeholders - Government of the Kyrgyz Republic - Ministry of Culture, Information and Tourism of Kyrgyzstan (Department of Tourism)

2 UNIDO Evaluation Manual section 3.3. page 24

- Permanent Mission of the Russian Federation / The Embassy of Russian Federation in Kyrgyzstan - Ministry of Agriculture - Export department of Ministry of Foreign Affairs - Administration of Issyk-Kul oblast - State Agency of Local Self-Governance and Inter-Ethnic Relations of the Kyrgyz Republic - Kyrgyz Technical University - Association of Resorts of Issyk Kul region - Business Development and Investment Council of the Issyk-Kul region - Association of Agro processors Group C: Direct and indirect beneficiaries: - MSME level, domestic firms in the tourism, agri-business and light manufacturing sectors - Relevant business support and advisory institutions as well as the relevant national and local government agencies Evaluation tools To be able to collect data in a participatory approach to reach widest available spectrum of stakeholders, respond to key evaluation questions and assess the overall relevance, efficiency, effectiveness, impact, sustainability of the program interventions, a set of different data collection methods was used with priority for qualitative ones. The ET used the following tools for data collection and triangulation: - Desk research of the project Documentation (DR) - Direct Observation (DO) - Key Informant Interviews (KII) of individual and group format The standard set professional and ethical norms of the evaluation process were be used, including respect for all kinds of differences, anonymity, non-attribution and triangulation. During KIIs the ET took notes on conversations / discussions, but the names of respondents and organizations will not be mentioned in the evaluation report to avoid tracing back to individuals who participated in the evaluation. Representatives of UNIDO team did not take part in evaluation activities except specific KIIs addressed to them. The Evaluation Team kept all data sources confidential. Desk Research of the project documentation (DR) During the Desk Research phase, the ET conducted an analysis of the documentation that had been proposed by UNIDO project team, as well as the relevant documentation available online. Over 20 project documents were provided to the ET by the Project Team for the Desk Research. Documents are available in Russian and English language and include (but not limited to):  Project planning documentation  Minutes of the PSC meetings  Progress reports of different time periods

 Reporting documentation from the project events Additionally, publications and announcements on the official project’s Facebook page3 were processed. Desk Research proceeded continuously as soon as new documents become available to the ET or requested by the ET during the field phase. Additional documents were requested based on initial findings and data collected during field mission. Direct Observation (DO) The ET conducted direct observations of relevant project sites during the field phase of the evaluation, which took place between November 24 - December 1, 2019 and included Bishkek and local beneficiaries in Chuj Oblast and the Issyk- Kul region of Kyrgyzstan. The ET used direct observation as a tool for partly assessing the efficiency of project spending and the capacity of local business partners. DO is the ability to see and follow how practices are implemented, how processes work after project intervention has occurred. In our case, the processes themselves were not observed at the active level, as the project implementation was almost finished. DO also helped to collect data on technical and infrastructural capacity, ways of communication, organizational culture and the distribution of roles etc. In long-term programs DO is also used for comparing the expert vision of the evaluator and the real implementation process, and the expected and observed behavior of people in project implementation and during interviews with their reactions to questions or comments. In this way, the DO tool is a suitable method of data collection. Key Informant Interviews (KII) Key Informant Interviews are seen as the main tool for data collection. In organizing KII, the ET used the principle of the semi-structured interview, which is widely used in evaluations. It allows having flexible and informative discussion with key project stakeholders. During the KIIs the evaluators asked a number of key questions in open format with invitations such as “tell us about…”. Some specific questions, designed for representatives of specific stakeholders were developed. If the interviewed person shares his\her experience and information in an open and reflective manner, additional questions were asked from the reserve list. In other cases, clarifying or testing questions were proposed. As an exception, guiding questions were used. The responses of the interviewee are noted, but this data is used exclusively for the ET. The notes are not coded, not edited and not provided to UNIDO due to the confidentiality principle.

3 www.facebook.com/unidoagrotour/

Evaluation Team To implement efficiently the evaluation goals IMACON Consulting Group, the ET consisted of two evaluation experts with a high level of performance and synchronization. An introductory meeting of IMACON ET and UNIDO project team took place on October 10, 2019 in Bishkek. Evaluation expert, Team Leader: Sergei Gotin The evaluation was conducted under the supervision of Sergei Gotin as Team leader with more than 16 years of experience in project design, and more than 11 years in monitoring and evaluation (including EU-funded small, middle and large-scale projects). Mr. Gotin’s experience covers the business, public and civil society sectors. At the end of 2017 and in the first part of 2019 Sergei Gotin led and successfully finished the process of development of a flagship EU/UNDP project on regional economic development and social entrepreneurships (implemented by UNDP and the Ministry of Economy of Republic of Belarus, with a total budget of 9 million Euro). Since 2006 Mr. Gotin also has experience in consulting and evaluation of projects for regional development and SME development objectives, providing his expertise for the UN office in Belarus, including EU, UNIDO, IFC and other development cooperation actors. Sergei Gotin holds a B.S. in Physics, and is fluent in English, Russian, Belarusian, and Polish. He also has several publications on organizational development, project monitoring and evaluation. In the current evaluation he was responsible for the over-all management of the team, communication with UNIDO and local partners, the development and implementation of the evaluation methodology and provision of the economic/tourism development expertise of the evaluated aspects of the project. Thematic expert: Ulad Vialichka Ulad Vialichka is an experienced manager, trainer, facilitator, evaluator and consultant with 20+ years’ experience. His main areas of competence are CSO and community development, adult and intercultural education, project monitoring and evaluation, organizational development and capacity building, international relations and development cooperation. Ulad Vialichka has held over three hundred educational programs, trainings, workshops, seminars and conferences for different target groups from Belarus and other countries. He has experience of evaluation of over 20 projects including countries of Central Asia (Kyrgyzstan, Tajikistan, and Uzbekistan). He speaks Belarusian, Russian, English and Swedish, has several publications on adult, civic and intercultural education, active learning methods, organizational development, project monitoring and evaluation.

Ulad Vialichka supported the evaluation team with his evaluation and assessment experience and was responsible for the development of QA of the evaluation process, facilitation of interviews with project stakeholders, data analysis and report writing.

Data collection The evaluation process was organized in following stages:  Kick off meeting in Bishkek (October 10)  Desk Research (October 10 - November 10)  Development of the Inception Report (November 1-20)  Field mission to Bishkek and the Issyk-Kul region, meetings with project stakeholders and beneficiaries (November 24 – December 1)  Presentation of the preliminary findings KG (December 1)  Data analysis and draft evaluation report (January–March , 2020) The present report is based on the analysis on the following data  Over 35 documents as a part of the Desk Research (data provided by the Project Team before and during the field mission)  Field Mission (Direct Observation, KII and FGD). Visited locations: Bishkek, Novopokrovka, Cholpon-Ata, Karakol, Maman, Tasma, Novovoznesenovka  13 individual interviews and 1 focus group (over 20 hours, 22 persons covered) with program partners and stakeholders o 3 members of the UNIDO Project Team in Kyrgyzstan o 4 national and local stakeholders o 11 – direct beneficiaries o 5 – final beneficiaries Limitations There were no significant limitations as regards the evaluation, other than the following minor challenges that were addressed during the evaluation. In particular: 1. The evaluation took place at the end of the project implementation period. Most of the project activities were finished, but some constructing or installation work was still going on during field visits; some equipment had been conserved because of the winter season. As result, the ET was able to see some of the specific equipment, but was not able to see it working. In such cases the ET took special efforts to ensure that the equipment and technology provided by UNIDO are useful and effective. In most cases the beneficiaries were able to present outputs of their work during the season. In all cases beneficiaries were able to provide detailed descriptions of their plans and strategy for the year 2020, and demonstrated relevant resources and raw materials availability, relations/contracts with supporters, and were able to explain relevant marketing strategies. Additional efforts were required to ensure the viability of the “Air Dome project” strategy, as its main goal is to serve

tourists in the next tourist season, which would only come in the summer of 2020. The ET required a series of additional meetings and interviews for in-depth analysis and forecasting the sustainability of this project. Details about each visited beneficiary enterprises are provided in the section “Field mission and Direct observation” of this report. 2. Data collection independence and non-engagement. The ET grounded its evaluation methodology proposal on the assumption that KIIs and Focus Group Discussions (FGD) should be held either in Russian or in English without the presence of representatives of the UNIDO project team to guarantee the independence and confidentiality of the evaluation. In reality, during the field phase, it became obvious that this evaluation requirement was difficult to meet. In several localities Russian (and English) fluency among local stakeholders was very limited and required interpretation. In such cases the UNIDO team helped with translation. On the other hand, most of the interviewed people, even if they did not speak Russian fluently, understood it quite well, so the probability of deliberate distortion of information during the transfer was very low. 3. Some influence on the quality of data collection was the culturallyspecific of the hierarchy in communication (especially group hierarchy), when it often prevented information from being received during KIIs. In particular, when an authoritative representative of the community was present at the group meeting, usually only this person spoke, others were silent or agreed. When a father was present at the meeting with his family, the sons were silent. As the ET has previous experience in Central Asia countries, in such cases the ET managed to divide the groups between two evaluation experts and take away a part of the people for an informal conversation.

COUNTRY AND PROJECT BACKGROUND In the present section ET updated context analysis of the Project Document with new data and conducted analysis of new relevant sources and national documents. Moreover, the data were updated by comparing with the current indicators of the National Statistics Committee of Kyrgyzstan, UNESCO, and the World Bank etc. with relevant links to the specific sources. Also for an objective assessment of the dynamics of the review of the country aspect, chapters of the National Strategy for Sustainable Development of the Kyrgyz Republic for the period 2013-2107 and 2017-2023 were analyzed. Population and macroeconomic context The Kyrgyz Republic, a landlocked country in Central Asia with a population about 6.315 million4, is situated in Central Asia bordering Kazakhstan to the North, Tajikistan to the South, China to the South and Southeast and Uzbekistan to the West. Following independence in 1992, the Kyrgyz Republic suffered steep economic decline, which was exacerbated by the political instability that followed in the next decades. Kyrgyz Republic have limited energy resources, very limited own gas and oil sources, developing gold mining industry. On August 12, 2015, the Kyrgyz Republic joined Armenia, Belarus, Kazakhstan, and Russia in the Eurasian Economic Union (EAEU). Entering the EAEU market and eliminating tariff and non-tariff barriers to trade in the single market is an excellent opportunity for Kyrgyz products. In addition, given the lower cost of labor and the availability of resources, the Kyrgyz Republic is expected to become an attractive place for foreign and local investors interested in the EAEU market. It also provides an opportunity for local enterprises, especially in agriculture and agribusiness, to gain access to regional and global value chains. The national poverty level has decreased over the past 5 years from 30.6% in 2014 to 22.4% in 2018. The results of assessments of measuring the well-being of the population in the Kyrgyz Republic were made by the National Statistical Committee based on a sample integrated survey of household budgets and labor force with a quarterly coverage of 5,016 households. The survey results show that the poverty level in 2018, calculated by consumer spending, in the whole country was 22.4%. At the same time, 11.7% of income is accounted for by the labor activity of the population carried out outside the Kyrgyz Republic. At the same time, the economic growth of recent years has been largely due to the exploitation of the country's minerals and precious metals, especially gold. The unemployment rate in Kyrgyzstan from 2014 to 2018 decreased from 8% to 6%5. According to the report6 of the National Statistical Committee of the Kyrgyz Republic, over the past five years, the process of increasing the number of employees has been less intensive than the growth of the economically active population. Such a situation on the labor market poses a challenge for the state to significantly increase the use of the country's already formed labor potential.

4 https://data.worldbank.org/indicator/SP.POP.TOTL?locations=KG 5 http://www.stat.kg/en/statistics/zanyatost/ 6 http://stat.kg/en/news/analiz-sovremennogo-sostoyaniya-rynka-truda-i-proizvoditelnosti-truda/

In 2018, compared with 2014, the number of people employed in the economy of the republic increased by 3.9 percent, or 88.2 thousand people, and the number of unemployed during this period decreased by 15.4 percent, or 31.7 thousand people. High levels of economic growth were observed in the period after independence, especially in 2007 and 2008, when annual GDP growth rates reached 8%, suddenly ended in a financial crisis, and in 2009 GDP fell by 2.9%, in 2010 by 0, 47% Due to the improvement of the political and security situation, in 2011, the Kyrgyz economy showed an overall GDP growth of 5.7 percent, and all sectors of the economy, with the exception of the construction industry, showed expansion. The slowdown in 2012 was due to a decrease in production at the Kumtor gold mine. During 2014-2018 GDP growth (per year) ranged from 4% to 3.5% (max 4.7% in 2017)7. According to the latest data from the National Statistics Committee8, the GDP of Kyrgyzstan in January-October 2019 amounted to about 455 billion soms, an increase of 5.7% compared to the same period last year. According to the National Statistics Committee, excluding the contribution of Kumtor enterprises, GDP amounted to about 406 billion soms, which exceeds the level of January- October last year by only 3.3%. GDP growth was mainly driven by industry, construction, agriculture and the service sector. At the same time, the growth of the commodity industry compared to January-October last year amounted to 9% (2.5% in January- October 2018), the services sector - by 2.8% (1.7% in January-October 2018 ) ) In the structure of GDP, the largest share fell on the sectors providing services (44.1%), which compared to January-October last year decreased by 1.6 percentage points, while the share of industries producing goods increased by 2.6% and amounted to 41.7%.The share of industry was 20.3%, which is 2.2 % higher than the same period last year, construction - 7.9% and 0.4 percentage points higher. National Development Framework According to chapter 2 of the National Strategy for Sustainable Development of the Kyrgyz Republic for 2013-20179, the priorities for economic development were: the economy as the main factor of sovereignty and national security, sustainable economic growth and macroeconomic stability, improving the business environment and investment climate, developing the financial sector, developing strategic sectors economics, economic development of regions, etc. The UNIDO project aimed at developing the tourism sector in synergy with the industrial sector was consistent with the Strategy; however, there is no direct mention of the need to develop the tourism industry. In October 2018, the National Council for Sustainable Development of the Kyrgyz Republic adopted the National Development Strategy of the Kyrgyz Republic for

7 https://databank.worldbank.org/reports.aspx?source=2&country=LIC 8 http://stat.kg/en/opendata/category/1/ 9 http://cbd.minjust.gov.kg/act/view/ru-ru/61542

2018-204010 11 after a wide public discussion, taking into account the program of the Government of the Kyrgyz Republic «Trust. Unity. Creation», programs of political parties, proposals of deputies of the Jogorku Kenesh of the Kyrgyz Republic, state bodies, local governments, donor and expert community, public associations, business and citizens. The new National Development Strategy of the Kyrgyz Republic 2018-2040 is aimed at the formation of a production, energy, financial, transport and logistics, information, social ecosystem, and the construction of a new economic model based on harmonious coexistence with nature. The country's economy will be well diversified, included in the system of international division of labor, with high added value, clean energy and organic agriculture. Moreover, paragraph 3.3 of the Strategy describes the need to strengthen the role of tourism in the economy of the state. The tourism industry makes a significant contribution to the sustainable development of the national economy, by it stimulates the development of industries and spheres related to tourism, and the influx of internal and external investments and ensures employment and income generation of the population. According to the Strategy, an infrastructure will be created to realize the country's competitive advantages in types of tourism subsectors such as resort and recreational tourism, mountain adventure tourism, cultural tourism and so on. One of the key strategic priorities for the development of the National Sustainable Development Strategy for 2013–2017 was the promotion of sustainable economic growth and social integration. According to part 2 of the NSDS, one of the priorities of economic development was tourism and the service sector. According to the decisions of the Executive Board of UNESCO12, tourism recognized as one of the main factors of cultural and humanitarian development, contributing to the preservation of peace and the rapprochement of peoples through a «dialogue of cultures». In Kyrgyzstan, tourism plays an important role in solving social problems, creating additional jobs and increasing the welfare of the population, in particular in rural areas. Currently, tourism is one of the priority areas for the revitalization of the economy. The Ministry of Economy of the Kyrgyz Republic requested UNIDO’s support to develop and implement a cluster development project aimed at strengthening linkages between tourism and productive industries in the Issyk-Kul region. Following consultations, the Permanent Mission of the Russian Federation expressed interest to fund the proposed project and support the new member of the Eurasian Economic Union to benefit from the development opportunities made available following its accession to the single market. Accordingly, following UNIDO field mission, carried out in September 2015, a project proposal was prepared and validated in a roundtable meeting in Bishkek by the government counterpart.

10 http://www.stat.kg/ru/nsur/ 11 http://cbd.minjust.gov.kg/act/view/ky-kg/79154/10?cl=ru-ru 12 https://unesdoc.unesco.org/ark:/48223/pf0000259059

Project background and context Tourism sector As described in the Project Document, the tourism sector is a potential market for agricultural products and handicrafts in the Kyrgyz Republic. However, the supply of goods from local manufacturing sectors to the tourism sector was negligible. The main reason was the current state of underdeveloped regional and local value chains and the low quality of products that did not meet price and quality standards and / or the expectations of foreign tourists. Dairy products and processed fruits and vegetables are examples of which, despite their good quality and sufficient local availability, have struggled to gain a significant market share in the domestic tourism sector. In addition, there are certain local products that have valuable domestic and tourist value, such as mountain tea or sea buckthorn, which can be used in cosmetic products (specific to the Issyk-Kul climate) or cottage cheese (a separate regional product that is produced in the traditional way). Such products are an important component of the visibility of the Issyk-Kul region and the Kyrgyz Republic as a whole as a tourist destination in export markets. The development of productive sectors (agro-processing and crafts) and the strengthening of their ties with the tourism sector served as an effective tool to reduce poverty and promote the socio-economic development of the Issyk-Kul region. The UNIDO project identified and partially addressed the three most important issues related to manufacturing capacity, market access and value chain management for local enterprises and support institutions. Lack of technical skills in product- development and quality control has hampered processing capacity of the agro-industrial SMEs. As a result, poor quality products that do not meet national and international quality standards and consumer expectations cannot find their way into the target markets. In addition, lack of business skills, such as managerial, marketing, financial and entrepreneurial skills, prevents small enterprises to engage in trade and commercial activities to expand their market. In the particular case of handicrafts and light manufacturing where traditional inefficient production methods prevail, there is an evident need for upgrading of skills in designing and production of new products as well as adopting existing products to the dynamic nature of target markets. The second factor in low processing capacity of the enterprises is limited use of technology for processing and marketing of products. Manual labor is less efficient efficiency and often lacks standardization which results in limited output and variation in quality of final products. Enterprises’ limited use of technology is partly due to their limited access to financial resources that is required for investment in acquiring new technology and training of the personnel to operate them. But it is also due to the small size of production and lack of business development strategy which reduces their capacity to use existing financial resources. In addition, such enterprises and specific products, e.g. production of cottage cheese and handicrafts, require specific processing equipment and machinery that are suitable for and affordable by target

beneficiaries in the Issyk-Kul region. Nonetheless, there is a gap between available technologies and the real needs of such industries in the region. Lack of necessary support infrastructure and services affects the processing capacity in the agro-industries. This is particularly important in the Kyrgyz Republic because of the small size of the enterprises for which investment in product development and improving quality is a significant cost element and normally beyond their reach. R&D requires specialized skills and infrastructure that are not sufficiently available in Issyk-Kul. In this context, lack of support infrastructure such as incubation facilities, testing laboratories, product certification standards and methodologies, among others, has significantly reduced the processing capacity of SMEs. In addition, many of the cottage industries, rural enterprises, including farmers, willing to engage in value adding activities do not have a sizeable output to justify such investments and would rely on common infrastructure and facilitates for sorting, storage and packaging of their products. Such common facilities that are suitable for being utilized by producer communities are not currently available in the selected industries. The irregularity of supply of raw materials and the varying quality of raw materials due to inefficient agricultural practices and limited capacity of small holder farmers and the challenges faced by processing sector as explained above have resulted in high cost of processing and low quality of the processed agricultural products in the region at large. Given its production potential the agro-processing industry has the potential to grow its market share in traditional export markets (Russia and Kazakhstan) while expanding into new regional markets. However, the commercial capacity of SMEs in the agro-processing and handicraft sectors are generally low. Those SMEs that are already engaged in export typically seem not to have additional production capacity needed to fulfill additional demand. Others lack necessary capacity to meet the requirements of new markets in terms of quality and standards. Lack of skills in marketing and limited access to information regarding export markets and requirements are also among important factors contributing to limited market access. Lastly, institutional support and services such as financial, logistics, storage, quality control, and certification to support SMEs in entering export markets is very limited in the Kyrgyz Republic. Moreover, cooperation among enterprises engaged in similar activities such as agro-processors and handicraft producers is limited. This lack of horizontal cooperation has resulted in poor reflection of their requirements and needs in the services and programs of public and private support institutions. In addition, such enterprises often face similar challenges and have common interests that cannot be met individually due to their small size. Yet despite this evident need, there is no market mechanism in place supposed to encourage cooperation and creation of business linkages among existing enterprises.

The key stakeholders As per the project document, the key stakeholders for the project implementation were:

Main Counterparts: Ministry of Economy of the Kyrgyz Republic. Other Counterparts: Ministry of Culture, Information and Tourism of the Kyrgyz Republic. The core target group of the proposed project were, at the Micro-, Small- and Medium Enterprises (MSME) level, domestic firms in the tourism, agri-business and light manufacturing sectors, and, at the institutional level, the relevant business support and advisory institutions as well as the relevant national and local government agencies in the country. The first target group consisted of those MSMEs that benefit from the infrastructure investments, as well as capacity building activities such as skill development programs, trainings, and other support activities. Qualified international and local experts in building stronger linkages to peers and support institutions at home and abroad assisted them. The second group of direct beneficiaries considered the business support and advisory institutions relevant to the assisted industries (including business associations/chambers of commerce, business development service providers, vocational/technical training institutions, business schools/faculties and Non- Governmental Organizations (NGO)). These institutions primarily benefited from the training delivered to their experts, including transfer of know-how in the areas of value chain analysis, product development, marketing strategy development, promotion of business linkages and partnerships, among others. The initiative will enable them to provide long-term advice and support to MSMEs operating in the assisted sectors on how to enhance their participation and competitiveness in the market. The third group of beneficiaries are local, regional, national institutions that benefited from a more effective policy-making process. Participation in the project helped to design, implement, monitor and evaluate agro-industrial and tourism cluster development projects more effectively. With regard to pilot cluster initiatives, they benefited from diagnostic methodologies and implementation techniques promoted by this initiative. Hence, they are able to feed back the lessons learned into the broader policy process and create a more conducive environment for the development of MSMEs in other sectors. Project objectives (theory of change) In 2015 The MoE of the Kyrgyz Republic requested UNIDO’s support to develop and implement a cluster development project aimed at strengthening linkages between tourism and productive industries in the Issyk-Kul region. Following consultations, the Permanent Mission of the Russian Federation expressed interest in funding the proposed project and in supporting the new member of the Eurasian Economic Union to benefit from the development opportunities made available following its accession to the single market. A UNIDO field mission was carried out in September 2015 and a project proposal was prepared and validated in a roundtable meeting in Bishkek by the government counterpart.

The long-term objective of the project was to stimulate economic growth and employment through promoting linkages between the tourism sector and related productive industries. The immediate objective of the project was to strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk-Kul region. The project focused on two interrelated outputs: Output 1: Support infrastructure for agro- and light-manufacturing industries is established Output 2: Pilot clusters in selected industries are developed and formalized This project is supposed to contribute to the envisaged Sustainable Development Goals (SDG), in particular SDG 9 (Build resilient infrastructure, promote sustainable industrialization and foster innovation) and SDG 8 (Promote inclusive and sustainable economic growth, employment and decent work for all). The three-year project was divided into three phases i) The initial phase - the program development phase (9 months), ii) The installation phase - capacity building of key market participants, including the modernization of technologies and facilities (12 months), and iii) The final phase - expanded impacts on the entire value chain (15 months). The initial phase covered the period from October 2016 to June 2017, the final phase of the project was expected to be finished by December 2019. Indirect Project Implementation Results 1. 10 years ago, the main tourist destination in Kyrgyzstan was Lake Issyk-Kul. According to the The Guardian, Kyrgyzstan was counted among the top 40 destinations for travelers in 201913. 2. The international agency Lonely Planet included Kyrgyzstan in its list of ten best countries for travel, putting it in fifth place. (The first was Sri Lanka.)14 3. In 2018, 7 million tourists, 900 thousand – foreign tourists, visited Issyk-Kul. Until recently, the main flows of tourists came from Kazakhstan and Russia, but now a large number of tourists from far abroad visits Kyrgyzstan. In 2018, the country's budget received $ 450 million from the tourism industry15.

13 https://www.theguardian.com/travel/ng-interactive/2019/jan/05/where-to-go-on-holiday-in-2019-the- hotlist#Asia 14 https://www.lonelyplanet.com/best-in-travel 15 http://www.stat.kg/en/statistics/turizm/

4. In 2018, agro-tourism became a tourism brand. Agricultural farms have appeared in every district of KR.

ASSESSMENT Project design The project document was developed in accordance with the standard UNIDO template, has a clear structure and includes all the components necessary and sufficient for high-quality implementation and project management. Context analysis The context and situation analysis provided a comprehensive overview of the local situation in Kyrgyz Republic in tourism and agricultural processing sectors, including factors hindering or contributing to the development (internal strengths and weaknesses, external threats and opportunities). The overview of key national and international policies is sufficiently described. The ET confirms that the project is in line with the Kyrgyz Republic’s National Strategy for Sustainable Development 2013-2017 as well as the Agro-industry Development Strategy 2013-2020) and Export Development Plan 2013-2017 and the direction for economic diversification and development of key sectors including agro- industries and tourism. A general but relevant overview of agro-processing value chains, dairy sector, fish processing, fruits and vegetables production, herbal tea and medicinal herbs as well as creative industries, hospitality and tourism was provided at the starting phase of the project. As a result of this analysis, the UNIDO team chose appropriate priorities for the project intervention. A clear and relevant institutional framework identified both layers of the project intervention: the Ministry of Economy (MoE) - as the main government organization mandated with coordination and implementation of the National Strategy for Sustainable Development 2013-2017, and the Export Development Plan (2013-2017) in charge of the coordination of economic layer of the project. To ensure relevant ownership for the “Tourism” layer of the project intervention, the Department of Tourism under MoCIT as the main government organization was mandated with the implementation of a common public policy in the tourist sector, in particular in the development of proposals for the creation of favorable investment conditions for the development of tourism facilities and infrastructure, the promotion of growth of quality services in the tourist sector and promotional activities beyond national borders. Target beneficiaries The project document clearly specified the target beneficiaries (Section A. 5. Target Beneficiaries). The eligibility criteria for target beneficiaries’ selection was updated as part of value chain analysis in the inception phase of the project implementation. Intervention logic and result framework The project document contains a concise and substantial justification of all the key steps to develop a project strategy, including stakeholder analysis, situation and problem analysis, the logical framework of the project, indicators for implementation etc. The problem analysis includes both the value chain elements for potential areas of project investments, aspects of processing

capacity, market access and aspects of organizational capacity and absorption capacity of the target beneficiaries. The logical model of the project is simple, specific and logical enough. Elements of the project theory of change have a clear logical connection. Field mission and Direct Observation In the present section, the ET provides reflection on each project site visited during the field mission. In each location the ET conducted Direct Observation (DO), Key Informant Interviews (KII) with the main stakeholders/beneficiaries, and in some cases it was also possible to conduct group KIIs with community members. At this stage each recipient of the project support was provided with a brief analysis of the situation, a description of the UNIDO contribution, the results of observation and an analysis of the outputs, an analysis of the usefulness of the UNIDO contribution from the point of view of the enterprise / subject - the recipient of support (social, economic and business effect, sustainability), analysis in terms of value chain and an assessment of the contribution of a specific enterprise to value chain development. Where relevant, the ET also provided expert suggestions and recommendations for the development of specific enterprises, which can also be used as a basis for planning follow-up activities by the beneficiary and the UNIDO team. An evaluation of the long-term effects of the project activities on the enterprises is also provided, where possible. This section contains an analysis of each of the supported recipients. An analysis of the synergistic effects of the UNIDO project is provided in the section

Conclusions supported by findings. OSKO company http://www.osko-kg.com/

Beneficiary: OSKO Company has been operating since 1993. In the fruit and berry processing industry, it has established itself as a reliable partner in the markets of Russia, Kazakhstan, Japan, the EU and the USA. The main features of the company are reliability, an innovative approach to production and high quality products in Kyrgyzstan. Today OSKO provides a wide range of dried berries and fruits, as well as natural drinks. Key markets: retail and HoReCa, as well as for various B2B industries.

All raw materials for processing grow on the territory of the Kyrgyz Republic, and 70% are purchased in the Issyk-Kul region: apples, pears, raspberries, barberries, sea buckthorn, plums, cherries and some types of mountain herbs. The annual turnover of OSKO LLC in 2016 was 42 million KGS, profitability - 25%. The annual increase in turnover is from 20 to 25%. The annual volume of raw material processing is about 400 tons.

Location: Chui oblast, Sokuluk district, 724815, Manas Agricultural farming and gardens are in Issyk Kul Oblast (between Balykchi and Chlpon Ata).

Equipment and services provided by UNIDO (Outputs):

The following equipment was delivered to OSKO: • 2 refrigerated containers for cooling, freezing and storing fresh berries and fruits; • 2 refrigerated vans for transporting fruits and berries; • Machine for cleaning, cutting and core removal from apples; • Bubble washing machine for berries; • Apparatus for cutting and pitting of plums and apricots; • A business plan was developed for the reconstruction of the production facility in accordance with the requirements of HACCP and a loan was received from the Russian-Kyrgyz Development Fund.

All equipment is installed and used for production purposes.

Representatives of OSKO within the UNIDO project also took part in a series of trainings in Kyrgyzstan (product promotion and single branding) and 3 study visits (Slovenia, Uzbekistan, Baikal region of Russia).

According to Direct Observation, OSKO has a lot of manual labor, but the development strategy was chosen correctly. It motivates the business to move to a higher standard of production. OSKO invested in the point of growth, which now allows building a development strategy. This represents a successful result in the form of a cheap loan for development.

Outcomes: Because of project interventions, OSKO increased volumes in 2019 by 25%, and plans to eventually increase production volume by 70% in the near future.

The equipment provided by UNIDO helped stabilize the processing. According to the beneficiary, “In Central Asia, there are ‘trade wars’ from time to time when the borders with Kazakhstan are closed”. In such cases, the berries have disappeared, but now OSKO is able to freeze and preserve them, providing greater stability for local producers.

Participation in Nomad games and the promotion of OSKO in the TV program “Poedem, poedim!” expanded its circle of business partners.

One more direct outcome of UNIDO interventions is that the increased capacity of OSK helped the company to get a loan from Russian-Kyrgyz Bank (7 years, 4% interest rate) for reconstruction purposes.

Value-chain effects: OSKO operates with a high degree of sustainability and a well-thought-out strategy. If the company develops at its current pace, it will buy their products from residents of Issyk Kul. This is a pulling, collecting strategy, which stimulates the market with its speed and dynamics. OSKO has strengthened its production capacity and somewhat expanded the number of local suppliers and consumers.

At the same time OSKO attempts to take care of its own gardens and orchards. This is challenging for business, as the company has little expertise in the agricultural business, and the competencies are more likely concentrated in the production process and equipment.

Effects for the local community and vulnerable groups: OSKO does not have any specific focus of attention to local community support or vulnerable groups. The added value of the company is that it has become either the customer or the provider for some other participants of UNIDO projects (Ichke Suu, EcoFloris etc.). It brings additional sustainability to local businesses, develops networking and B2B contacts. Thanks to its expansion, OSKO has also created a number of job places for the local population.

Impact: The UNIDO project has a generally positive impact on the processing sector. UNIDO found a sector that needed technical, moral and educational support. OSKO has become one of success stories demonstrating progress on SME as a result of systemic international support (in this case UNIDO) in the difficult field of agricultural processing.

Seeing and being inspired by the OSKO case, the local authorities want to use OSKO as a place for internships for practical business-education.

Recommendations on follow up:  The development of a procurement system (including on a pre-order basis) of agricultural products from the population of Issyk Kul Oblast.

EcoFloris (Bishkek) https://ecoteakg.com/about

Beneficiary: EcoFloris LLC is a private Kyrgyz company, registered in 2012. EcoFloris has been processing healing herbs and producing high-quality teas with herbs and fruits since July 2015. The company produces and sells high- quality tea “Issyk-Kul Bouquets” without the use of flavors, dyes or GMOs. Tea "Issyk-Kul Bouquets" have passed all the necessary laboratory tests and have a certificate of conformity.

The company exports its products to Kazakhstan and Russia. Export volumes are still small, but export volume is constantly growing.

Location: Akhunbayev Street 89, Bishkek The production workshop is located in a suburb of Bishkek. Suppliers are manufacturers of medicinal herbs in Issyk Kul Oblast.

Equipment and services provided by UNIDO (Outputs):

The following outputs were provided to EcoFloris: • The reconstruction of the production premises, including the layout of the workshops, was carried out taking into account the characteristics of the processes according to Hazard Analysis and Critical Control Points (HACCP) and International Organization for Standardization (ISO) 22000; • Equipment for tea production was delivered (packaging in filter bags, sheet separating, grinding machines, and a mixer);

At the moment of the evaluation mission the premises and equipment were about to start using these renovations and equipment.

Representatives of EcoFloris within the UNIDO project participated in the study visits, exhibitions, B2B meetings, meetings with enterprises, acquaintance with the tourist infrastructure system, and other training in a number of topics.

Outcomes: The UNIDO project has done a lot, and this is not just limited to paying experts and consultants. In the case of EcoFloris, there were serious investments in the premises and equipment aimed at increasing the volume of products, the appearance of new types of products (in disposable bags), the growth of production, the increase in the number of employees, and the increase in procurement.

The effect of the project will be long- term. The company has made a business plan now that there is an optimal amount of raw materials and people to produce and sell - but everything will expand after reconstruction.

Earlier EcoFloris had a lot of manual labor, but now this will be significantly changed: production will be mechanized, and the form of supply of filter bags will improve. Thanks to future certification, there is the possibility that handicraft production can turn into a small businesses.

In 2018 UNIDO invited experts for training. Later the company used their services for the new branding of products. In the new packaging the product sells better. Sales increased - cubes with bows. Thus UNIDO's expertise is in demand. The effect is already there, but it is long-term. The campaign only starts after reconstruction, so all the effects are yet to come.

Value-chain effects: EcoFloris offers cooperation with trading companies, supermarkets, health food stores, the pharmaceutical markets of EAC and foreign countries on the sale of their products in Kyrgyzstan, Kazakhstan and the Russian Federation.

The company also offers teas for SMEs in the tourism sector: making or selling tea in cafes, restaurants, guesthouses and boarding houses. EcoFloris is developing cooperation with tourist agencies for the development of the agro- tourist sector through workshops on making herbal teas, making aromatic

sachets, and preparing informative excursions to agro farms for tourists in Lake Issyk-Kul.

EcoFloris passes HACCP standardization and plans to diversify its production to develop a more sustainable sales situation (distillates, extracts, etc. complementary to herbal tea production).

KII with EcoFloris confirm the presence of good ideas for a business development strategy: its own investments in equipment, a niche, capacities, and a strategy for working with suppliers. What is missing is a sales strategy (only vision/ideas) for new capacities. There is no technology experts for equipment, there is no transparency of the formulation, etc. So far, equipment is needed in order to reduce costs, and not develop opportunities. However, investments in the premises are reasonable and provide the required growth potential.

Effects for the local community and vulnerable groups: EcoFloris does not have any specific focus of attention to local community support or vulnerable groups. The company is interested in cooperation with farms and individuals for the cultivation and collection of medicinal herbs: pharmacy chamomile, peppermint, field mint, oregano, amaranth, basil, rose, linden, etc. EcoFloris has great potential to create a sustainable demand for small farms and individuals. The added value of the company is that it has become either the customer or the provider for some other participants of UNIDO projects (Arashan, Issyk Kul Organic, OSKO, guest houses etc.). The company also is actively involved in Nomad Games and the joint Air Dome initiative in Karakol.

According to KII, the company is well aware about UNIDO’s interest in caring about vulnerable groups and the fight against poverty. EcoFloris tries to put the emphasis on increasing the number of jobs and tax funds thanks to natural growth of production.

Recommendations on follow up:

 Training and assistance in certification, issues of modernization and cost reduction, joint implementation of products by project participants.  Further developing joint fair infrastructure in Issyk-Kul (Slovenian experience) - not only to sell, but also to conduct master classes, teach to collect useful fees, etc. which can be used as entry point by local and international tourists of Issyk Kul region.  Support developing a more advanced sales strategy (with RBM principles, clear cash-flow calculation and KPI) taking into account newly gained capacity of production.

Guest House Eldos Ata (Tosor village, Issyk Kyl South bank)

Beneficiary: Guest House Eldos Ata operates as eco-hotel on the south bank of Issyk Kul, established in 2012 for visitors who need to restore their health and take a positive charge within a short time. Eldos Ata is a developing guesthouse with growing profits and infrastructure due to the flow of foreign tourists who respond well to their services (see Booking.com). Eldos Ata adheres to the environmental focus, building houses made of local natural material (clay, stone, sand, wood, etc.), uses environmentally friendly food products (milk, eggs, vegetables, fruits) from local farmers, and uses national handicraft material for interior design, which is made by local women from the village. The guesthouse has a large territory with an apricot orchard and a vegetable garden, where tourists often pick fruits and vegetables themselves. Owners and staff speak Kyrgyz, Russian, English and Turkish languages, often traveling and looking for new ideas for tourism development.

Location: Issyk Kul oblast, Jeti-Ögüz District, Tosor village

Equipment and services provided by UNIDO (Outputs): The request for support from UNIDO was made in cooperation with the tourist company “Prodavets Prikliucheniy”. The guest house requested and received from UNIDO project equipment for making jam (gas stove, oven, centrifuge). The equipment was installed, and the owners made trial production, preparing large portions of jam for the next season. The label and branding was developed by a professional designer. Production and exploitation will start in the 2020 season.

Representatives of Eldos Ata also participated in a series of trainings in Kyrgyzstan (marketing, package design), study trips to Slovenia and the Baikal region of the Russian Federation.

Outcomes: Participation in the project allowed Eldos Ata substantially improve their services. The owners began to pay more attention to aesthetics, hygiene, and environmental friendliness. Profit is growing every year, the network of contacts has grown, and many tour operators are requesting services on a regular basis.

The guesthouse is constantly evolving; the owners are investing in improving their business. The most important thing is that they have begun to think how to develop production more productively without disturbing tourists. For example, a compressor is used in production, but it is noisy. It is necessary to make a separate room. By solving one problem, UNIDO provides an impetus for development in other areas. The work of the artist who helped create his own brand is separately noted.

Value-chain effects: The south bank of Issyk Kul is less developed in comparison to the north, and this is both a weakness and an opportunity. The south can be more attractive for Western tourists, more flexible with modern architecture and the development of agro tourism as an alternative strategy to big tourist enterprises like sanatoriums.

Another longer-term task is to prolong the duration of stay of tourists from 2-3 days to at least 1-2 weeks. This is possible to do only by developing a wider spectrum of services – alpinism, mountain and horse-riding paths, handicrafts etc. The final idea is to prolong the season from two to at least four months, which could significantly affect the value chain.

Effects for local community and vulnerable groups: Eldos Ata sees the potential of community development in designing village strategies as well as practicing specialization and hiring local personnel and interns for guesthouse work. For example, one of the villages in the region provides yurts for customers from different parts of the world.

The guesthouse cooperates with the society of deaf-mute people. Experience started from hiring a builder from this community, who recommended working with this society. Now this cooperation is regular: over 10 people have been hired for different work, while Eldos Ata also plans to make up to 15 free tours for people from this society.

The guesthouse plans cooperation with EcoFloris (eco-tea) and oil production “Egin”, as a networking follow-up of the UNIDO project.

Impact: Issyk Kul region is increasingly analyzed and designed as a holistic territory and system with special business and infrastructure zone, but there is still a lot to do in this direction.

Recommendations on follow up:  Consult local guesthouse owners regarding joint production and the distribution of jam for tourists in Issyk Kul.  Market consultations and mentoring for guest house owners to help with the development of a results-based market strategy.  Develop, consult and test several original ideas: contact Zoo, hippo therapy etc. Agricultural cooperative Arashan (Novopokrovka)

Beneficiary: The agricultural cooperative "Arashan" was established in 2002. Previously, this farm was a state farm, and later the remaining 25% of the farm was transformed into a cooperative that collects medicinal herbs in Issyk-Kul. Previously, herbs were harvested only in the form of raw materials, but now they are being prepared for sale and further production in Bishkek.

The cooperative has 60 members; 20 people will work in the newly created production (both members of the cooperative and hired employees). Previously, 100% of the labor was manual. In Issyk Kul there are fields and dryers of Arashan, in a new cover production for the pharmacy chain. To organize production, the cooperative acquired a piece of land where it is completing the construction of a building of 164 sq.m.

Location: Chuj oblast, Novopokrovka village

Equipment and services provided by UNIDO (Outputs): Before UNIDO support, the cooperative used 100% manual labor for gathering and processing medicinal herbs. The UNIDO project provided the beneficiary with two sets of modern equipment for drying medicinal herbs and the production of dried fruits, as well as equipment for the production of tea (packaged in filter bags). Direct Observation shows that at the moment of the

evaluation the equipment is placed in industrial premises but not yet installed and used for production purposes by Arashan. The cooperative explains this is due to the late delivery of equipment and a longer period of building industrial premises than predicted.

Representatives of “Arashan” also participated in a series of trainings in Kyrgyzstan and study visits, and also got consultancy support from the UNIDO team.

Outcomes: During a KII with the head of the cooperative, it was confirmed that, thanks to participation in UNIDO project, Arashan received an ISO certificate. Newly gained opportunities to expand production and a signed preliminary agreement led to the fact that two villages of the cooperative increased their sown areas by 100 hectares each.

Arashan has restored step-by-step cultivation and the seed fund of some important herbal plants. The cooperative also plans to develop tourist services in cooperation with some tourist providers in Issyk Kul region as a result of established cooperation within the UNIDO project. They take an active part in the Air Dome project near Karakol, where the yurt camp is planned in cooperation with Agrotourism Park.

According to KII data, study visits also generated new experience and motivated Arashan to use other technologies by replacing gardens (gradual method instead of total substitute). The management of the cooperative says that got new points of view from the perspective of tourists to their business and outputs. Now they are developing the tourism sector in addition to the main business of medicinal herbs as well as koumiss, hose riding tourism, etc.

Value-chain effects:

The key (but still potential) value chain effect is that after the installment of the equipment Arashan will be able to pack and offer ready-made products new types of products that were not previously in the range of the cooperative.

As a result of the UNIDO project, the Arashan cooperative has developed cooperation with EcoFloris, one of the main customers of medicinal herbs in the region of Issyk Kul.

In this particular case, the increase in productivity should not lead to a shortage of raw materials, as the cooperative has vast areas for growing medicinal herbs. The main expected challenge for Arashan is effective marketing and a promotion strategy. The cooperative has a rational business logic, there are options for plans B and an appropriate business strategy.

Effects for local community and vulnerable groups: The cooperative unites people living in the countryside where income is traditionally low, so the self-organization of people and income growth can be seen as one of the solutions for poverty reduction. Increasing the productivity of processing of Arashan cooperative will bring additional positive effects to its members’ incomes.

Impact: One of the impacts identified by a respondent is that the Arashan cooperative has ceased to be subsidized by the state budget.

Recommendations on follow up:  Consultations on sales management and change management in the context of business growth.  The development of empowerment and delegation skills and competences of the Arashan leadership  Exploration of the network of direct sales opportunities (especially within the Issyk Kul tourist infrastructure).  Investigation and development of sales opportunities within the Eurasian Economic Union.

Guest House Altyn Jeek (Cholpon Ata)

Beneficiary: Guest house Altyn Jeek has functioned since 2009 as one of many family-based business B&B services in the tourist area of Issyk Kul lake (Cholpon Ata).

Location: Issyk Kul oblast, Cholpon Ata, Altyn-Zheek 5/2, 722125

Equipment and services provided by UNIDO (Outputs): Before UNIDO support the guest house didn’t have any additional complementary income from jam production due to limited capacity. Jam was offered to guests free of charge or as a gift. The UNIDO project provided the beneficiary with a mini-set for making jam (storage, manufacturing and packaging). Direct Observation confirms that the equipment is installed and used as a pilot format, and active exploitation will start next season (May 2020).

Representatives of the guesthouse participated together with other beneficiaries in a series of trainings in Kyrgyzstan (Bishkek, Cholpon Ata) and study visits (Slovenia, Baikal region of Russian Federation).

Outcomes: During KIIs representatives of the beneficiary stated the high importance of study visits, during which they got familiar with the experience of agricultural processing. They also developed a joint brand for jam production.

For a guesthouse, a valuable outcome is that they will be ready to produce a new type of service.The owner was convinced from the experience of the project that it is necessary to connect processing with tourism. A beautifully packed offer of good quality goods to tourists will expand the demand. The owner also plans to help neighbors in processing fruits or enter into cooperation with them.

Value-chain effects: A practical follow-up regarding value chain improvement can be assessed only next year, when the equipment will be in use. It is predicted that one effect is the widening spectrum of services, creating new work places for local inhabitants of Cholpon Ata, and an increase in the income of the guesthouse etc. There are also some plans for synergy between guesthouses owners to sell their complementary products and services together via the town tourist infrastructure and cross-direct the customers.

Effects for the local community and vulnerable groups: In Cholpon Ata, thanks to cooperation with EcoFloris, shops with environmentally friendly goods have been opened, selling Issyk Kul gifts. All manufacturers can display their products there.

The project has had a visible effect on the local community as it stimulates the establishment of new work places as well as cooperation between guesthouses. The local authorities are motivated by this support as it means additional tax income for the local budget and the creation of job/self-employment opportunities.

Impact: It is hardly possible to identify impact in such a short-term perspective. Most probably an increase in sustainable development and the resilience of the guesthouse could become a good impacts and serve as an example for other owners to try to expand the development of their own value chains.

Recommendations on follow up:  Consultations with local guesthouse owners regarding joint production and the distribution of jam for tourists to Issyk Kul.

 Marketing consultations and mentoring for guest house owners to help with development of a result-based market strategy.  Managing a single brand of UNIDO project beneficiaries in cooperation, as well as local development strategies.  Help for ideas / strategies for extending the season Commodity service cooperative “Ichke-Suu”

Beneficiary: Сooperative "Ichke-Suu" was established in 2008. The cooperative is engaged in the production of agricultural products and the provision of services, in particular:  growing potatoes and importing from the Netherlands high-quality potato varieties with the subsequent propagation of seed material and sale to other farmers’ households  services through the provision of agricultural machinery (tractors - 2 units), and the transportation of goods (GAZ-53 car),  the provision of potato storage services (there is storage with a capacity of 1000 tons per village of Taldy-Suu in the Tyup region),  the cultivation, purchase and storage of fruits, as well as export to the markets of Kazakhstan and Russia.  The provision of fruit storage services (there is storage with a capacity of 500 tons for artificial cooling in the village of Ananyevo, Issyk-Kul region).  The cultivation and processing of wheat for flour and animal feed (there is a mill with a capacity of 20 tons / day)

Location: Issyk Kul oblast, Tyup region

Equipment and services provided by UNIDO (Outputs): In its initial application Ichke-Suu cooperative requested equipment for producing French-fries. After consultations with the UNIDO team regarding

amore direct correlation with the tourist business infrastructure, the cooperative changed its request and finally received two sets of calibration line for fruits and vegetables, as well as complementary accessories for the calibration line.

Representatives of Ichke-Suu cooperative participated in a series of trainings and study visits (Uzbekistan, Slovenia).

Outcomes: In 2019, the cooperative, in connection with enforced food safety regulations in the Eurasian Economic Community, applied for standardization in the hope of receiving a HACCP certificate.

The representatives of the cooperative have been trained in regulations and certificates in Tashkent, and have a vision of the implementation of this aspect in relation to their business.

One of the representatives of the cooperative has very good engineering skills. As a result, having been acquainted with the experience of drying fruits in Uzbekistan (observed during the UNIDO Project study tour), he assembled a drying cabinet from old components using the Uzbek prototype.

The cooperative creates new jobs for drying fruits. In addition, the investments made and equipment will potentially reduce manual labor by 40%. This will save money, time and add quality.

Value-chain effects: The introduction of drying makes it possible to operate the enterprise in the winter season, but to do that it will be necessary to harvest more fruits. That is what will now become the main task for the growth of production volumes.

As a new experience, the cooperative plans to sell dried fruits online.

The possibility of sorting and calibrating fruits (primarily

apples) allows farmers and cooperative members to significantly increase the added value of their products, as well as offer selected apples for export at a higher price.

The cooperative also plans to increase its capacity through the purchase of seeds, fertilizers and fuel with lubricants so that farmers will be less dependent on loans and will be able to reduce the cost of production. Another idea in the development of the chain is the creation of a logistics center

Effects on the local community and vulnerable groups: The cooperative does not focus specifically on vulnerable groups. However, it unites producers and farmers, helping them to save their harvest and thus be more sustainable ad successful in the market. The equipment is mostly installed, but some minor technical problems were identified during installation, meaning that some adjustments are needed to start active use.

The UNIDO project also helped the cooperative to establish relations with other businessmen in the agro-processing sector, for instance regular cooperation with OSKO started through project networking.

Impact: The modernization of production at Ichke-Suu cooperative contributes significantly to a stable income for more than 50 local farmers, the production of high-quality environmentally friendly local product with added value, and the development of cooperatives as a business model in Kyrgyzstan. Members of the cooperative started to switch to income-generating crops, before there was no demand.

Recommendations on follow-up:  Training on internet sales for the sales department of the cooperative  Support and training for the transition to organic farming and assistance in appropriate certification Returning to the idea of making French fries, which may lead to the substitution of imports (the estimated volume of imported raw materials is about 6-7 thousand tons), this would will stabilize the price of potatoes and make them more profitable.

Agricultural processing company “Egin” Individual entrepreneur Jamilia Tynalieva

Beneficiary: Agricultural processing company “Egin”, operates in the form of a family cooperative. The company has officially functioned since 09.10.2008. Field of activity – the production of vegetable oils and fats.

Location: Issyk Kul oblast, Karakol, Gosmelnitsa Street 1a

Equipment and services provided by UNIDO (Outputs): Before UNIDO support, the company produced oil by direct pressing using a homemade press. The UNIDO project provided the beneficiary with modern press equipment, as well as a production screw and filling machine. All this equipment is installed and used for production purposes.

Representatives of “Egin” also participated in a series of trainings in Kyrgyzstan and study visits.

Outcomes: The enterprise representatives say that they now work in a completely different way, have received a much better idea of their own business, and that this has raised their self-esteem. They have met similar entrepreneurs and shared common challenges and perspectives, resulting in an increased desire to develop their production. They

have also gained new skills in offering their products to clients of the tourism business in Kyrgyzstan.

Investments in equipment have allowed this business to double its productivity when it succeeds with regular provision with ingredients) while maintaining production profitability. The company has also launched the production of oil from crops (rapeseed, walnut) that could not be processed before or was unprofitable with the old equipment. The owner and her team also developed their business skills, in particular learning how to generate demand and manage sales.

Some local partners sell the oil to their clients and use it in their catering services. One more idea for further development is to bring tourists from local guesthouses to the production place to show how oil is produced from local materials, after which they can buy oil directly from the producer.

The producer has a clear business strategy and is well aware of its mission to not only be a successful business but also create jobs and help the local community.

As a part of business network development, “Egin” also cooperates with other UNIDO project participants, including producers of medicinal herbs and sea buckthorn oil.

Value-chain effects: This is a good example of when the company stimulates the behavior change in other parts of value chain and creating a demand for the cultivation of crops instead of producing unprofitable potatoes. It has begun to produce oil not just for the mass market but also, with it useful healing properties, for tourists.

Increased productivity has created a shortage of raw materials. Next season entrepreneurs plan season to place an order for local farmers and private farms for the supply of raw materials with a guaranteed purchase of finished products. The company is ready to invest in seed. This will enable residents of the region to diversify their activities and not only provide tourist services, but also use the available land for the production of agricultural products with guaranteed sales. At the same time, local providers will be able to offer tourists not only teas and souvenirs, but also various oils. This expands the range of products for tourists.

Effects on the local community and vulnerable groups: This company does not focus specifically on vulnerable groups, but it is based on family members’ involvement (a quite traditional way of organizing small business in Issyk Kul Oblast’). Oil production has a definite positive influence on the local community by involving local farmers in the new value chain and thus helping them to be more sustainable. Close ties with the community make it possible to form a cluster for the production and processing of oilseeds, from the supply of seeds to sales in the trade and tourism services

Impact: As a result of modernized oil production, clients of the tourist business during the season in Issyk Kul region will have access to a wide range of high quality oil products which were not available on the market before. The local community has also reacted positively to the new products, above all for their high quality, and have requested products through advanced orders.

Recommendations on follow up:  Сonsider the use of oilcake as a raw material for fuel briquettes (by analogy with the palm kernel shell as a by-product of palm oil production).  Investigate and develop sales opportunities within the Eurasian Economic Union  Explore the network of opportunities for direct sales (especially within the Issyk Kul tourist infrastructure)

Cooperative Issyk Kul Organic

Beneficiary: Cooperative “Issyk Kul Organic” was established in 2016 as a result of the support of self-assistance groups of women in rural areas since 2011. It is one of the first cooperatives in Kyrgyzstan which has received the certificate of IMO (Turkey) for the production of organic products. In 2013, the cooperative began to specialize in cultivation and drying of medical herbs and in the same year began to export one of its product (dried roots of a valerian) to Germany. Having got its first experience in organic production, the cooperative gradually began to expand its activity. In 2016, with the financial support of GIZ and the organizational support of PF "Bioservice", the organic certification of the land plots of cooperative members in 3 districts of the Issyk-Kul Oblast was carried out. The certification was carried out by the company "Organic Standard" (Ukraine).

At present the cooperative covers seven villages and over 120 households. Over 90% of the cooperative members (210 out of 223 persons) are women. The cooperative has about 1000 hectares of land, including 400 hectares with organic certification. Its specialization is the cultivation and marketing of medicinal plants: Valerian; Peppermint; Calendula etc. (all lightly dried). Its main customers are: Patanjali (India), Kyrgyzstanda, Bukety Issyk Kul, Neman Pharmacy, and Galenpharm.

Location: Issyk Kul Oblast, Tyup region (Novovesnesenovka village, Tasma village)

Equipment and services provided by UNIDO (Outputs): As a beneficiary of UNIDO support, the cooperative received 7 sets of equipment for drying herbs and producing dried fruits. These were were installed in different villages where cooperative members live and can use the equipment for cooperative and household needs. All the equipment was installed and in use in just 2 months.

Representatives of the cooperative (3 persons) also participated in a series of 3 trainings (Bishkek, Cholpon Ata, Karakol) and support activities of UNIDO projects in Kyrgyzstan (i.e. Nomad Games etc.) and three study visits (Tashkent, Veliki Novgorod, Slovenia).

The dryers are in good premises and accessible to local inhabitants. The cooperative built or adjusted the necessary premises for the equipment using its

own resources and also provided electricity lines. The cooperative coordinator provided special training for the users on the optimal ways of using the equipment.

The ET had to take special efforts ensure an in- depth analysis of the economic feasibility of the dryers and of the model of reimbursement of the cost of usage by cooperative and community members. Despite the fact that the people responsible for the operation of the equipment do not have sufficient competence to carry out proper calculations (they do not understand the difference between installed and consumed power, do not have an electricity metering mechanism), the ET was able to confirm that model of work established and supported by UNIDO is completely feasible and sustainable. The ET also analyzed the retail market price of valerian in different countries (EU, USA) as well as the bulk price (India, China) and concluded that the cooperative’s prices are appropriate.

Outcomes: Earlier cooperative members were totally at the mercy of the climate and weather and were not able to make annual plans. Since receiving the drying equipment the drying process become much more predictable, and it is possible to create and implement plans for their use and generate planned production. Cooperative coordinators choose the main cultures, have learned how to calculate the volumes of collection, collect the required volumes together, monitor the market and demand, and sign export contracts. During the presentation at Nomad games, there was a large number of requests from companies relating to medicinal/organic production.

As a result the activity of the cooperative has become more stable and predictable, with less time needed to produce the same amount of products (1 week of natural drying has been shortened to 3 hours thanks to the equipment), and more time to think about perspectives and marketing tasks. The cooperative wants to be more and more specialized on organic products as they bring more profit (+20%). Present calculations show that potentially it can produce five-

times more than before (100 tones instead of 20 tones).

The local authorities are very positive and supportive to the cooperative, as they see the concrete results and are happy about improved business indicators. As a part of its business network development, “Issyk Kul Organic” cooperates with other UNIDO project participants such as EcoFloris, providing medicinal herbs for their tea production. EcoFloris trains cooperative members on marketing and fair sales.

Value-chain effects: The UNIDO project helped the cooperative to enhance the direction of organic production. It also stimulated improvement in packaging. An internship in Slovenia helped the cooperative to recognize the herbal tea and infusion niche and thus to widen spectrum of products. As one of the new customers, EcoFloris participated in stabilizing the value chain. It also advises the cooperative regarding projected demand.

Some cooperative members would like to start producing teabags to sell to Issyk Kul tourists. There are also plans to expand production to the EU market. It is quite important to minimize the number of intermediators to make the value chain more simple, profitable and predictable. To do this, there is a need to complement drying with the processing of medicinal herbs.

Effects on local community and vulnerable groups:

The cooperative itself is an outcome of women’s mobilization. It plays an important role in poverty reduction and the inclusion of the local population in the labor market, production and trade.

Female family members are not only able to provide their families with income, but also to use the cooperative’s capacities for their household needs: they gather 3-4 persons per 100 kilogram of home fruits to use the drying

equipment together by agreement (covering only direct costs). This helps to strengthen neighbor relations in local village communities.

For individual farming, valerian has an additional positive effect to the quality of soil of the households. Women visit each other, exchange experience and improve their financial literacy as the main persons responsible in their families.

At the same time, according to KIIs with the inhabitants of the villages where the dryers are installed and where there is no understanding of where the dryer came from, this is a matter of awareness raising. There is also a very low awareness of the opportunities that have arisen, even among cooperative members. The financial literacy of cooperative members and their families is also quite weak. Impact: The Department of Organic Agriculture has finally been established in Kyrgyzstan. Previously, rural producers produced organic products in small quantities, but now the region has set a goal to develop organic agriculture. There was no support before, but now there is. If the cooperative has ready- made raw materials, then the department will help to sell products and draw up contracts. The project stimulates the development of the Issyk-Kul region especially in the tourist areas. It brings economic benefits for people. For example, a simple farmer grows medicinal herbs at home. Previously, s/he dried raw materials on the street (a midst garbage, manure, wind, dust). Now the quality of the products has become better, which in turn saves people time in the growing season.

Recommendations on follow-up:  Complementing the drying phase with the processing of medicinal herbs.  Raising awareness among cooperative members and local inhabitants about the UNIDO project and entrepreneurship possibilities  Improving the financial and economic literacy of cooperative members.  Assisting with regular marketing of small wholesale batches of the cooperative products.  Training several persons from the cooperative on marketing, e-trade and sales on the global market (alternatively, hiring such specialists from outside of the region to work distantly).

Cooperative Agro Tour Park (Air Dom Project)

Beneficiary: Cooperative “AgroTourPark” was established as a part of the implementation process of the UNIDO project by 4 partner companies which were already involved in aproject with their own business initiatives (Arashan, Kara Kyz yurt camp, KATO association and KATOS). The goal of the project is to

promote the sustainable growth of agro-tourism by creating an air dome as a new tourist destination in the tourism sector of the Issyk-Kul region.

The expected results stated by the partners included the creation of a new tourist attraction in Karakol, the stimulation of the local population to participating and promoting agrotourism.

Location: Issyk Kul oblast, Ak Suj district, Maman village

Equipment and services provided by UNIDO (Outputs): This project was one of the most expensive investments of the UNIDO Project to equip. The air dome and supplementary investments costs amounted to over 160 000 USD.

The project is implemented on territory, which belongs to one of the cooperative members and is guaranteed by the property and motivation of all four cooperative members who are at the same time implementing their own projects in cooperation with UNIDO.

Outcomes: It is difficult to identify any outcomes at the present

moment. The nearest time for an assessment is at the end of season 2020.

Value-chain effects: The investment can be successful as tourism object if there is sufficient flow of people. The stakeholders have good ideas how to fill it with content and make profitable. The local authorities are directly involved as one of the stakeholders into the decision-making process.

At the time of the evaluation, the cooperative members do not have clear concept or strategy of development for this tourist object, mostly being driven be joint vision and long-term perspective. The potential of tourism operators is not forecast or calculated, there is no detailed business plan (only vision) and there is no plan B for the case if the initial idea does not succeed. According to KII data, cooperative members do not have not very high ownership and have different expectations for implementation. Mutual guarantees among stakeholders are also lacking.

Effects for local community and vulnerable groups: The project could become a good point of multilateral cooperation for many small actors united by the idea of developing tourist infrastructure and production in Issyk Kul region. It could be a good idea of creating a place with joint management and performance

Impact: The only possible impact which could be identified during the evaluation is the potential of this project to create synergies between different stakeholders and become a flagship for improving tourist the infrastructure and production of the Issyk Kul region. The Oblast authorities have strong motivation to support it and make it a success, but there is still long way to go to implement the idea properly and make it work for the benefit of the stakeholders.

Recommendations on follow up: Transferring Air Dome to the Flagship project - 3 main ideas (can also be combined):  Establish a small wholesale B2B weekly marketplace with an online platform and best practices. This format could become the public open space of the project, the catalyst and the physical territory of the post- project relations.  Create a local EXPO place with a calendar map of exhibitions, fairs and festivals (4-6 large events per season)  Create the tourist site with daily activities, similar to SCANSEN in Scandinavia (local interactive museum of nomadic culture, handicrafts and agricultural fair, interactive garden, open space for master-classes, festivals, concerts etc.).

Key steps to be done in the near future:  Pro-active communication between the stakeholders to reach optimal agreements (maybe with external facilitation)

 Analysis, concept, strategy, business plan, plan B  Contracting, distribution of roles and guarantees for all stakeholders

Multi-enterprise Activities and Capacity Building This section analyses the contribution of multi-enterprise activities and capacity building efforts in the development of project results. The ET had limited ability to analyze these measures due to the lack of opportunities for direct observation. Therefore, the analysis of the effectiveness, sustainability and relevance of these project activities was carried out on the basis of documentation, project reports, and also based on the opinions of KII respondents, in particular references to certain activities as a data source for strategies, plans and the subject of investments. Event summary With the assistance of UNIDO, a number of project activities supporting and developing the competences of the participants were carried out. The main goal was to introduce the Kyrgyz beneficiaries with the best practices in the field of agro-processing and tourism, their close ties. Thus, the representatives of the beneficiaries were able to participate in four study tours abroad: Slovenia, Russia (Veliky Novgorod and Baikal Lake), Uzbekistan; and participated in four seminars organized by UNIDO with the participation of highly qualified international and local specialists in Kyrgyzstan.

Study tours

Uzbekistan UNIDO, in cooperation with the Tashkent Chamber of Commerce and Industry, organized a three-day study visit to Uzbekistan from 13 to 24 November 2017. In total 13 project beneficiaries took part. Guided by a UNIDO agro-production and marketing expert, the study tour included a visit to two exhibitions (UzAgroExpo and UzProdExpo), meetings with two agro-processing companies, one equipment manufacturer, and the standardization agency of the Uzbek government as well as a business forum with members of the Chamber of Commerce.

The Kyrgyz delegation also visited the production sites of the leading Uzbek agro-processing companies, namely Golden Dried Fruits, Agro city, Golden Leaf and Eco prom standard. They had the opportunity to closely examine modern solutions and technologies applied in the industry and to establish new business contacts.

During the exhibition, the beneficiaries from Kyrgyz Republic were acquainted with the best practices of enterprises specializing in the production and sale of modern agricultural machinery and spare parts, equipment, technologies and materials for crop production, livestock, veterinary medicine, processing, transportation and storage of crop production and livestock production.

Veliky Novgorod, Russian Federation From 10 to 14 April 2018, the project organized a five-day study tour to Veliky Novgorod, Russia, for representatives of the Kyrgyz Government, and the Kyrgyz association of tour operators and entrepreneurs in the field of tourism from the

Kyrgyz Republic (in total 12 project beneficiaries). The study tour included a visit to the tourist information center «Red Izba» and meetings with city administration and business circles of Veliky Novgorod. The main purpose of the study tour was to increase the capacity of tourism enterprises in the Kyrgyz Republic and to provide an opportunity for them to learn about the promotion of tourist destinations on domestic and global markets, the formation of common information tourist centers, the creation of conditions for advanced training of personnel etc. After the study tour, the Department of Tourism decided to build, with the support of UNIDO, two information centers on the shores of the Issyk- Kul Lake based on an example of «Red Izba».

Slovenia From 8 to 12 October 2018, representatives of the Issyk-Kul administration, national tour-association and entrepreneurs in the field of agro-processing and tourism from the Kyrgyz Republic took part in a one-week study tour in Slovenia. The main purpose of the tour was to increase the capacity of agro and tourism enterprises in Kyrgyzstan and to provide an opportunity for them to learn about promotion of the tourist place in domestic and worldwide markets, assistance in development of the sector, the creation of conditions for the advanced training of personnel and overall best practices used in agro-processing and tourism.

The Kyrgyz delegation visited relevant agricultural and tourist industry companies as well as the Ministry of Economic Development and Technology, Ministry of Agriculture, Forestry and Food, and the Agricultural Institute. Participants also attended two lectures at the Agricultural Institute in Ljubljana. The delegation visited the former least-developed part of Slovenia, now a tourism gem – Goriška brda – with its small medieval fortified village Šmartno, which is a great case study on how cooperation and a smart local policy combined with the successful sourcing of funds can have a huge impact on a region’s development.

Baikal Lake, Russian Federation In order to organize an exchange of experience and learn from each other between companies from similar lake-focused areas of Issyk Kul and Baikal, the project organized a seven-day study tour for a Kyrgyz delegation to Lake Baikal in the Russian Federation. The delegation included representatives of Ministries of Agriculture, Culture, Information and Tourism, regional authorities, tourism and agro-processing associations and the private sector.

The delegation learned about promotion of the tourist venues in domestic and worldwide markets, the formation of common information tourist spaces, assistance in the development of the sector, the creation of conditions for advanced training of personnel and overall best practices used in tourism. The Kyrgyz delegation met with the city administration and business circles, where discussions on possible cooperation were facilitated. A visit to the Taltsy Architectural and Ethnographic Museum showcased national and ethno elements of interior design that could be included in products and services in

Kyrgyzstan. The company “Dikaya Sibir” (Wild Siberia) demonstrated the process of producing tea, extracts and dried fruit products. The delegation noted with appreciation the detailed explanation and practical examples of industrial packaging design attractive to customers and to tourists in particular.

Training and workshops

Valencia, Spain In October and November 2017, the project collaborated with the World Tourism Organization (UNWTO), a specialized agency of the United Nations. UNWTO and participating entities held an executive-level capacity building training program, entitled The Silk Road Training and Capacity Building Program. The UNIDO project in the Kyrgyz Republic was able to co-fund the participation of four Kyrgyz representatives from the public and private sectors to represent this Silk Road destination. The training included a 2-week online course and a 10-day workshop with highly qualified specialists in Spain. The online program included courses on Project Management and Strategic Tourism Planning. During the workshop, participants were familiarized with tourism concepts, key issues, principles, structure, processes, tools, and international case studies.

In-country Training and workshops (Kyrgyz Republic) UNIDO held two events on marketing for market actors in tourism and agro- processing (fruits, vegetables, and herbs) industries from 5 to 6 and 10 to 11 October 2017 (for agro-processors and tour operators, accordingly). Each event consisted of a plenary session, aimed at providing a platform for open discussions and enabling greater public awareness about the marketing challenges that each tourist and agro-processing sector player faces as well as the services available in the local market to address their issues. UNIDO identified seven companies with expertise in marketing, branding and packaging development. These companies were invited to serve as panelists/specialists at the event.

As a result, 184 participants attended the plenary sessions, including the private sector, universities, associations, government representatives etc. More than 32 companies reported they are looking to rebrand and/or develop new products; 12 tour operators, 14 agro processors, and 6 marketing companies participated in B2B meetings.

An event on food safety and quality control systems was held in Bishkek, Kyrgyzstan, from 14 to 15 February 2018. 130 participants, including representatives from the government and the private sector, the food industry, international organizations, business associations and NGOs attended the event. Over the two days, the participants had the opportunity to discuss all the current issues in plenary with experts, exchange experiences and build the potential of business contacts. In total 72 B2B meetings were held with representatives of

industry and food safety experts, and 16 companies expressed their commitment to improving the quality of their products and implementing the HACCP system.

Following the Food Safety Event held by UNIDO in February 2018 in Bishkek, the Plenipotentiary Representative of the Government in the Issyk-Kul region, together with the Center for State Sanitary and Epidemiological Services, requested a similar event in the Issyk-Kul region. The main purpose of the event was to increase the capacity of food enterprises in the Issyk-Kul region and to provide an opportunity for them to learn about food standards and the requirements of the Technical Regulations of the Customs Union. In total, 123 participants attended the events, including representatives of the food industry and public catering, and 12 companies expressed their commitment to improving their production and services.

In cooperation with the CERT Academy, UNIDO organized a training course on food safety management systems based on ISO/FDIS 22000:2018 for the project beneficiaries in Bishkek from 3 to 6 July 2018. Participants of the training course carefully studied the requirements of the ISO 22000, learned methods for the development and implementation of the food safety management systems, as well as the main principles for conducting internal audits.

From 11 to 18 February 2019, experts from Slovenia held a series of practical workshops aiming at enhancing competitiveness and the conditions of tourism and productive industries in Kyrgyzstan. Workshops were devoted to “eco management in hotels”, product shaping for the tourism destination and tourism marketing in general. In addition, Slovenian experts conducted a lecture for students and professors of Bishkek University on eco-labelling as a successful tool of sustainable tourism management. The results of the workshops received positive feedback from all the participants. In total, 185 participants attended the UNIDO workshops.

Beneficiary activity Analysis

During the project, a series of seminars, trainings and study tours for the beneficiaries were organized, during which they had the opportunity to get acquainted with the technologies that they needed to introduce. The events were attended by representatives of OSKO company, EcoFloris (Bishkek), Guest House Eldos Ata, Agricultural Cooperative Arashan (Novopokrovka), Guest House Altyn Jeek (Cholpon Ata), Commodity Service Cooperative «Ichke-Suu», Agricultural Processing Company «Egin», Cooperative Issyk Kul Organic and Cooperative Agro Tour Park (Air Dom Project). The results obtained indicate the benefits and the need for their implementation in the framework of similar projects. As experts and beneficiaries note, such experience is most valuable and useful.

OSKO Representatives of «OSKO» enterprise within the UNIDO project took part in a series of trainings in Kyrgyzstan (product promotion and single branding) and

three study visits (Slovenia, Uzbekistan, Baikal region of Russia). Before the implementation of the project, OSKO enterprise mainly used manual labor, but thanks to the training and analysis of the best practices in organizing production, it revised its development strategy and introduced modern technology into the production process. As a result, modern equipment provided by UNIDO (2 refrigerated containers for cooling, freezing and storing fresh berries and fruits, 2 refrigerated vans for transporting fruits and berries, a machine for cleaning, cutting and core removal from apples, bubble washing machine for berries, apparatus for cutting and pitting plums and apricots) as part of the project made it possible to modernize the process as soon as possible and significantly increase competitiveness not only domestically but also abroad.

OSKO increased volumes in 2019 by 25% and plans to ultimately increase production by 70% in the near future.

EcoFloris Representatives of «EcoFloris» Company within the UNIDO project participated in study visits, exhibitions, B2B meetings, meetings with enterprises, acquaintance with the tourist infrastructure system, and other training in a number of topics. The «EcoFloris» сompany had used mainly manual labor in its production. The awareness-raising events, with the assistance of UNIDO, made it possible to review the development strategy and introduce modern technologies. In 2018 UNIDO invited specialists for training, and later the company used their services for new product branding, which helps the product sell better. Thus the experience of UNIDO is in demand. The effect is already there, but that it is a long-term, nonetheless sustainable effect from the project is obvious and the expert support of UNIDO plays a decisive role in this process.

«EcoFloris» offers cooperation to trading companies, supermarkets, health food stores and pharmaceutical markets of the EAEU. «EcoFloris» develops cooperation with travel agencies to develop the agro-tourism sector through workshops on the manufacture of herbal teas, the production of fragrant sachets and the preparation of educational excursions to agricultural farms for tourists in the Lake Issyk-Kul region.

Guest House Eldos Ata Representatives of «Eldos Ata» also participated in a series of trainings in Kyrgyzstan (marketing, package design), study trips to Slovenia and Baikal region of the Russian Federation. Participation in study trips and the project in general allowed Eldos Ata to substantially improve their services, including more attention to aesthetics, hygiene and environmental friendliness. As a result, profit is growing every year, business contacts are established with representatives of the tourism industry. More attention is paid to clients (tourists).

Agricultural cooperative Arashan (Novopokrovka) Representatives of «Arashan» also participated in the series of trainings in Kyrgyzstan and study visits, and also got consultancy support from the UNIDO team.

According to KII data, the study trip experience encouraged «Arashan» to use new garden replacement technologies (a gradual method instead of a complete replacement). The company revised its business lines anddecided to develop a new tourist destination in addition to the main one (collecting herbs, koumiss, riding tourism, etc.).

During a KII with the head of the cooperative, it was confirmed that, thanks to participation in UNIDO project, «Arashan» received an ISO certificate.

Guest house Altyn Jeek Representatives of the «Guest house Altyn Jeek» participated together with other beneficiaries in a series of trainings in Kyrgyzstan (Bishkek, Cholpon Ata) and study visits (Slovenia, Baikal region of Russian Federation). During a KII representatives of the beneficiary stated the high importance of study visits during which they got familiar with agricultural processing. They also developed a joint brand for jam production. Thanks to study tours, the company made sure that it is necessary to connect processing with tourism. Beautiful packaging and the offer of good quality goods for tourists will expand demand. Until recently, the guest house did not have any additional income from jam production due to limited capacity. The UNIDO project provided the beneficiary with a mini set for making jam (storage, manufacturing and packaging).

Ichke-Suu Representatives of the «Ichke-Suu» cooperative also took part in a series of trainings and study tours (Uzbekistan, Slovenia) and underwent training on standards and certificates in Tashkent, and apply these aspects in relation to their business.

As a result, having familiarized himself with the experience of drying fruits in Uzbekistan (observed during a study tour under the UNIDO project), the company's engineer assembled a drying cabinet from old components by analogy with the Uzbek prototype which he will develop with dried fruits.

The cooperative creates new jobs for drying fruits. In addition, investments made and equipment will potentially reduce manual labor by 40%. This will save money, time and add quality. The modernization of the production of «Ichke- Suu» cooperative makes significant input to provision of a stable income for more than 50 local farmers and the production of a high quality, environmentally friendly local product with added value.

Agricultural processing company «Egin» Representatives of «Egin» participated in the series of trainings in Kyrgyzstan and study visits. The cooperative members declare that they now work completely differently, with a much better idea of their business and increased self-esteem. They met similar entrepreneurs, shared common challenges and perspectives, and their desire to develop their production increased. As a result, investments in equipment allowed the cooperative to double its productivity while maintaining production profitability. A new production line has started, (oil from agricultural crops). During the study visits, members of the

cooperative improved their business skills, in particular learning how to generate demand and manage sales. They also gained new skills in offering products to clients of the tourism business in Kyrgyzstan.

Issyk Kul Organic Representatives of the cooperative participated in a series of 3 trainings (Bishkek, Cholpon Ata, Karakol) and supporting activities of UNIDO projects in Kyrgyzstan (i.e. Nomad Games etc.) and three study visits (Tashkent, Veliky Novgorod, Slovenia).

For the members of the «Issyk Kul Organic» cooperative, the experience of acquainting themselves with similar enterprises with modern technologies was certainly useful. They shared common problems and prospects, and their desire to develop their production increased. In addition, during the study visits, the members of the cooperative came up with a way of cooperating with the tourism sector to promote their products in Kyrgyzstan and abroad.

Conclusions supported by findings In this section of the report the ET provides answers to Evaluation Questions as prescribed in the ToR. As described in Key aspects for evaluation and evaluation questions section of the report, the ET redesigned and clarified questions according to DAC criteria to be addressed to the main project stakeholders. Relevance (R): Relevance and ownership relate to the national development priorities, the UNIDO mandate and government strategies, as well as to target groups. These aspects were assessed by ET as highly satisfactory. R1. Are the activities and results of the project relevant to UNIDO’s long-term objectives and national government priorities? The project is highly relevant to UNIDO’s long-term objectives. During the DR the ET found direct links between project documentation (design, reports etc.) with UNIDO strategy documents. In particular: 1. SDG9: Industry, Innovation and Infrastructure 2. UNDAF for the Kyrgyz Republic (2012-2016): Inclusive and Sustainable Job- Rich Growth for Poverty Reduction, with particular attention to women and youth, as well as to vulnerable groups and disaster-prone communities 3. UNIDO Thematic priority:  Advancing economic competitiveness  Upgrading businesses and industrial infrastructure  Investing in technology and innovation  Supporting small and medium industry clusters  Meeting the standards  Entrepreneurship development  Entrepreneurship development  Branding for competitiveness and sustainable Growth During the KII the ET asked relevant stakeholders about their vision of the objectives and Theory of Change (ToC) of the project and their understanding of the linkages of the long-term objectives of the project with UNIDO and the Kyrgyz Republic strategy and objectives. No irrelevance was identified. The ET assessed the project relevance to national government priorities in general by comparing national strategies and program documents with the project ToC and observed results. The most challenging aspect was to compare the national program/policy documents with the project ToC as not all national documents do not have a RBM/LFA approach or long-term strategy (formulated in RBM/LFA logic). Anyhow, content analysis showed that the project is relevant to:  The National Strategy for Sustainable Development 2013-2017 (NSSD): The NSSD outlines the significance of development of the tourism sector through the tourism clusters

 Agro-industry development strategy (2020): to increase in production, improving product quality and efficiency of agriculture, and food security in the country  The Tourism Development Program 2019-2022: engaging the local population in sustainable employment, thereby contributing to the expansion of the economic opportunities for local residents and poverty reduction. In this way, the ET confirmed that the project is relevant to national government priorities as well. DO showed that the chosen project methodology and project strategy is highly relevant to local conditions and the level of enterprises and value chains’ development. R2. Is the project and its theory of change relevant to the country and regional context? Yes, the ET confirms that the UNIDO project and its theory of change are highly relevant to the country and regional context, and that interventions are well- timed. For justification see more in E4 as well as the section “Country and Regional Context” of the present report. Effectiveness (E): Effectiveness was assessed as Satisfactory with potential to Highly Satisfactory as there were some cases where the ET was not able to collect evidence that equipment or machinery supplied to the beneficiaries are properly installed and consumed/used, at the time when evaluation was conducted. This refers to the cases such as: the Air Dome infrastructure, which was installed but was planned to be actively in use from spring-summer 2020, while no strategy or business plan is provided by the stakeholders; the Arashan, which received equipment but not yet installed properly by the beneficiary. E1. What have been the project’s key results (outputs, outcome and impact)? During KIIs the respondents were addressed with a number of questions to find out their opinion on which project outputs have been the most valuable for them, how they consume them (outcomes evaluation) and what are the long- term effects of such consumption (impact evaluation). When the ET identified any inconsistency (positive or negative) with the project plan, additional questions were asked. As result, the following project results have been confirmed by the ET:

Outputs: Outcomes: Impact:

   Trained and Increased resilience Stimulation of new upgraded and productivity of services and offers in

beneficiaries local beneficiaries the tourist business  New  New employment  Partial bridging of thinking/horizons  Pro-active behavior of production and  Positive some beneficiaries in tourism (more efforts cases/success developing their needed) stories business (loans,  Increased trust of  Increased self- property, investments local and national esteem and etc.) stakeholders in motivation of the  Mobilization of UNIDO participants communities around  Motivation of regional  Personal horizontal the beneficiaries and national connections/  Stimulation of other authorities to keep up cooperation around elements the dynamic the value chain (participants) of the  Potential of the Air  Some elements of value chain Dome flagship project clusters are  More competitive organized and production developed  Steps in the direction of standardization and certification

E2. To what extent have the expected results been achieved or are likely to be achieved? The ET came to the following conclusions: Output 1: Support infrastructure for agro- and light-manufacturing industries established. This result is fully achieved. The cases of Ichke-Suu, Arashan, Issyk Kul Organic cooperatives clearly confirm this. Even more convincing results were achieved in the case of more advanced processing enterprises such as OSKO and EcoFloris. Output 2: Pilot clusters in selected industries developed and formalized. Cluster establishment/development is fully achieved, while the formalization of the clusters is partly achieved because some of the value chains or associations have no legal status or formal agreements and/or are still in the stage of formalization. Immediate objective: to strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk-Kul region. The aspect of capacity strengthening is fully achieved. The project made significant efforts to ensure achievement of the aspect of access to the markets for the agro-industry clusters in the Issyk-Kul region, but the present level of capacity building of the beneficiaries is too low to absorb advanced opportunities of market access at the moment. During KIIs the ET mostly heard the opinion, that “now, when we increase our production, we understand why UNIDO took so much effort to help us to get access to new markets. We are definitely trying to implement their recommendation in 2020”. The ET concludes

that the aspect of market access is partly achieved and most probably will be fully achieved during the next few years, after the project has ended. Long-term objective of the project: to stimulate economic growth and employment through promoting linkages between the tourism sector and related productive industries. This aspect fully achieved. The aspect of promoting linkages between the tourism sector and related productive industries is partly achieved. The ET has to conclude that additional interventions on capacity building, value chain analysis and investment are needed to assess the establishment of linkages. The project successfully tested and piloted such linkages, obtained success stories and demonstrated the possibility of synergy from such linkages. Impact: Contribution to SDG 9 (build resilient infrastructure, promote sustainable industrialization and foster innovation) and SDG 8 (promote inclusive and sustainable economic growth, employment and decent work for all). The ET concludes that the contribution to SDG8 is fully achieved and is evident from the collected data. The contribution to SDG 9 is definitely achieved although the baseline for fostering innovation and building a resilient infrastructure in the region was too low. This means that the provided technologies are relevant and innovative enough for the regional context and infrastructure, but less innovative from the modern technological perspective. At least one more project cycle of similar UNIDO intervention (2020-2022) is needed for the region to ensure the achievement of a substantial level of growth and innovations and to ensure the sustainability of project outcomes in the region. E3. What are the key drivers and barriers to achieve the project objectives? A summary of key drivers and barriers is provided in the table below.

Drivers Barriers

  Good analysis at inception phase Weak engagement of some key stakeholders at national level  Wide publicity at the inception  phase, interest of local target Limited cooperation / lack of groups synergy with some business associations  Good quality of beneficiary

selection  Connection between production and tourism is not provided with  Ownership: co-investments in practical tools and RBM production infrastructure and  equipment with local business and Absence of good quality strategies, cooperatives analysis and forecasting in agro- production and tourism  Systemic and tailored made development approach to training and sharing  experience. The modality of project planning used for Air Dome project work less

 Strong focus: One group of effective and created different beneficiaries throughout the whole expectations; weak planning and project. coordination  Motivation and support of MoC and local authorities of Issyk-Kul region  Good quality, flexibility and sustainable efforts of UNIDO Project implementation team (Kyrgyzstan and Vienna)

E4. Has the project done the right things? The ET confirms that the project has done the right things and with correct and clear logic. The key factors of the project success are the following: 1. Project theory of change is correct and mostly works well 2. Approach to value chain analysis works well and fully corresponds to the local context, where it is necessary to invest in each of the chain elements 3. Study tours, trainings and horizontal networking bring trust and a sustainable dynamic in the beneficiaries’ progress 4. Clustering works quite well, though more advanced producers mostly incorporate small scale businesses into their production and distribution system than build peer cooperation 5. Equipment provides a substantial impulse to business; 6. The actors have clear and relevant business strategies in most of cases; 7. Beneficiaries understand their mission better: to create a more productive environment and support community 8. Great examples with stimulating changes in other parts of the value chain

E5. What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? The ET comes to the following conclusions on lessons learned: 1. The project logic from market analysis and selection to training beneficiaries and then investing in their infrastructure is absolutely correct. Investment is the most risky part of the project, but it took place at the final phase. It makes sense to move the investment phase to an earlier period of time, e.g. in the middle of the project. 2. The procurement procedures for equipment implementation by UNIDO HQ - is highly appropriate to the country’s institutional and cultural environment. 3. In order for the community be able to consolidate the sales of final products, there must be some actor who can organize the basic processes of consolidation and distribution. In communities there is a high level of trust, but there are problems with skills.

4. Assistance with the formation of micro-finance facilities in cooperatives and business communities and training and supervision for the clusters / communities is in high demand. 5. More efforts at the policy level, more involvement of key stakeholders, more sectorial / thematic strategies and plans are needed in the next project cycle. 6. So far the agricultural cooperatives are doing a good job, but their connection with the tourism business is quite weak (though with good potential for the engagement of local communities) and requires additional attention in the next project cycle. 7. More attention to stakeholders’ engagement and partnership building is needed when a joint project (like the Air Dome) is planned and supported. Communication of the stakeholders needs to be facilitated by an external actor for some time. In the case of the Air Dome the project was lucky enough that the role of such actor was taken by local government.

Efficiency (Y): Both financial and administrative Efficiency is assessed by the ET as Highly Satisfactory. The project was able to find a lot of good solutions to ensure high financial efficiency. The chosen methodologies and expertise were highly efficient, especially when it comes to assessing efficiency of long-term objectives. The challenge for the project was a matter of timing. A number of events were organized with a slight delay for reasons beyond the control of the project team. This required additional efforts from the project team to ensure effectiveness and sustainability. Y1. How well has the project performed? Project has mostly performed well. Most of the equipment was delivered in 2019, at the final stage of the last year of the project. This is logical according to the project strategy, increases effectiveness and sustainability, but it also created pressure for the project beneficiaries and the UNIDO project team. As a result, some equipment has been tested, but has not yet started to contribute to full-scale production because of different reasons, such as seasonal issues, delays with construction work, some technical installment problems etc. (Arashan and to some extent Ichke Suu cooperatives, while the most complicated case is AgroTourPark.) Some delays with procurement were also caused by local customs procedures. Except for the delays described above, there was good quality planning and management; high-quality expertise; and good quality trainings and study tours. The investments provided by the project were organized in way to ensure the relevance of the investment scale to the present level of beneficiaries’ capacities For example, the small cooperative Issyk Kul Organic got 7 dryers worth 6000 USD each, while the bigger company OSKO received more costly equipment. Beneficiaries were required to contribute a significant amount of funds. This requirement increased efficiency significantly and positively contributed to the high level of effectiveness and sustainability.

Y2. Has the project done things right, with good value for money? Evaluation data clearly indicates that all available project resources (financial, time, human etc.) were efficiently used in accordance with the LFA matrix and the action plan. There was high efficiency of used resources against achieved deliverables (outputs and outcomes). Project implementers provided efficient spending per planned activities and local travel. The project office location in the capital of the Issyk-Kul region was also very efficient and effective. Based on direct observation, the ET concludes that the project team was able to make efficient decision-making, including decisions about equipment to be procured. Based on both direct observation and an analysis of KII, the project activities were cost-efficient. The UNIDO procurement rules and the fact that all equipment procurement was made by UNDP HQ in Vienna prevented bias and abuse. All stakeholders and beneficiaries interviewed made only positive comments about the financial efficiency of the project. Some of them complained about the delayed project start, but the ET agrees that the approach of spending time on an in-depth value chain analysis at the beginning was completely feasible and efficient. The fact that most of beneficiaries do not plan their activities on a long-term basis (for the period of more than one year) presented a challenge to timing efficiency. Some beneficiaries stated during KIIs that they know from other community members about bad experiences of cooperation with international organizations in the past. This caused limited trust among some beneficiaries that investments promised by UNIDO would really take place. This also sometimes led to delayed investments by the beneficiaries for the modernization or buying of appropriate premises for the installment of UNIDO equipment. Impact (I): The ET confirms that the achieved Impact is Highly Satisfactory (at least according to evidence that can be assessed immediately after project implementation). The ET found that the project contribution to SDG 9 and SDG 8 was as planned. The project stimulated economic growth and employment in the Issyk-Kul region via the stimulation of the demand for goods from agricultural sector. Local policy actors are looking for budget and investment opportunities on how to continue the approach implemented in the UNIDO project. I1. What have been the project’s key impact? As described in E2, the key planned project impact (to contribute to SDG 9 and SDG 8) is found to be fully achieved. As planned, the project stimulated economic growth and employment in the Issyk-Kul region via the stimulation of the demand for goods from agricultural sector. The ET identified some additional key impacts, in particular: 1. The regional and national authorities increased their faith that that international development intervention can be effective (UNIDO has a strong credit of trust).

2. Local policy actors are looking for budget and investment opportunities on how to continue the approach implemented in the UNIDO project. Some smaller impacts were also mentioned during KIIs (more details see in E1), for example:  The stimulation of new services and offers in the tourist sector  Partial bridging between production and tourism  Increased trust among local and national stakeholders in UNIDO  Motivation among the regional and national authorities to maintain the development dynamic I2. To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long term objectives? For specific value chains and enterprises the project helped put in place drivers and contributed to overcome barriers to very high extent. An in-depth analysis of value chains carried out at the beginning of the project made it possible to identify the needs and potential of the beneficiaries in areas in which they often did not have confidence or certainty. The methodology and expertise used in the value chain analysis identified growth points, the potential for investment which will boost growth not only for individual entities, but will also achieve the synergy effect through the development of value chain. As a result, the beneficiaries, having received support from the project in the form of knowledge, experience, contacts, market access, investment in equipment and personnel, have begun to develop the value chain, although they had not set such goals before. This project success was noted by institutional and policy actors at the local and national level, including the local authorities. However, the project strategy itself is not recognized by these players. On the one hand, discussions with stakeholders on how the project is perceived by decision makers at the local, regional and national levels showed that the project is highly rated, extremely effective, with all project impacts confirmed and highly valued. On the other hand, most of the external stakeholders have a poor understanding of how exactly this success happened. In particular, many consider the analytical stage at the beginning of the project to be too long, when it could have immediately started with investment. The success of the project among such interlocutors is associated with the choice of beneficiaries and objects for investment, the choice of topics for educational events, and successful experience shown during the stadium classes. At the same time, they have no understanding that the value chain analysis report was the decision-making tool for choosing experts, beneficiaries and locations for educational visits. As result, the ET concludes that degree of awareness of mechanisms and project methodology is not high. Level of institutionalization of the project practices is comparatively low and requires special efforts in the next project cycle. The contribution to overcoming barriers and contributing to the long-term objectives in the processing sector is very high, although in the tourism sector it is quite low, while there is middle level influence on the linkage between processing and tourism. The reason for such a conclusion is mostly because of

weak synergy and marketing strategies between of the actors in the tourism sector and agricultural processing sectors, lack of in-deep value chain analysis between these sectors. Based on an analysis of the project documentation, data obtained during DO and KII, the ET believes that in the existing timeframe, with the available resources and in the existing context, it was impossible to ensure parallel work with the tourism sector at the level at which work with the processing sector was ensured. The chosen strategy of stimulating the tourism sector entities to develop through establishing ties with producers and processors of agricultural products has generated a demand for capacity building and value chain analysis both from the tourism sector and from relevant policy makers. Sustainability (S): S1. To what extent will the achieved results be sustained after the completion of the project? Assessment of sustainability of each of results:  Output 1 (Support infrastructure for agro- and light- manufacturing industries established) is judged as sustainable to a high extent. The “Air Dome” project and infrastructure is under some risks, mitigated by additional efforts by the project team and local authorities.  Output 2 . (Pilot clusters in selected industries developed and formalized) is judged as sustainable to a high extent, in particular, the component “processing clusters” has the potential to grow. Component “linkage between processing sector and tourism sector” is judged as sustainable to a middle extent. To ensure future inter-sector value chain development and tourism sector growth additional future interventions needed.  The project’s immediate objective/Outcome (to strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk- Kul region) –is judged as highlysustainable.  The project’s long-term objective/Impact (to stimulate economic growth and employment through promoting linkages between the tourism sector and related productive industries) is judged as sustainable to a middle extent. Institutional capacity building is needed. S2. What were the major factors, which influenced the achievement or non-achievement of the sustainability of the project? The ET identified the following key factors, which have influenced the achievement or non-achievement of sustainability of the project outputs and outcomes:  Good and in-depth value chain analysis and planning enable the high quality and low cost of the project results.  Good project strategy with a balanced combination of capacity building interventions and direct investment to the pilot projects  Factor of the environment: the institutional capacity of local policy actors is a challenge and there is not enough quality of policy development in the tourism and agriculture industries. In particular, there are good quality forecasts, and no result-based planning and management. Consequently,

the ET was not able to identify a local actor able to start scaling-up the practice of value chain analysis and management on a region level.  Factor of project design: the design of the project time frame, when the procurement of equipment happened at the end of the project period with no possibility to assess impact from investment for at least one more season.  Factor of environment: local stakeholders (at all levels) have weak capacity on strategic and project/program management.  Factor of environment: The relationship between tourism and processing is primarily by the improvement of living standards and increased entrepreneurial activity. This is still far from stimulating the tourism industry in the present situation. A more direct means of influence to tourism sector and linkage is required.  Factor of environment: low functional literacy of the local population (internet, cash flow, budgeting…) explains the limited potential of scalability of community-based businesses.

Gender mainstreaming

According to the project document, ”the project should provide the necessary means to vulnerable producers in the rural areas of the Issyk-Kul region and ensure the necessary provisions to enable more vulnerable actors to be able to participate and benefit from the project activities”. The project has adequately defined its window of opportunity in terms of gender mainstreaming, disability mainstreaming and other aspect of promoting the interests of vulnerable groups in the specific country context. Indeed, among the project beneficiaries there is a female cooperative (Issyk Kul Organic), enterprises owned and operated by women (EcoFloris, both guesthouses), and enterprises creating jobs for women from the countryside (Arashan, Egin). The project is also distinguished by the fully balanced gender representation of the project team.

On the other hand, content analysis of the minutes of the project Steering Committee meetings, reports on study visits and other project documents shows that the topic of gender mainstreaming is not explicitly featured here. However the discussions during KIIs showed that the project team paid attention to this issue and was able to promote at least issues of gender equality as an important aspect of cooperation with international organizations and donors. Project interventions contributed to better gender equality by involving the female rural population of Issyk Kul Oblast to economic relations, increased their incomes in several cases (primarily through agricultural cooperatives and guesthouses) and stimulated poverty reduction in the region. Bishkek based mid-size enterprises involved in the UNIDO project did not have gender equality and empowerment as an objective.

Both at the level of the entire project and at the level of direct/indirect beneficiaries, no discrimination was identified by the ET, but it is difficult to

assess aspects of discrimination before progressing to the level of actual users of the technologies and difficult to measure without relevant data collected.

However, there is a room for improvement regarding indicators, monitoring and reporting procedures, which at present are not gender-disaggregated.

The ET noted that gender mainstreaming has been addressed in a satisfactory manner in the following aspects:  Gender issues were addressed in the design of the project.  The participating enterprises included several women run/women owned businesses.  Women are quite well represented in participants’ lists of educational events and study-tours.  Training of staff of enterprises included female staff at different levels (managerial; operations).  Women were well presented in the team of project experts (coordination / thematic).

Therefore, taking into account cultural context of Kyrgyzstan, its traditions and the mentality of the people, the attitude to the topic of gender equality, the project approach allowed for the raising of the topic of gender mainstreaming to the agenda of discussions at different decision-making levels and demonstrating how it can be implemented in practice in the future. In summary, the ET evaluated this aspect of the project planning and implementation as satisfactory. Results Based Management, Monitoring and Evaluation

Overall, project monitoring has been implemented at a satisfactory level, including the preparation of periodic reports, periodic missions from UNIDO HQ, monitoring visits of the project team to the beneficiaries. The project would have however benefitted from a single database aligned to the logical framework/its indicators (which has no quantified baseline, while gender indicators were not included in the M&E tools which lacked a precise description how the indicators would be measured) that systematically compiles data/information accordingly. A regular monitoring report system is also missing or at least not identified by the ET during the DR and KII phase.

The lead national expert assisted the Project Manager when needed in monitoring the project activities on a continuous basis in order to ensure that activities occur as planned and remedial steps are taken as deemed necessary. On this basis, UNIDO prepared a project progress reports every six months.

Financial monitoring was exercised by UNIDO as per UNIDO’s standard financial regulations, UNIDO’s applicable regulations, rules, directives and administrative instructions.

The project design envisaged a result-based management mechanism (RBM) to ensure timely identification of possible implementation challenges and provide support in addressing them. The RBM mechanism would thus serve as an

instrument for balanced decision-making. On the basis of organized monitoring (mostly face-to-face monitoring visits, not so much minutes and reporting), the project team also succeeded in providing flexible management and operative decision-making, according to RBM principles, which took into account a realistic picture of project progress as well as the dynamic of development of initiatives of each specific selected beneficiary.

The project established a result-based management (RBM) mechanism to ensure timely identification of possible implementation challenges and provide support in addressing them. RBM results were distributed and discussed during the Steering Committee meetings.

On the other hand, the project’s RBM aspect was more based on the capacity and pro-activity of the project staff together with UNIDO HQ and less on established procedures and protocols that can be a de-personalized tool for further development and sustainability. The monitoring procedure followed the UNIDO progress report format that is mainly activity based and ends up being rather repetitive. In this regard, there is scope for more emphasis on RBM during the next phase of interventions. Rating The ET used following score system, based on UNIDO Evaluation manual, Vienna, 2018 - Chapter 3. Methodology, p.19, p.24.

Score Definition Category HS Highly satisfactory Level of achievement presents no Satistafory shortcomings (90% - 100% achievement rate of planned expectations and targets). S/HS Satisfactory with Level of achievement presents minor potential to Highly shortcomings (80% - 89% satisfactory achievement rate of planned expectations and targets) and project intervention demonstrates high probability to achieve highly satisfactory rate as long-lasting impact. S Satisfactory Level of achievement presents minor shortcomings (70% - 79% achievement rate of planned expectations and targets). MS Moderately Level of achievement presents satisfactory moderate shortcomings (50% - 69% achievement rate of planned expectations and targets). MU Moderately Level of achievement presents some Unsatisfactory unsatisfactory significant shortcomings (30% - 49% achievement rate of planned expectations and targets). U Unsatisfactory Level of achievement presents major shortcomings (10% - 29% achievement rate of planned expectations and targets). HU Highly unsatisfactory Level of achievement presents severe

shortcomings (0% - 9% achievement rate of planned expectations and targets).

Rating table for the project:

# Evaluation Definition Evaluation comments Rating Criteria

hardly possible to predict some minor shortcomings identified during project implementation and evaluation of the project.

2 Logframe Assessment of the logical The logical framework is HS framework aimed at of high quality and planning the intervention includes a clear logic and verifiable indicators.

C Project Functioning of a HS performance development intervention

for the project was timing. A number of events were organized with a slight delay for reasons beyond the control of the project team. This required additional efforts from the project team to ensure effectiveness and sustainability. Outputs 1 and 2 are 4 Sustainability The continuation of benefits HS assessed as sustainable of benefits from a development to a high extent. The intervention after major project’s immediate development assistance has objective is assessed as been completed. The highly sustainable. The probability of continued project’s long-term long-term benefits. The objective/impact is resilience to risk of the net assessed as sustainable benefit flows over time to a satisfactory extent, since institutional capacity building is needed. D Cross-cutting Other important criteria S/HS performance that cut across the UNIDO criteria intervention

the plan (monitoring) and is this basis, UNIDO having the desired result prepared project (evaluation) progress reports every six months. Financial monitoring was exercised by UNIDO as per UNIDO’s standard financial regulations, UNIDO’s applicable regulations, rules, directives and administrative instructions. Gender indicators were not included in the M&E tools.

E Performance Assessment of partners’ S/HS of partners roles and responsibilities engaged in the intervention

scalability of project strategy

3 Donor A proper level of HS strategy-level results based monitoring is demonstrated.

F Overall Overarching assessment of The project achieved S/HS assessment the project. Drawing upon great results and impact, the analysis made under and demonstrated high project performance and quality management and progress to Impact criteria development approach. above but not an average of Late delivery of some of ratings the equipment and the need for additional efforts in building the capacity policy actors does not allow the ET to rate overall performance of the project as highly satisfactory.

RECOMMENDATIONS The evaluation findings are systemized in the following main recommendations, with an explanatory note (justification) as regards each of the recommendations:

To the Donor (the Russian Federation) 1. To continue support to development of the agricultural processing and tourism sectors via supporting value chains and cluster development. Consider making available funding for the follow-up project to ensure it starts not later than June 2020. Or, as an alternative, consider the allocation of an interim budget (bridge funding) to ensure the smooth transition to the follow-up project.

Justification: The completion of the present project will happen when the report is finished and the finalization of approval for the follow-up project document at the level of the Government of Kyrgyzstan, within UNIDO and also at the level of the Donor, will take time. Timely efforts to increase institutional memory and create sustainable processes for planning the development of the territories through value chain analysis and investment to the point of growth require additional efforts from the local, regional and national authorities, which at the moment cannot be provided with internal resources.

To the Government of Kyrgyzstan (in particular the Ministry of Economy) 2. Decide which of the national, regional and local authorities will be constant members of the project Steering Committee during the whole project period. With project support, consider updates of the processes and programs to further support dissemination of UNIDO project best practices, especially in terms of policy-level processes.

Justification: The ET found that most of the project Steering Committee members attended one-two meetings only. The process of adaptation and implementation of the project methodology and best practices had some gaps. As a result, while decision makers at different levels are very much aware about project results, they cannot take any action to implement the use and expansion of the project’s best practices.

To UNIDO 3. Finalize the preparation of the follow-up project document, taking into consideration the findings and suggestions of the terminal evaluation of present project.

Justification: The ET is aware that the drafting of the follow-up project document has already started, in parallel with or after the formulation of the concept note. The key message here is that the design of follow-up project is to duly reflect the lessons learned from the implementation of the present project and that its implementation strategy includes attention to replication/upscaling, timeframe and capacity building for policy-actors, in particular:  More focus to support institution actors’ capacity building on evidence based policy development and result based policy

 More attention to tourism sector development, more intensive practical mechanisms of bridging agro-processing and the tourism sector, and the implementation of industry and cluster development into the regional development policy of tourism sector. Consider investment into development regional/local economic development strategies. Consider the implementation of Belarussian best practices of local economic development (for example, in the form of a study-tour).  Ensure a strong analytical component for future value chain analysis and cluster development both in the processing and tourism sectors (survey on the measurement of tourist perceptions on borders/airports,  Design the project plan to ensure that after equipment installation the project beneficiaries will have at least one year of project capacity building and mentorship support  More attention to a follow-up/exit strategy. In particular, more efforts to ensure local ownership and state and non-state stakeholders engagement/capacity building.  Consider supporting a micro-finance facility at the local level where relevant.  Include in project activities the mapping of foreign (including Russian Federation) investment opportunities for the local agro-processing and tourism business.  Consider a series of in-country study-visits as a cheaper and more sustainable form of capacity building of SMEs.  Organic farming is another topic that can continue the logic of UNIDO investments. Organic farming needs to be stimulated at the national level as a strategy for the development and diversification of exports of high value-added products.

Lessons learned and good practices This ET’s review of the entire project (both its design and implementation) generated the following main lessons learned:

 A responsible approach to high-quality and in-depth value chain analysis and focus on investment in growth points identified during the analysis allowed comparatively small resources to achieve a very noticeable and significant effect on stimulating the development of the agricultural production and processing industry.  The combined approach to capacity building, which includes sharing best practice and experience from countries in the region and EU through exchange of experts and study tours enabled local producers to learn from the best practices in specializing in the production and sale of modern agricultural machinery, spare parts, equipment, technologies and materials for crop production, livestock, veterinary medicine, processing, transportation and storage of crop production and livestock production;

The combined approach to capacity building for operators and hoteliers enabled to learn about the promotion of tourist destinations on domestic

and global markets; potential ways of the formation of common information tourist centers; the importance of continuous training of the personnel on sustainable and eco-tourism and on industrial packaging design attractive to tourists; advantages of government-business cooperation in development of the tourism sector and the support provided to small farms and family businesses contributing to tourism sector, local productive activities and regional development.

 Procurement management through UNIDO HQ in Vienna and an individual, responsible approach to the requirements and needs of each procurement contract not only ensured high-quality procurements, but also allowed saving on equipment costs (due to lower prices and low risk of non-payment of bills by UNIDO)

ANNEXES Annex 1. Evaluation ToR UNITED NATIONS INDUSTRIAL DEVELOPMENT ORGANIZATION TERMS OF REFERENCE PROJECT TERMINAL EVALUATION UNIDO project “Linking the tourism industry to productive activities in the Issyk-Kul region of the Kyrgyz Republic” Project ID: 150245 August 2019

1. BACKGROUND INFORMATION The Ministry of Economy of the Kyrgyz Republic has requested UNIDO’s support to develop and implement a cluster development project aimed at strengthening linkages between tourism and productive industries in the Issyk-Kul region. Following consultations, the Permanent Mission of the Russian Federation expressed interest to fund the proposed project and support the new member of the Eurasian Economic Union to benefit from the development opportunities made available following its accession to the single market. UNIDO field mission was carried out in September 2015 and a project proposal was prepared and validated in a roundtable meeting in Bishkek by the government counterpart. The long-term objective of the project is to stimulate economic growth and employment through promoting linkages between the tourism sector and related productive industries. The immediate objective of the project is to strengthen the processing capacity and market access of selected agro-industry clusters in the Issyk-Kul region. The project will focus on two interrelated outputs: Output 1: Support infrastructure for agro- and light-manufacturing industries established Output 2: Pilot clusters in selected industries developed and formalized This project will contribute to the envisaged Sustainable Development Goals (SDG), in particular SDG 9 (Build resilient infrastructure, promote sustainable industrialization and foster innovation) and SDG 8 (Promote inclusive and sustainable economic growth, employment and decent work for all)

2. SCOPE OF THE SERVICES AND DELIVERABLES The project terminal evaluation (PTE) will cover the whole duration of the project from its starting date up to the date of the evaluation. It will assess

project performance against the evaluation criteria: relevance, effectiveness, efficiency, sustainability and impact. The PTE has an additional purpose of drawing lessons and developing recommendations for UNIDO, the Government, Donors, and the project stakeholders and partners that may help improving the selection, enhancing the design and implementation of similar future projects and activities in the country and on a global scale upon project completion. The overall purpose of the PTE is to assess whether the project has achieved or is likely to achieve its main objective and to what extent the project has also considered sustainability and scaling-up factors for increasing contribution to sustainable results and further impact. The evaluation will be carried out as an in-depth evaluation using a participatory approach whereby all key parties associated with the project will be informed and consulted throughout the evaluation. The evaluation will use a theory of change approach and mixed methods to collect data and information from a range of sources and informants. It will pay attention to triangulating the data and information collected before forming its assessment. This is essential to ensure an evidence-based and credible evaluation, with robust analytical underpinning. The theory of change will identify causal and transformational pathways from the project outputs to outcomes and longer-term impacts, and drivers as well as barriers to achieve them. The learning from this analysis will be useful to feed into the design of the future projects so that the management team can effectively manage them based on results. In those cases where baseline information for relevant indicators is not available, the evaluation team will aim at establishing a proxy-baseline through recall and secondary information. The Evaluation Team (ET) will be required to use different methods to ensure that data gathering and analysis deliver evidence-based qualitative and quantitative information, based on diverse sources, as necessary: desk studies and literature review, statistical analysis, individual interviews, focus group meetings/discussions, surveys and direct observation. This approach will not only enable the evaluation to assess causality through quantitative means but also to provide reasons for why certain results were achieved or not and to triangulate information for higher reliability of findings The key evaluation questions are the following: (a) What are the key drivers and barriers to achieve the long-term objectives? To what extent has the project helped put in place the conditions likely to address the drivers, overcome barriers and contribute to the long term objectives? (b) How well has the project performed? Has the project done the right things? Has the project done things right, with good value for money? (c) What have been the project’s key results (outputs, outcome and impact)? To what extent have the expected results been achieved or are likely to be achieved? To what extent the achieved results will sustain after the completion of the project?

(d) What lessons can be drawn from the successful and unsuccessful practices in designing, implementing and managing the project? The evaluation will assess the likelihood of sustainability of the project results after the project completion. The assessment will identify key risks (e.g. in terms of financial, socio-political, institutional and environmental risks) and explain how these risks may affect the continuation of results after the project ends.

3. TIME SCHEDULE The evaluation is scheduled to take place from September 2019 to January 2020. Detailed PTE scheduler is subject of inception report.

4. EVALUATION DELIVERABLES The evaluation team will submit inception report (deliverable #1), including draft of the evaluation methodology, provisional in-fields mission scheduler and draft evaluation instruments. At the end of field-mission, the evaluation team will conduct in-person or distant (internet, teleconference software) debriefing with UNIDO HQ project team on data collection, initial findings and preliminary conclusions. Debriefing presentation of the evaluation team will be submitted to UNIDO (deliverable #2). Feedback of UNIDO will be taken into consideration during at the phase of data analysis. The PTE draft report (deliverable #3) will be circulated to UNIDO project staff and national stakeholders associated with the project for factual validation and comments. Any comments or responses, or feedback on any errors of fact to the draft report provided by the stakeholders will be sent to UNIDO HQ project team. On the basis of this feedback, and taking into consideration the comments received, the evaluation team will prepare the final version of the terminal evaluation report. The PTE report should be brief, to the point and easy to understand. It must explain the purpose of the evaluation, exactly what was evaluated, and the methods used. The report must highlight any methodological limitations, identify key concerns and present evidence-based findings, consequent conclusions, recommendations and lessons. The report should provide information on when the evaluation took place, the places visited, who was involved and be presented in a way that makes the information accessible and comprehensible. The report should include an executive summary that encapsulates the essence of the information contained in the report to facilitate dissemination and distillation of lessons.

5. LANGUAGE REQUIREMENTS The Team Leader proposed by the contractor must be able to communicate fluently in English and Russian. Experts proposed by the contractor must be able to communicate in Russian.

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6. PAYMENT SCHEDULE  30% upon approving the Final version of Inception report by UNIDO Project Manager  40% upon conducting of debriefing on initial findings (offline meeting or via teleconference)  30% upon approving Final version of PTE report by UNIDO Project Manager The Contractor must provide all deliverables to UNIDO in 1 electronic copy, consisting of MS Word/Power Point and PDF files. The electronic copy can be provided via e-mail, if the nature and size of the files make it possible. Otherwise, the electronic copy will be provided in a CD or DVD copy.

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Annex 2. Evaluation Schedule The evaluation is scheduled to take place from September 2019 to February 2020. The ET after consultation with UNIDO project team agreed on the following detailed PTE scheduler:

Time Evaluation activities

September 11 – October Clarification of working tasks, planning field 10, 2019 mission, development of evaluation methodology

October 10 - 31, 2019 Receiving project documents and providing Desk Research

October 10, 2019 Introduction meeting of IMACON ET and UNIDO project team in Bishkek

November 1-20, 2019 Development and approval of the Inception Report

November 23 – December Field mission of the ET to Kyrgyzstan, presentation 2, 2019 of initial findings to the UNIDO country team

December 3 – January 25, Development and submission of the Draft Report 2019

Feedback to draft Report from UNIDO team Kyrgyzstan and Vienna

Development and submission of the Final Evaluation Report

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Annex 3. Program of evaluation mission LINKING THE TOURISM INDUSTRY TO PRODUCTIVE ACTIVITIES IN THE ISSYK-KUL REGION

PROGRAMME OF THE EVALUATION MISSION Bishkek, Kyrgyz Republic November 24-December 2, 2019 This program agreed and used for the mission planning. Some ad hoc meetings or relevant changes based on collected data may be appearing. Mr. Segrei Gotin, Evaluation Consultant Mr. Vlad Vialichka, Evaluation Consultant Ms. Nurgul Baiburaeva, National Project Coordinator Ms. Asel Serkebaeva, Cluster Development Expert Mr. Zhanybek Saatov, National Communications Expert Mr. Anarbek Bekish, Project driver

Time Activity Status Sunday 24, November 2019 Meeting at the airport Manas Transfer to BHotel, Bishkek of: TK348, Nov 24, TBD (address: 99, Baetova str; Bishkek, Kyrgyzstan Phone: 2019, 6.25am +996(312)62-15-16, +996(770)77-55-90 14:00 Team meeting 18:00 Dinner Monday, 25 November 2019 10:00 Transfer to OSKO 13:00-15:00 Lunch 15:00-18:00 Transfer to EcoFloris 18:00 Dinner Tuesday, 26 November 2019 Meetings with state counterparts – Ministry of culture, 10:00 information and tourism 12:00-13:00 Lunch 13:00-14:30 Transfer to Arashan in Novopokrovka 14:30 Departure to Ornok, Issyk-Kul region 17:00-17:30 Stop by OSKO Orchard in Ornok village 18:00-19:00 Visit to Altyn-Jeek guest house (Jam production line) 19:30 Check in TBD 20:00 Dinner

Wednesday, 27 November 2019

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10:00 Departure to Karakol Visit to Ichke-Suu cooperative. Monitoring equipment and 11:00 premise. Interview with key informants. Visit to PE Tynalieva (oil production). Monitoring 13:30-14:30 equipment and premise. Interview with key informants. 15:00 Lunch in Karakol 16:00 Check in Argo guest house in Karakol Visit to AgroTourPark cooperative in Maman village. 17:00-18:00 Monitoring equipment, air dome and TIC, Interview with key informants. 19:00 Dinner Thursday, 28 November 2019 09:00 Meeting with Issyk-Kul Administration 11:00 Transfer to Novovoznesenovka Visit to Issyk-Kul Organic cooperative. Monitoring 11:30-12:30 equipment. Interview with key informants. 12:30 Transfer to Tasma village 13:00-14:00 Lunch in Karakol 15:00-18:00 Visit to members of IK Organic cooperative in Tasma village 19:00 Return to Karakol Friday, 29 November 2019 10:00 Check out and transfer to Jeti-Oguz and Lipenka villages Visit to members of IK Organic cooperative in Jeti-Oguz, 11:00-14:00 Lipenka and Jargylchak villages 15:00-16:00 Lunch in Jargylchak village 16:00 Departure to Bishkek 21:00 Check in to B-Hotel and Dinner Saturday, 30 November 2019 Meeting with Agroprocessors and Tour operators’ 10:00 associations 13:00 Lunch 14:00-18:00 Wrap up meeting with National Team Sunday, 1 December 2019 Final meeting and discussions of National and evaluation 10.00 teams Monday, 2 December 2019 TURKISH AIRLINES, 05:00 Transfer to the airport Manas Dec2, 2019, 07:30

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Annex 4. Interview questions

Structure of the Key Informant Interview

1. Name of respondent, position

2. Interaction with the UNIDO project (role, affiliation etc.)  How does your cooperation with the project started?  Which activities you took part?  What are your impressions and comments regarding your participation?

3. Procurements, efficiency, M&E aspects  Do you think you (the project) have chosen the most economic approach? Could you think or imagine other alternatives?  What procedures did you use? Are these procedures described? If so, please, share this description?  Where there any delays with implementing activities from the Annual work plans? What was the management response in case when delay happened?

4. Outputs and outcomes  Which of the project outputs were the most valuable for you and why?  How your capacity has been ensured via cooperation with UNIDO project?  What is your progress in service delivery as a result of your participation in cooperation with UNIDO?  What can you identify as significant change after project interventions at individual, community, networking or policy level?

5. Networking  Has you networking with other project participants improved as result of your participation in UNIDO project?  Which activities stimulated networking the most?  What examples and evidences you can identify?  What benefits from networking you can identify regarding the project goals?

6. Impact  What, in your opinion, was the essence of the project?  Were the objectives of the project and relevant objectives of your organization in line with each other?

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 How do you see the long-term effect of this project? How did it influence the development of SME and tourist sector in Issyk Kul oblast?  Is it logical and necessary for UNIDO to invest to this project?  Is the project relevant to adopted policies and strategies in Kyrgyz Republic?

7. Sustainability and follow up  Do you plan to continue this activity after the project funding and implementation will be finished? If yes – how can you provide resources for these activities in the future?  Which positive and negative factors influenced project implementation? How did you address them in the past and for the future?

8. Vulnerable groups  Did you have any focus on vulnerable groups (women, countryside population etc.)?  Was there any focus of attention to gender equality in your (or the project) activities? If yes, please, explain  Which measures can improve the situation of vulnerable groups in Issyk Kul oblast, in your opinion?

9. Recommendations and lessons learnt  What can recommend to the project stakeholders in case if the project will be prolonged or will get new phase / follow up?  What key lessons learnt for yourself and for the project you can identify?

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