USAID ECONOMIC RESILIENCE ACTIVITY: ANNUAL REPORT October 01, 2019 – September 30, 2020
This publication was produced by the USAID Economic Resilience Activity under Contract No. 72012118C00004 at the request of the United States Agency for International Development. This document is made possible by the support of the American people through the United States Agency for International Development. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the U.S. Government.
Program Title: USAID Economic Resilience Activity
Sponsoring USAID Office: USAID Ukraine
Contract Number: 72012118C00004
Contractor: DAI Global, LLC
Submission Date: October 30, 2020
Author: DAI Global, LLC
CONTENTS
CONTENTS 2 ACRONYMS AND ABBREVIATIONS 3 I. EXECUTIVE SUMMARY 6 II. INTRODUCTION 8 BRIEF SUMMARY OF ACTIVITY 8 III. CONTEXT UPDATE 9 KEY NARRATIVE ACHIEVEMENTS 9 BIG INFRASTRUCTURE 11 INCLUSION 13 INCREASING CAPABILITIES 13 INCREASING OPPORTUNITIES 18 GROWTH 23 MARKET EXPANSION 24 INVESTMENT ACCELERATION FOR MSMES 31 TRANSFORMATION 33 DRIVING VISION 34 COMMUNICATION 39 SUPPORTING INFRASTRUCTURE INVESTMENT 41 IV. COORDINATION 43 V. PROGRESS AGAINST TARGETS 46 VI. PERFORMANCE MONITORING, EVALUATION AND LEARNING 50 VII. LESSONS LEARNED 54 VIII. FINANCIAL INFORMATION 57 IX. MANAGEMENT 58 X. SUB-AWARD DETAILS 60
ACRONYMS AND ABBREVIATIONS A2F Access to Finance AGRO Agriculture Growing Rural Opportunities Program AMELP Activity Monitoring, Evaluation, and Learning Plan BSP Business Service Provider BSPU Berdiansk State Pedagogical University CAP Credit for Agricultural Producers program CC Consolidated Community CdA Chargé d’Affaires CEP Competitive Economy Program COP Chief of Party CSR Corporate Social Responsibility DAI DAI Global LLC DFID Department for International Development DG East Democratic Governance East DonNTU Donetsk National Technical University DOSA Donetsk Oblast State Administration DRC Danish Refugee Council ECOS Environmental Compliance Support EBRD European Bank for Reconstruction and Development EIB European Investment Bank EPS Energy Security Program ERA Economic Resilience Activity ERC Environmental Review Checklist EU European Union FAO UN Food and Agriculture Organization FHI 360 Family Health International 360 (NGO) FMCG Fast Moving Consumer Goods GAP Good Agricultural Practices GBV Gender-based Violence GCA Government Controlled Areas GIZ Deutsche Gesellschaft für Internationale Zusammenarbeit GoU Government of Ukraine HACCP Hazard Analysis and Critical Control Points HoReCa Hospitality, Restaurant, Catering I4M Innovations for Manufacturing ICA Individual Contract Agreement ICRC International Committee of the Red Cross IDP Internally Displaced Persons
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IFI International Financial Institution IOM International Organization for Migration I4M Innovations for Manufacturing ISS Institute for Strategic Studies under the President of Ukraine IT Information Technology KOSA Kherson Oblast State Administration LGBTQI Lesbian, Gay, Bisexual, Transgender, Queer and Intersex LNAU Luhansk National Agrarian University LoA Life of Activity LOSA Luhansk Oblast State Administration LRLC Luhansk Regional Laboratory Center MEL Monitoring, Evaluation, and Learning MinTOT Ministry for Reintegration of Temporary Occupied Territories MIF Mariupol Investment Forum MoES Ministry of Education and Science MSME Micro, Small, Medium Enterprises MSRA Market Systems Resilience Assessment MVP Minimum Viable Product NGO Non-Governmental Organization NSDC National Security and Defense Council OTI Office of Transition Initiatives PE Private entrepreneur PLEDDG Partnership for Economic Local Development and Democratic Governance PPP Public Private Partnership PSTU Pryazovskyi State Technical University R&D Research and Development RFA Request for Applications RFP Request for Proposal P&R Pause and Reflect SAF Small Architectural Form STEM Science, Technology, Engineering, Mathematics TA Technical Assistance ToR Terms of Reference ToT Training of Trainers TSATU Dmytro Motornyi Tavria State Technical University UCAB Ukrainian Club of Agribusiness UCBI II Ukraine Confidence Building Initiative ULA Ukrainian Leadership Academy UNDP United Nations Development Program
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UNFPA United Nations Population Fund UNICEF United Nations Children’s Fund USAID United States Agency for International Development UUCU Ukrainian United Credit Union UWF Ukrainian Women’s Fund VC Value Chain VR Virtual Reality VEI Vocational Education Institution VET Vocational Education Training WHO World Health Organization WBSC Women’s Business Support Centers WNISEF Western NIS Enterprise Fund WfD Workforce Development ZOSA Zaporizhzhia Oblast State Administration
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I. EXECUTIVE SUMMARY
The year can be reviewed in two halves, before and after COVID-19. Although not a symmetrical division, the ERA program felt the effects and changes brought on by the global pandemic in March 2020, almost mid-way through implementation of an ambitious and innovative workplan. It was innovation, ambition and creative teamwork that enabled ERA to adapt and make plans to achieve and exceed many goals and objectives in Year 2.
October 2019 began with strong positive economic indicators in Ukraine’s economy including employment and sales throughout ERA’s area of operation in the eastern Oblasts of Luhansk, Donetsk and Zaporizhzhia. The outlook was positive, as the international community was able to see firsthand the enthusiasm and opportunities available in the east at the Mariupol Investment Forum supported by ERA and attended by President Zelenskyi and acting U.S. Ambassador Taylor.
While the Russia-backed conflict in eastern Ukraine was still a primary concern during the reporting period, the early steps of the Zelensky government to reduce tension through prisoner swaps and discussions of potential economic cooperation allowed citizens to focus on new opportunities and economic development. In response, ERA supported development of economic opportunities throughout the year with targeted programming in each of its newly arranged and integrated technical components: Inclusion, Growth and Transformation. ERA also maintained its commitment to close coordination with USAID partners such as DG East, the Energy Security Program (EPS), the Competitive Economy Program (CEP), the Credit for Agricultural Producers (CAP) program, international organizations including the World Bank and European Investment Bank, and local, Oblast and national government partners.
ERA introduced a new organizational structure by adding a Deputy Chief of Party Operations, based in Kyiv, to streamline grants and procurements systems, a Senior Engineer in Kramatorsk to solidify the logical sequence and quality of the infrastructure project verification process, and a new Deputy Chief of Party Technical based in Kramatorsk to complement and support partner relationships and the in-depth technical and contextual knowledge of the Economic Strategy Lead based in Sievierodonetsk.
Despite the onset of the COVID-19 global pandemic and the accompanying remote work and travel restrictions, ERA adapted its programming and operations through direct communication and coordination with partners and beneficiaries to continue progress on workplan goals and targets while maintaining compliance with Government of Ukraine, USAID and DAI health and safety policies and procedures.
ERA expanded its partnerships and area of implementation in February to include Henichesk, Kherson Oblast, through signing a Memorandum of Cooperation. The ERA Inclusion, Growth and Transformation teams worked together throughout the year to adapt programming and project interventions to an online or distance format and reschedule or redesign activities with partners, beneficiaries, and grantees.
The Inclusion team worked closely with partner organizations, universities, NGOs, ministries, local government employment agencies and grantees to continue to deliver online training and technical assistance to vulnerable groups including women entrepreneurs, students and youth including IT startups throughout the east. The Growth team supported local produce firms to attend international trade fairs in Berlin and Dubai resulting in new forward contracts, and increased access to finance for SMEs and targeted online strategic consulting for 16 innovative manufacturing
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enterprises. The Transformation team partnered with Luhansk Oblast and Donetsk Oblast, eleven municipalities and consolidated communities (Starobilsk, Novopskov, Bilovodsk, Pokrovsk, Dobropillia, Kramatorsk, Bakhmut, Mariupol, Berdiansk, Melitopol, and Henichesk) and the seven cities of the Coal City Sustainable Development Platform in Donetsk Oblast to develop and promote highly participatory economic development strategic plans and visions for the future, including identification of high-priority infrastructure projects. Working together, the ERA teams combined to award more than $4.2 million in grants, train more than 2,400 people, help SMEs secure more than $6 million in new investment and assist at least 500 people to find new or better employment.
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II. INTRODUCTION
DAI is pleased to submit this Annual Report for the USAID Economic Resilience Activity (ERA) covering the period of October 1, 2019 to September 30, 2020. The Activity aims to improve the overall economic resilience of eastern Ukraine in response to Russia’s aggression, which has left industry ransacked, communities divided physically and politically, and weakened the social, financial, and physical assets that underlie resilience. The Activity will directly contribute to USAID/Ukraine’s Development Objective 2: Impacts of Russia’s Aggression Mitigated, and Intermediate Results 2.1: Conditions Improved for Reintegration, and 2.4 Common Civic Values Increasingly Embraced.
This report details the Activity’s accomplishments during the second year and describes the most successful interventions, benchmarks achieved, and performance standards achieved.
BRIEF SUMMARY OF ACTIVITY Over the life of the Activity, ERA will help eastern Ukraine reorient its economy toward sustainable, diverse, and inclusive growth by working through three interrelated objectives:
OBJECTIVE 1: PROVIDE ASSISTANCE TO STABILIZE THE ECONOMY OF EASTERN UKRAINE. This objective will build on previous work under Office of Transition Initiatives (OTI) programming and U.S. Government humanitarian assistance. ERA will continue to support quick- response, high-impact interventions that address the immediate needs of conflict-affected individuals, including internally displaced persons (IDPs), returnees, women, youth, veterans, IDP host communities and businesses (likely micro-enterprises with up to 10 employees and small enterprises with 10 to 50 employees).
OBJECTIVE 2: SUPPORT THE SUSTAINABLE DEVELOPMENT OF SMALL AND MEDIUM- SIZED ENTERPRISES (SMES). This objective will support medium-term results by starting with end markets, improving SMEs’ ability to deliver in-demand goods and services, and building the surrounding market infrastructure—from information to finance to knowledge and skills—that enables longer-term growth. Objective 2 will focus primarily on SMEs with up to 250 employees; in select cases, it will support innovative Western-leaning companies with up to 1,200 employees that are near the line of contact and provide much-needed employment in stressed areas.
OBJECTIVE 3: BUILD CONFIDENCE IN THE FUTURE OF THE EASTERN UKRAINIAN ECONOMY. This objective will play a critical role in the integration and coordination of all ERA interventions and culminates in the most important result: a path forward to a viable economic future for the eastern region as an integrated part of the Ukrainian economy, one that is understood and supported by the population and energizes people into entrepreneurial action. By orienting interventions under Objective 3 around current and potential end markets for growth sectors that are a combination of traditional and new, ERA will simultaneously promote the diversification that will lead to a more resilient economy and create opportunities for innovation and transformative ideas.
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III. CONTEXT UPDATE
At the time of the onset of the COVID-19 pandemic, Donetsk and Luhansk Oblasts in eastern Ukraine were already experiencing the brunt of a general economic downturn happening throughout Ukraine.
According to the Department of Statistics, in Donetsk region the decline in industrial production continued through the first half of 2020 compared to the same period last year, with a 10.7% decrease in the volume of manufactured industrial products. From January 2020 a decline was recorded in all main industrial activities of the region except for production of food, beverage and tobacco products, where production increased by 8.0% compared to January–July 2019.
In Luhansk region, the decline in industrial production was felt on an even larger scale and continued through the reporting period. Compared to the same period in 2019, industrial production in July 2020 fell by 37.8%. At the same time, in general in Ukraine for the same period, industrial production decreased by 4.2%.
Coal mining and electricity production also decreased throughout both oblasts. In Luhansk and Donetsk Oblasts the number of unemployed people increased during the epidemic. The highest unemployment rate in Ukraine (according to International Labor Organization methodology) in the first half of the year was registered in Luhansk (16%), Donetsk (15%) and Kirovohrad (12.7%) Oblasts according to the State Statistics Service—all higher than the national rate of 9.6% for the same period.
According to the World Bank, the economy in Ukraine is expected to contract by 5.5% in 2020, as the negative impacts in the first half of the year will be partially offset by a noticeable recovery in domestic demand in the second half and positive contributions from net exports. The baseline also assumes a possible re-imposition of COVID-19 restrictions and containment measures in response to a “second wave” and an increase in the number of positive cases recorded at the time of this report, and a slower pace of reforms.
KEY NARRATIVE ACHIEVEMENTS CONTRACT DELIVERABLES AND OTHER REPORTING
Over the course of the year, all core deliverables were finalized, delivered and approved during the reporting period including the Construction Plan. Other recurring deliverables—such as monthly schedules, quarterly reports, and weekly progress reports—were submitted to USAID per the schedule outlined in the contract.
TECHNICAL INTERVENTIONS
As a result of programming innovations designed during the Year 2 Workplan development retreat which included participation from USAID and multiple ERA partners, ERA implementation began in October 2019 with a new team structure and approach of program objectives addressed within three integrated complementary components of Inclusion, Growth and Transformation. ERA continued close coordination with its government partners at national, regional and local levels, with other USAID implementers including DG East, CAP, CEP and ESP, other international development organizations and financial institutions such as UNDP, UNICEF, IOM, World Bank, EBRD and EIB, and our direct beneficiaries (Donetsk and Luhansk Oblast State Administrations—DOSA and LOSA)
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to ensure active participation in an integrated approach to supporting more inclusive economic growth. This reporting period, ERA designated five sub regions across its area of operation in Luhansk, Donetsk and parts of the Azov Sea regions. The sub regions are: 1) Luhansk GCA 2) Northern Donetsk GCA 3) Central Donetsk GCA 4) Mariupol 5) Azov Sea Coast. Within each sub region ERA operates as a coordinated team, bringing support and expertise from the Inclusion, Growth and Transformation pillars to the unique and specific needs and conditions of each area.
ERA support to the successful Mariupol Investment Forum represented the new more integrated, three-component approach and was one of the first applications of the ERA formula of Inclusion plus Growth equals Transformation. While the forum was successful in attracting international attention and real commitments for financial investment, ERA also supported and highlighted the Youth Forum hosted locally by the Ukrainian Leadership Academy (ULA), which discussed opportunities for inclusive training and development in the region. ERA worked closely with the President’s Office, the Ministry of Finance, officials from LOSA and DOSA and the Mariupol Mayor and city council to promote the new, long-term, positive transformative vision of the future of Mariupol and the entire eastern Ukrainian region.
Throughout the reporting period ERA worked closely with Luhansk, Donetsk and Zaporizhzhia Oblasts to identify and support high priority development initiatives. Supporting big infrastructure investments remains a priority for all regional governments. ERA worked closely with Luhansk Oblast to facilitate the development and preparation of a portfolio of large infrastructure project proposals valued at more than $144 million, for potential funding by other international donors. ERA also supported Luhansk in funding a study of the economic impact of the currently blocked rail system and preparation of a ToR for a Rail Connector project recently supported by a central government working group reporting to the President’s Office. The ERA team worked with the World Bank to help them define their approach to working in the east and direct an additional $60 million for investment in eastern Ukraine for a total of $260 million. ERA also worked closely with European Investment Bank (EIB) on identifying potential priority projects for their $200 million investment in the east.
The Inclusion team quickly adapted its normally highly personalized and interactive in-person approach to supporting and training beneficiaries from target vulnerable groups to online learning platforms, with an enthusiastic response from many partners, grantees, and beneficiaries. The Inclusion team was instrumental in preparing a concept note on gender-based violence (GBV) in eastern Ukraine for ERA’s Rapid Response COVID-19 programming. The Inclusion team continued to make progress in increasing capabilities and opportunities through launching 30 grants and training more than 2,400 people throughout the year. Under increasing capabilities, ERA continued to support grantees such as ERA partner Ukrainian Leadership Academy (ULA), which met quarantine restrictions with innovation and flexibility. The approach of ULA’s academic program is based on principals of mutual assistance and active student participation in host communities. The academy quickly transitioned essential planned academic activities to an online format that allowed 35 students to complete their requirements and graduate on time in June 2020. ERA grantee the Ukrainian Women’s Fund (UWF) was not able to adapt all its planned programming to an online mode but managed to remotely train 150 women who mastered or improved skills in business planning, marketing and business processes, and received mentoring to make their businesses more competitive. Under increasing opportunities, the Inclusion team awarded grants to private entrepreneurs and MSMEs who adapted their business plans to navigate the restrictions and conditions of the changing market in the COVID-19 crisis.
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The Workforce Development (WfD) team supported creation of an innovation ecosystem and establishment of dual education systems in the east through continued partnership with universities, vocational and technical schools, institutes of higher learning, businesses, and government. As part of ERA’s Rapid Response to COVID-19, the WfD team quickly identified six universities in the east to provide support for distance learning and training with delivery of hardware, software, and equipment. Five of the six universities received grants for distance learning support: Berdiansk State Pedagogical University (BSPU), Donetsk National Technical University (DonNTU), Dmytro Motornyi Tavria State Technical University, Luhansk National Agrarian University (LNAU) and Volodymyr Dahl East Ukrainian National University (Dahl). Pryazovskyi State Technical University (PSTU) is due to receive a similar grant during the first quarter of FY2021.
The Growth team supported progress in all growth sectors, including market expansion for two ERA SME fruit and vegetable producer beneficiaries which attended international food trade fairs in Dubai and Berlin and returned with more than $800,000 in potential new sales agreements. Since the onset of COVID-19 travel restrictions and cancellation of international fairs, ERA is monitoring planned online trade fairs and will support ERA partner participation in these types of forums in the year ahead, until in-person trade fair attendance is possible again. ERA increased access to finance for businesses in the east through support to the Ukrainian United Credit Union through an ERA grant that will increase access to credit for MSMEs throughout Luhansk, Donetsk and the Azov Sea regions, and supported the Transaction Advisory Services initiative to bring investments to small and medium-sized business in the east. After a delay to redesign for online delivery, the Innovations for Manufacturing (I4M) sector team began supporting 16 manufacturing firms through a focused, online consulting and business strategy training series organized by Roland Berger. The Biofuels sector team identified eight models for stimulating the market for biofuels in rural communities that will be rolled out as grants in Year 3. The Tourism sector team initiated a series of trainings on new tourism product development and began the development of a unified Azov regional tourism brand. The IT sector team continued to support the establishment of industry clusters in Mariupol, Kramatorsk and Luhansk Oblast which will be the primary movers of IT development in the east.
The Transformation team successfully completed a highly participatory, public process of creating Strategic Economic Development Plans in four cities and consolidated communities in Donetsk and Luhansk Oblasts, as well as the Luhansk Oblast State Administration Development Strategy 2020- 2027. All strategic plans were presented for public comment and formally adopted. Throughout the year, ERA continued supporting the Mariupol municipality/city council and the Coal Cities Platform in Donetsk Oblast to create strategic plans which will identify high priority strategic infrastructure projects and other initiatives for co-financing and implementation. ERA partnered with international development organization GermanWatch and EU-funded EU4Business to develop a roadmap, strategy, and priority projects for the central Donetsk coal sector transformation of seven municipalities: Dobropillia, Myrnohrad, Novohrodivka, Pokrovsk, Selydove, Toretsk and Vuhledar.
BIG INFRASTRUCTURE In 2019–2020, the ERA team began to support Donetsk and Luhansk Oblast administration activities to prepare big infrastructure project proposals for potential funding from other international donors. ERA also supported Luhansk in funding a study of the economic impact of the currently blocked rail system and preparation of a ToR for a Rail Connector project recently supported by a central government working group reporting to the President’s Office. The ERA team worked with the World Bank to help them define their approach to working in the east and direct an additional $60 million for investment in eastern Ukraine for a total of $260 million. ERA also worked closely with EIB on identifying potential priority projects for their $200 million investment in the east. Such
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large-scale projects are not only aimed at overcoming the consequences of the conflict, but also engage numerous local companies in stimulating regional development including construction and design work, equipment supply and creating jobs.
Starting from the ERA-supported Mariupol Investment Forum in October 2019, the ERA team has worked with Luhansk Oblast State Administration (LOSA) on supporting the economic analysis and feasibility of restoring and restructuring the railway service in Luhansk region, which will directly benefit more than 70% of the GCA population as well as support Ukraine's humanitarian activities for the population living in NGCA. In October–November 2019, ERA conducted research on the project’s potential impact and presented the results on December 6, 2019 at a conference organized by the Institute for Strategic Studies (ISS) under the President of Ukraine, after which the ISS sent recommendations to the President’s Office, the National Security and Defense Council (NSDC) and the Cabinet of Ministers. In April–May 2020 the ERA team, in close cooperation with LOSA, prepared a ToR for development of a feasibility study for construction of the railway, coordinated with Ukrzaliznytsia (state railway company) and other stakeholders. At the end of September 2020, the ToR was approved by a special interdepartmental working group created by Vice-Prime Minister Oleksiy Reznikov to prepare and implement the project. In 2021, ERA will further support the railway project in assessing its environmental and social impact as well as engaging civil society and businesses from eastern Ukraine into active partnership.
At the Mariupol Investment Forum, the ERA team organized several meetings between the LOSA delegation and international financial institutions (IFIs) to discuss possible financing of highway and road renovation. From November 2019 to February 2020, the ERA team assisted the World Bank delegation in preparation of the 3R Project (Eastern Ukraine: Reconnect, Recover, Revitalize), including selection of potential road infrastructure projects to boost the local economy. After several meetings facilitated by ERA with representatives of local business, civil society, and authorities from different districts of Luhansk region, the evident enthusiastic interest demonstrated the potential for expanding road revitalization. In July 2020, the EIB decided to further commit to the project by increasing their budget from 100 to 217 million euros. In 2021 ERA will continue supporting the World Bank and EIB in 3R road project implementation by improving the capacity of local governments to prepare independent applications to IFIs in the future.
The Mariupol Investment Forum also helped ERA to start cooperation with Donetsk Oblast State Administration (DOSA) over solving the most burning humanitarian issue for the Donetsk region— restructuring and reconstruction of the water supply system and renovation of Voda Donbasu state- owned utility company. As a result of productive communication facilitated by ERA between different partners operating in this sector (e.g., preliminary agreements with the leadership of Donetsk Oblast in January 2020), the USAID Energy Sector Project (ESP) has decided to conduct a Technical and Energy Audit of the water supply system to be completed in December 2020. In 2021 ERA plans to assist DOSA and Voda Donbasu to aggregate research by USAID, ICRC (a completed financial audit of Voda Donbasu is scheduled for October 2020), UNICEF and other international NGO partners in order to create a common understanding of the water supply improvement project, which will be presented publicly throughout the region to highlight the project’s prioritization by Ukrainian authorities and IFIs. Furthermore, in September 2020, ERA received an invitation from the Ministry for Reintegration of Temporary Occupied Territories (MinTOT) to join their work on improving the water supply in Luhansk Oblast and participate in a visit of French company representatives to Popasna Vodokanal (the Luhansk Oblast analogue of Voda Donbasu) in October 2020.
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INCLUSION During the second year of implementation, the ERA Inclusion component was able to accomplish most planned interventions in accordance with the workplan, even with the onset of the COVID-19 pandemic and its negative implications on ERA programming. ERA’s planned interventions were focused on identification of new approaches to marginalized and underrepresented groups in Donetsk and Luhansk Oblasts, joint co-creation of grants with local MSMEs, NGOs and lyceums, upgrading professional skills for entrepreneurs, and support to professional communities of women and other vulnerable groups. Overall, the Inclusion component managed to achieve initially planned results through a timely adaptive management approach undertaken by ERA management and the Activity team. Shifting interventions to an online format, where possible, allowed the Inclusion team to stay on track with scheduled events. In Year 2, the Inclusion team launched 30 grants. ERA inclusion grantees managed to adapt their implementation approaches to new quarantine limitations by switching grant interventions to an online mode where practical which, in some cases, allowed grantees to exceed some of their performance targets: for example, the IT Nation grant implemented by NGO Global Compact Ukraine attracted 2,500 beneficiaries to its online training program, 500 more than originally planned.
INCREASING CAPABILITIES
WOMEN
ERA supported an educational program for women implemented by the Ukrainian Women's Fund (UWF) aimed at improving the economic capacity of women from small towns and villages in eastern Ukraine. As result, 150 women mastered or improved their skills in business planning, marketing, and business processes, received expert mentoring and became more competitive in terms of their current businesses. The grantee organized and conducted six business schools for businesswomen in Kramatorsk, Mariupol and Sievierodonetsk, supported mentorship for beneficiaries, provided consulting from hired specialists, and ran roundtables and a final business camp. For more effective work in each city, the grantee created Women’s Business Support Centers (WBSC) where anyone participating in the activity could apply for advice from business lawyers.
From the very first public presentation of the activity there was high demand from women in Donetsk and Luhansk Oblasts, with more than a thousand applications submitted for participation (nine applicants for each available place). The main selection criteria were: motivation to develop or scale up a business; residence within ERA target Oblasts with preference to those living in small rural communities, and capacity to participate in the entire training program (assessed during a follow-up interview). In each target city, a separate team of trainers—practitioners, business coaches and specialists on business development—worked with each group of participants. During a four-day training of trainers (ToT) 12 trainers were instructed on UWF training methodology to be utilized in trainings for grant beneficiaries, as well as on mentorship support via individual consulting for training graduates.
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The WBSCs successfully completed the first round of business development training for women. In total, 79 women completed the training course at three WBSCs (26 women in Sievierodonetsk, 27 in Mariupol and 26 in Kramatorsk), gaining knowledge and skills on starting and running a business. Pre- and post-training evaluations done by the grantee show an average 34% improvement of knowledge. The second round of the same training and mentorship program is currently ongoing. Quarterly monitoring conducted through Year 2 among grantee beneficiaries discovered that 23 people confirm better employment conditions, including four with self-employed status who were unemployed before taking part in the grantee’s training.
The WBSCs provided mentorship support to 36 graduates from the first training program cycle, who were selected on a competitive basis. All participants noted the real effectiveness of mentoring support after graduating from the business school. Mentoring sessions helped them solve individual specific business issues, especially in the context of the COVID-19 pandemic as WBSC mentors assisted participants in finding new markets, keeping their businesses operating and minimizing potential losses. Complementary to the business schools and mentoring sessions, UWF organized a series of 15 information webinars during May–July 2020 for 706 women, including 631 from Luhansk and Donetsk Oblasts and 75 women from the Sea of Azov area.
The high level of efficiency of the grant interventions, which were based on an individualized approach, enabled beneficiaries to prepare quality business plans and receive either grant support from other donors or private investments in their businesses. For example, a self-employed mentee learned how to market and sell her sewing services and goods and developed a competitive business plan. Motivated by pandemic restrictions to adapt and expand her small production and start selling online, she not only gained additional individual clients but several large orders from Kyiv-based companies. While studying at the UWF business school, she discovered a new niche—branding for business—and received her first orders from fellow participants. After obtaining a 6,500 Euro grant from UNDP this summer to help with start-up expenses, she has since registered as a private entrepreneur.
Another graduate of the first round of WBSC training and mentoring in Kramatorsk is the owner Kolo Druziv, a tourist agency and cafe which she opened using her own savings in 2019. Training at the UWF business school and further mentorship sessions inspired her to expand the range of services with almost no additional investment and to develop a competitive business plan for creation of a website highlighting nearby tourism destinations in Donbas Oblast.
YOUTH
In the beginning of Year 2 ERA supported the establishment of the Ukrainian Leadership Academy (ULA) branch in Mariupol. ULA’s primary mission is to discover and support leadership potential in young and ambitious high school graduates who would like to take a gap year to help them determine their future direction. The quarantine and associated restrictions were serious challenges for ULA because their approach is based on principles of mutual assistance, active participation and leadership that are most effective when students are living together in a host community. Fortunately, the grantee transitioned all essential
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scheduled academic activities to an online format that allowed 35 students to complete their academic requirements to graduate in June 2020.
Through multiple training events over the year, ULA has established a large, informal community of young Ukrainians living in the east. Apart from the academy training, students have been involved in the Youth Council, the Cool Youth strategic planning working group contributing to the Mariupol Development Strategy 2021–2030, a summer school for Mariupol schoolchildren, the Liberal Arts program for teachers from Donetsk, Luhansk and Zaporizhzhia Oblasts, and many other activities. ULA enables young people to participate in decision-making as a contribution to Mariupol’s strategic planning process: a ULA mentor was elected deputy head of the Cool Youth working group and the results of a youth survey conducted by ULA students with the assistance of a professional sociological research agency substantially contributed to elaboration of the Mariupol Development Strategy 2021–2030.
The youth survey showed a range of positive findings: the majority of respondents confirm that Mariupol is a rapidly 73% developing city and a good place for work and life; almost survey respondents see 73% of respondents rather or completely agree with the statement that Mariupol has certain advantages among the advantages for youth other cities of Ukraine for youth development due to development in Mariupol increased cultural opportunities, many festivals, educational institutions, proximity to the sea, diverse identities and increasing empathy of the population after the beginning of the conflict in eastern Ukraine; around 87% of respondents see an increase in the level of opportunities for youth over the last two years.
This fall 40 new students began their academic program for the 2020–2021 ULA academic year. On September 26, 2020, the official opening ceremony of the newly renovated ULA Mariupol campus building took place. Acting Deputy Chief of Mission and USAID Mission Director attended the eremony and congratulated the Ukrainian Leadership Academy’s achievement in developing cohorts of new local youth leaders. ULA students and mentors will cohabit in Mariupol for the next 10 months while studying and organizing numerous networking events. The ULA campus has earned the name Center of Leadership Development, which reflects its mission and characterizes the events that will take place in it.
Another ERA youth partner, Shift, a non-profit youth organization established in August 2018 in Kramatorsk, discovered in previous work that young people in Donetsk Oblast are very interested in creative industries and creative entrepreneurship as a way of earning money in their free time after classes. Shift has the mission to promote and develop young people’s creative skills and entrepreneurial thinking for successful self-fulfillment and a better quality of life for themselves and society. Shift noted that unfortunately there was no space in Kramatorsk where young people could get practical expertise on how to monetize their talents, skills and creative ideas without cash investment.
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ERA issued a grant to Shift on March 6, 2020 for establishing a unique, youth-friendly space called Art-Coworking. Since the official opening on June 1, 2020, Shift has conducted seven practical workshops for 99 participants who learned a range of new skills such as using sewing and overlock machines, drawing with professional markers, image processing and work with a textile printer. Art-Coworking participants have successfully utilized their new skills by selling their products through Instagram and Etsy platforms. Overall, more than 400 hours of consulting by the grantee’s staff have led to the production of more than 300 products by some 200 users of the Art-Coworking space.
Quarantine restrictions have had an impact on Art-Coworking’s mode of work. Starting from July 1, 2020, all registered workshop participants are divided into two groups of no more than 10 people, demonstrating Shift’s flexibility in adjusting to the unstable environment without halting grant implementation.
Near the end of the reporting period, ERA began implementation of a new youth-oriented activity through a grant award to international NGO Terre des Hommes. This grant will exclusively focus on young people studying in vocational education institutions. The grant aims to increase the participation of non-educated youth in the Ukrainian economy by strengthening Vocational Education Training (VET) and raising employability and entrepreneurial skills with a focus on digital and IT competencies. Within the grant, Terre des Hommes will train 450 students to use digital equipment at Digital Fabrication Workshops, as well as provide additional training on financial management and entrepreneurship.
UNEMPLOYED
ERA has been supporting online educational programming through the IT Nation grant implemented by NGO Global Compact Network, with the purpose of providing those interested in IT as a profession a chance to obtain knowledge and skills to become competitive specialists in Ukraine’s growing IT job market.
The grant responds to the need for decent working opportunities and living conditions for residents of Donetsk and Luhansk Oblasts. Analyzing data from the State Statistics Service of Ukraine for 2018–2019, Global Compact Network found that the unemployment rate in the east remains significant, with economic activity in decline. Therefore, the goal of this grant was to cover not only socially vulnerable groups, but to encourage proactive people with university degrees and readiness to learn who are temporarily disadvantaged by unemployment to acquire the IT skills in demand throughout the job market.
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The project was designed to enable different segments of the population to learn from scratch and gain basic professional skills in IT. The online education program within the grant began in January 2020 by providing training for participants on one of five specific skill tracks: front-end web development, web coding, automated testing, manual testing and digital skills (basically for office workers regardless of their type of job duties). Each track has its own features and level of difficulty. However, all are in high demand in both the Ukrainian and global job markets.
Because of the COVID-19 pandemic and quarantine measures, a series of additional offline workshops were conducted in the form of webinars, which increased from the six originally planned to 32. In addition, eight were prepared as purely practical online workshops (boot camps) with homework and evaluation by professional mentors. Modification of the events’ format made it possible to keep students and enable them to continue acquisition of knowledge and skills.
Despite the adjustments made to the program, it continues to be implemented and bring both qualitative and quantitative results. In total, 2,556 people from Donetsk and Luhansk Oblasts have registered to participate in the IT Nation program. By September 30 there were 440 unique graduates. Moreover, 185 students earned two or more certificates of completion, meaning that they managed to pass several courses simultaneously. Among the unique certificate holders, 102 initially declared themselves unemployed and 21 graduates identified themselves as self-employed, i.e. without a license or registration as a private entrepreneur, which is considered unstable employment.
The grantee organized a career-oriented session where mentors talked about the rules of writing and designing a resume and preparing for interviews with an emphasis on technical (hard skills) and non-technical (soft skills) aspects. To support the graduates, the grantee created a resume database which currently contains 65 CVs. Global Compact has actively promoted the database among IT companies and other businesses throughout Ukraine.
The grantee’s reporting indicates that grant participants are actively looking for entry level work or at least an internship. In post-training surveys conducted by the grantee, 17 students declared that they had been through first interviews and felt competent enough to be hired. An IDP from Bakhmut completed a full course of training on the platform within two months, prepared a resume, and engaged with the project mentor during webinars, setting an example to other participants of how to work out mistakes when writing a resume, communicate in a professional manner, and be ready to succeed during an interview. ERA quarterly monitoring revealed that 13 Global Compact beneficiaries had declared better employment just a few months after completing the online courses. It is still too early to see the total impact of the grant and ERA expects the results to continue to accrue over the next year.
Many graduates in post participation interviews mention the practicality and usefulness of the acquired IT skills. A father of a disabled child from Bilokurakyne village joined the project with two goals: to gain skills in a new IT profession and strengthen his digital skills. He is satisfied with the training program because it gave him an idea of where to move further in the IT field. Participation in the grant activity allowed him to strengthen and improve his skills in his current work; find contractors that might hire him for outsourcing work; plan new projects; negotiate with potential clients; and estimate budgets of future orders. Another grant beneficiary, a civic activist and single mother from Kramatorsk, acquired the skills of a manual tester and now has a chance to be hired by a Ukrainian IT company. She is already actively using her new skills to help test a website being developed for a friend’s company.
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Unemployed graduates of the online IT courses have demonstrated progress in building and developing new careers. A recent graduate noted that he was already preparing for an interview with an IT company after completing courses in automated testing, digital skills, and front-end development. Another unemployed graduate initiated a webinar with mentors on manual testing, motivating other participants by her example of a woman striving to become a full-time IT professional. A self-employed graduate has successfully completed an advance web front-end development course and recently announced that he was working as an IT freelancer.
INCREASING OPPORTUNITIES
SUPPORT TO MSMEs
During Year 2, ERA continued with co-creation of grants which were earlier selected through its Year 1 APS, issued on February 28, 2019. As in Year 1, these grants aimed to target vulnerable and hard to reach populations by supporting activities of local and international NGOs focused on marginalized and underrepresented beneficiaries and development of local businesses that hire and serve vulnerable groups. From 30 grants developed by the Inclusion team in Year 2, 11 grants have been awarded for business development, with some of those grants reaching their end. Below are a few success stories from our MSME beneficiaries.
A private entrepreneur (PE) has been operating the Sky Star Internet service provider in the northern part of Donetsk Oblast since 2014. While larger cities like Sloviansk and Kramatorsk are covered by national and regional Internet service providers which offer affordable tariffs, smaller communities remained unattractive to large providers due to low returns on investment. The PE has identified this gap as a niche for his business model and become the only Internet provider in the area. To expand the operating range of his low-margin business, he successfully applied for a grant from ERA.
Internet connection is essential for all categories of the population nowadays, and it is impossible to imagine work or education without it, especially in remote rural areas. As the grant wrapped up on October 6, 2020 (just after the close of the reporting period), the grantee had effectively implemented all scheduled activities within the reporting period. The grantee’s company has connected 128 households in four villages, which is 13 more than envisaged under the grant workplan. Requests from neighboring villages keep coming, so the grantee is planning to expand its presence in two more districts of the northern Donetsk area.
COVID-19 became a major challenge for the above-mentioned PE. Even though the company did not furlough any staff and kept operations running, it had to increase operation costs to ensure personnel’s health and safety. Nevertheless, the ERA grant allowed the entrepreneur to create four new jobs in Slovyansk and improve working conditions for existing staff by raising salaries. Most of the staff employed by the company represent vulnerable population categories including IDPs and representatives of IDP host communities.
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Another private entrepreneur is a former director of children's entertainment centers in Luhansk and Sorokyne (now part of NGCA). In 2016, due to the conflict in the region, she was forced to relocate to Kreminna where she opened a business after successfully implementing a micro-grant from the Danish Refugee Council to provide entertainment activities to children.
Successful business operations and constantly growing demand stimulated the grantee to further expand her range of services. In December 2019, an ERA grant allowed this PE to open a children's entertainment center and youth hub in Kreminna. Regular field visits to the grantee and reviews of its Instagram posts show that the Mozaika children’s center is very popular among the local population. The PE now offers five new services such as air hockey and a children's labyrinth and ball pit, bringing the total number of entertainment options to ten. As a result of ERA support, Mozaika’s business activity has proved profitable as revenue increased in the first month after the center opened.
During the grant, the PE employed four new staff who confirmed better employment and usage of new practices, techniques, and business management skills as a result of ERA assistance. The quality of the services provided has gained positive feedback from many clients, who expect further expansion of the grantee’s entertainment activity for children. The grantee plans to open a youth hub at a separate premise, and a café for children’s center clients on the same floor as the entertainment center.
A third private entrepreneur had her own business sewing specialized workwear in Horlivka, Donetsk Oblast (currently NGCA). Due to the conflict, she moved to Lyman district with her family and with the help of two employees managed to restore the sewing business in rented premises in Kramatorsk in 2015. Despite the growing demand for medical workwear, the low production capacity of the sewing workshop reduced the number of potential clients and orders and outsourcing branded logo application increased costs and production time. In November 2019, the PE received an ERA grant to automate the manufacturing process with new sewing equipment, thus increasing her range of services, production, and sales.
After obtaining a single-needle embroidery machine and lockstitch sewing machine, the speed and quality of work has visibly increased and the PE can now develop and offer customers products with embroidery and logos. "Clients began to turn to us with requests to apply embroidery on clothing—names, logos of companies. A lot of buyers are interested in branding their company. Now, thanks to the ERA grant, we have received a machine for embroidery. We have developed almost 20 embroidery models and are already using the new equipment to embroider polo shirts and work clothes,” says the businesswoman.
At the start of the COVID-19 pandemic, the sewing workshop quickly adapted to produce protective masks, allowing it to fully retain its staff and prevent reduced revenue. The grantee hired two new employees who keep applying new practices using the new equipment. The above-mentioned PE expanded the range of services to produce not only medical clothing, but also branded clothes for employees of cafes, restaurants, hotels, and cleaning companies. This expansion allowed her to recover from a temporary fall in sales at the start of COVID to a slight increase in monthly sales by the end of the reporting period.
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SUPPORT TO UNIVERSITIES AND VOCATIONAL EDUCATION INSTITUTIONS
LNAU. Through Year 2 ERA provided significant support for developing the skills needed in the local labor market via grants to partner universities. ERA reinforced the establishment of agrarian education with a grant for Luhansk National Agrarian University (LNAU) to improve the educational process after the University’s displacement from Luhansk city (now in NGCA) more than five years ago. In 2019 LNAU relocated back from Kharkiv to Donetsk and Luhansk Oblast GCA. The second relocation's success is not assured yet, however the University has definitively survived as an educational and scientific institution, successfully attracting sufficient numbers of students for the ongoing school year (close to student numbers in previous years of displacement).
ERA assisted LNAU to acquire furniture, a wide range of IT and office equipment, and software for electronic document circulation to improve internal operations. Two modern laboratories of veterinary medicine and food processing were equipped and launched for teachers and students as well as for use in delivering better-quality agricultural extension services development, which will provide additional benefits for local agribusinesses. ERA facilitated joint research and mutual knowledge enrichment between LNAU and management of local businesses, which led to establishing the first of several partnerships with local farming enterprises. Though these partnerships LNAU has been able to leverage its research capacity, there are plans to conduct joint testing of winter wheat varieties in LNAU’s fields together with local farmers in the 2020–2021 academic year.
AGROKEBETY Program. While proving the mechanisms for educational services’ delivery, the LNAU grant also enhances the technical capacity and curricula of the displaced University. Aligning with the ERA Workforce Development team’s strategy, the LNAU grant supports efforts to upgrade students’ practical skills required by agricultural industry and further develop dual education through cooperation with the Ukrainian Club of Agribusiness (UCAB) and its new Agrokebety Masters’ program. These efforts will significantly advance the University’s curricula and attract agricultural companies’ top management for mentorship activities. Students will use completely new curricula providing the best practices and applicable knowledge in agriculture. To achieve this, UCAB will separately receive a grant to develop its offering through a series of events, and the Agrokebety program will be introduced into two ERA partner agrarian universities, LNAU and Dmytro Motornyi Tavria State Agrotechnological University (TSATU). Finally, in terms of sustainability, the grant to UCAB will finance advanced training to allow professors and guest lecturers to continue building their own technical skills and record lectures for free student access online, in order to identify the most effective adaptation of courses to online settings given current COVID-19 realities.
PSTU and DAHL UNIVERSITY. ERA has also provided grants for developing modern engineering skills of young people in Donetsk and Luhansk Oblasts to Pryazovskyi State Technical University (PSTU) and Volodymyr Dahl East Ukrainian University (Dahl University). In September 2020 ERA finalized procurement and delivery processes for both grants, supporting grantees’ activities on
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enhancing the pool of partner companies and analyzing the curricula for further modernization in accordance with renewed technical infrastructure and employers’ demands. In the framework of the current grant PSTU has developed a scientific-based collaboration with Magma, a Mariupol-based manufacturing enterprise and an active, ERA I4M team partner, whereby a PTSU PhD student employed by Magma is conducting a specialized study on the equipment that ERA has provided for the newly created Laboratory of Microelectronics and Robotics. Such research and development (R&D) cooperation will be a starting point for linkages between the University and local employers, while building a foundation of R&D that ensures better sustainability of ERA’s strategic interventions.
Volodymyr Dahl East Ukrainian University is the only technical higher educational institution in Luhansk Oblast. Although its engineering majors used to be very popular among companies in the region, the university’s technical capacity was lost due to the conflict and displacement from Luhansk city. Through ERA grant support, the University is creating two modern computer laboratories for chemical and mechanical engineering aimed at delivering modern, upgraded resources and training potential.
It is important to underline that ERA’s grant for Dahl University is strongly attached to close cooperation with big regional employers. Currently engineers of Khimproekt, one of the most active engineering companies in Luhansk Oblast, have developed educational models based on the use of simulators in University labs, strengthening the University’s capability to offer up-to-date knowledge and skills to students and advanced training for teachers. Khimproekt is sharing its software with the University to make the training process efficient and practical.
INNOVATIVE ECOSYSTEM. During 2019–2020 ERA continued promoting innovative development and startup entrepreneurial activities in the targeted universities of Donetsk and Luhansk Oblasts under a grant to Sikorsky Challenge LLC, launched in August 2020. The Sikorsky Challenge grant will help build a university-based innovation and entrepreneurship ecosystem within eastern Ukraine at the four universities mentioned above (DonNTU, LNAU, Dahl University and PSTU) along with the Donbas State Engineering Academy. Together with the universities, ERA has begun to form another type of innovation ecosystem—enhancement of a network of innovative STEM (science, technology, engineering, and mathematics) education centers for teenagers. In May 2020 ERA provided a grant to an experienced and well-known educational entrepreneur to equip and furnish an existing STEM center in Vuhledar and set up two new centers in Kurakhove and Volnovakha. Focusing on STEM and robotics these centers will help to form teenagers' engineering mindset and consequently encourage high school graduates to enter the technical universities located in their regions.
COVID-19 RAPID RESPONSE. In accordance with the USAID approved ERA COVID-19 Rapid Response workplan, in August ERA issued grants for equipment and software to be used for distance learning to five ERA partner universities: Berdiansk State Pedagogical University (BSPU), Dahl University, DonNTU, LNAU and TSATU. These grants are aimed at strengthening the organizational and technical capacity of the five ERA partner educational establishments to maintain high-quality distance learning for current and future students. The five universities are ready to expand the variety of educational services offered through distance learning as soon as they get ERA’s technical support in using new resources and adapting content to a distance online setting. All five grants will help the universities adapt to the challenges posed by the COVID-19 epidemic and the related economic crisis.
DUAL EDUCATION. In line with introduction of the dual education approach to partner universities and in response to the Ministry of Education and Science of Ukraine (MoES) order dated October 15, 2019, ERA supported all partner universities on the MoES’ list of pilot institutions, and
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provided consulting to a universities-companies working group and organized the DUAL-O Forum in February 2020.
More than 70 representatives of different institutions took part in the DUAL-O Forum, including 12 private companies, the Friedrich Ebert Foundation, MoES, the state employment service and institutions for scientific-methodological support for vocational education training (VET). At two sessions during the event, universities and VET schools described their plans for dual education implementation in the Ukrainian context—approaches, experiences, and achievements. All ERA partner universities have applied a dual education approach in their educational processes, monitored the activities, and presented their results in the MoES dedicated report. DonNTU’s dual education model is considered an ideal example, and the model of PSTU was presented as a separate case study.
During the implementation period (October 2019–May 2020) 71 students from ERA partner universities applied to the MoES pilot project and 47 successfully finished the pilot project, combining the status and responsibilities of a student but also as an officially employed worker. Because of these activities, ERA partner universities started collaboration and signed agreements with several regional companies: Zorya LLC, Chemical Technology PJSC, AZOVSTAL PJSC Metallurgical Plant, Metinvest-Promservice LLC, Sievierodonetsk ORGCHEM LLC, RIZIKON PJSC NCVR, and big and small agrarian companies. As the GoU goal of applying the dual education approach is to find the most appropriate model(s) that will ensure better practice-based training for students and provide opportunities for companies to mitigate the workforce shortage, by December 2023 MoES anticipates having up to 10% of university and 60% of VET students to be successfully involved in dual education programs.
VEI AND LYCEUMS. During Year 2, ERA provided support to five vocational education institutions (VEIs or lyceums) from Donetsk and Luhansk Oblasts under ERA-RFA-001 “Strengthening technical capacity of vocational educational institutions in Donetsk and Luhansk Oblasts.” By the end of September 2020, Kramatorsk Center for Technical and Vocational Education, Kurakhove Vocational Lyceum and Velykonovosilkivskyi Vocational Lyceum have received all equipment envisaged under their grants, and Mariupol Vocational Lyceum of Motor Transport will complete delivery in early October 2020.
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The grant for Lysychansk Higher Vocational School #94—the sixth planned VEI—is under development since repair works to the premises were requested and needed before ERA could proceed with the grant. ERA’s Infrastructure team has made an assessment and prioritized the grant in Year 3. The VEI staff and students will benefit from such a joint cross-team approach in equipping the school’s workshop.
The national quarantine imposed by the GoU had significant implications for grants to lyceums since usual classes, including practical workshops, were suspended and students had to study online from their homes without any opportunity to use the modern equipment provided by ERA. Thus, discontinuation of studies after winter break 2020 was the main impediment to full implementation of the grants and achieving the planned performance indicators for their performance periods. However, the ERA technical team will continue working with the respective lyceums and the ERA MEL team will keep monitoring progress during the 2020–2021 academic year. In September 2020, the lyceums informed ERA of the start of the regular (i.e., offline) school year, meaning that students will be physically able to use the equipment for better practical education. The results of equipment usage will be reported throughout Year 3.
GROWTH The common theme in Year 2 across Growth sector interventions was market expansion to compensate for traditional markets lost due to shocks including the armed conflict and COVID-19. This was accomplished through targeted consulting and some of the first Growth grants awarded, though significant grant interventions will begin in Year 3. In the Vegetable and Fruit Growth sector, ERA’s intensive partnership with the pathfinder farmers of the Ovochi Stanychnykiv cooperative led to new client relations including one with the largest regional supermarket chain, Simya, which heavily incorporated the Stanychnykiv cooperative into its supply chain. Another Growth grantee, the Sady Donbasu enterprise, thanks to ERA support was able to participate in trade expos in Berlin and Dubai in February 2020, which lead to an arranged pilot export sale of apples to the promising markets of the Gulf States.
The Innovations for Manufacturing sector team focused its efforts on organizing the ambitious Roland Berger business strategy training, which was delayed until the end of Year 2 by COVID-19 (as the original approach proposed by Roland Berger was an in-person intensive training). ERA activated individual online consultations for partner companies with the goal of increasing clients in the agricultural sector and developing brand identity.
In the biofuels sector, ERA identified eight model organizations for stimulating the market for biofuels in rural communities that will be rolled out as grants in Year 3. In the Azov Sea region, the Tourism team initiated a series of trainings on new tourism product development that should help attract new categories of customers, while also setting the stage for development of the unified Azov regional tourism brand. In the IT Sector, ERA began forming industry clusters in Mariupol, Kramatorsk and Luhansk Oblast that will be the primary movers of IT development in the east.
In the honey sector, where access to the global market remains strong, ERA focused on improving technical and business knowledge among small beekeepers and increasing their access to inputs so that they can grow their apiaries to a more sustainable scale. The “Increasing Access to Inputs for
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Beekeeping SMEs In Luhansk, Donetsk And Zaporizhzhia Oblasts” program designed in Year 2 will be rolled out in Year 3. Finally, in response to COVID-19, ERA is helping small agricultural producers improve their branding and enter online sales to reach middle class consumers. Consultancies were initiated with companies in the produce delivery, meat and milk processing and specialty fruit sectors to improve online sales. Details for each of the mentioned key achievements are provided below.
MARKET EXPANSION
HONEY GROWTH SECTOR
Throughout Year 2, namely September 25, 2019–February 15, 2020, the honey sector team conducted the multi-component Professional Beekeeper course for 72 beekeepers from Luhansk and Donetsk Oblasts. This training served as a bridge to cover the gap in professional education for adult beekeepers who cannot spend years studying at formal educational institutions. The intensive pace and condensed curriculum gave all necessary information over the course of five weekend training sessions and was aimed at enabling beekeepers to scale up production, introduce new products with higher added value, and reach new markets. After the first beekeepers' group graduated in mid-2020 the curriculum was adjusted based on the feedback of trainers from Hadyach Agrarian Lyceum, ERA experts, and trainees themselves.
As a further development of this initiative and way to achieve sustainability, ERA organized a training of trainers (ToT) on June 15–August 7, 2020. Newly prepared trainers were selected from agrarian professional college and university (LNAU) teachers, state officials in relevant bodies and services, and champion beekeepers. This pool of new trainers should bring positive changes on the institutional level, promoting beekeeping education in educational institutions and advocating for changes in governmental policies and approaches to the sector, and should also inform beekeepers about new best practices in modern apiary business. In Year 3, ERA plans to engage the trainers with further training on professional beekeeping to build the capacity of smallholder beekeepers and foster development of the sector in ERA target regions. Thirty-one participants have passed the ToT and are now certified trainers who will provide training and consulting to beekeepers living in the region.
The knowledge received from the trainings should provide a path for smallholder apiaries to build a more resilient business that is able to better sustain turbulence within local and international honey markets. A specific case of an IDP could serve as an example of the training’s impact. The IDP moved with his family from Luhansk city to Spivakivka village, Novoaidar Raion. After he graduated from the training, he and his neighbors created a cooperative that serves as a honey aggregator and allows small beekeepers to form large honey batches and deal directly with honey exporters, avoiding a middleman. It ensures better prices and more reliable customer relations for the beekeepers. During the training, the IDP learned about royal jelly as one of the added value products that can be produced by apiaries. This season he tested this idea and produced his first batches of royal jelly; next year he plans to offer it as a niche value-added product at local open-air markets and online.
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Beekeepers name bee mortality from pesticide poisoning as the biggest threat that could potentially destroy their business and lead to lengthy lawsuits with farmers. NGO Grand Expert created an online platform as a communication tool for beekeepers and crop farmers that allows beekeepers to keep informed in real time about planned crop treatment and advise beekeepers of the use of pesticides and plant protection products nearby, as well as the presence of honey plants. After receiving a grant from ERA on October 15, 2019, the NGO introduced and positioned the Grand Expert platform as a convenient and accessible tool to improve interaction between beekeepers and farmers and allow beekeeping and crop procedures to safely interact and operate in the same area.
The grantee selected two pilot raions in Donetsk Oblast and two in Luhansk Oblast for the first stage of platform promotion. Due to quarantine restrictions and in response to recommendations from the ERA technical and MEL teams, Grand Expert has gradually adjusted its approach to consultation with beneficiaries by shifting from on-site training designed for larger groups to a combination of online training and direct one-to-one consultation sessions. The grantee reports that in total, 459 beekeepers and farmers received training (215 via individual consulting provided from April 16, 2020), and 340 have registered on the platform. In the season to follow, Grand Expert and ERA will analyze how actively beekeepers and farmers have been using the platform for mutual coordination and what cumulative results the platform’s wide promotion has brought to its users.
INNOVATIONS FOR MANUFACTURING (I4M)
Roland Berger, an international strategic consulting firm with extensive expertise in manufacturing, has been leading an intensive business strategy workshop for top management of ERA partner companies that was originally planned and organized for mid-March 2020 in Kyiv. Due to the deteriorating COVID-19 outlook in Ukraine, it became clear that the only realistic way to conduct the workshop was online. Roland Berger and ERA renegotiated the subcontract in August 2020 to account for the new remote implementation realities, and the initial offline workshop was converted into seven half-day workshop sessions starting on September 8, 2020. As an unexpected bonus, the updated format allowed extra participants from ERA target regions to be invited. The Roland Berger workshop relaunched strategic cooperation with 16 selected manufacturing companies from Luhansk and Donetsk Oblasts.
I4M partner companies representing machine-building, pharmaceutical, FMCG, chemical and construction industries—totaling 80 participants with local consultants—eagerly participated in the workshop, not least since this is just the first stage of ERA’s integrated approach to cooperation and business development. After the workshop, the companies started designing their individual development strategies with the support of Roland Berger consultants. The full cooperation cycle consists of consequent presentation and defense of each company strategy before a panel consisting of Roland Berger representatives and ERA specialists to choose the candidates for co-creation of full grant applications. It is expected that most of these companies will demonstrate organizational capacity improvement. Once the current pilot cooperation cycle is finished and the potential grantees selected, the I4M team will onboard the second round of companies for similar cooperation.
The importance of professional branding has been underestimated by local businesses. Companies located in Donetsk and Luhansk Oblasts have an image problem due to the risk profile of the region, and boosting the positive business image of firms in the region has been a part of ERA’s integrated approach to business development, branding and marketing is key to placing the local companies strategically in a better position to deal with existing and potential partners. Without a modern and attractive “face,” their appeal is often insignificant or overlooked by investors or clients. During
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June–August 2020 ERA provided branding consulting services to Kramtechcenter, a Kramatorsk- based machine-building plant. An ERA consultant designed a fully-fledged brand book in close cooperation with the beneficiary’s top management. This intervention included multiple elements of modern brand and corporate visual identity with a company logo, brand positioning concept, website concept, branded office building exterior and interior, and corporate uniforms and clothing. The factory has already updated its Facebook page and produced branded T-shirts with ERA-supported branding, while site modernization and construction of a branded factory entry zone is ongoing. Kramtechcenter plans to gradually incorporate all branding elements into its activities and products.
A good example of a small company that has closely cooperated with an ERA consultant to crystallize its strategy and streamline business processes is PE Nimanikhina, a sewing company based in Ukrainsk. This intervention resulted in a significant extension of the company’s professional network in other regions of Ukraine, expanding its clothing range in accordance with market demand, enhancing its network with clothing designers, modern rebranding which will increase anticipated sales by 10%.
By further assisting customer base diversification for its beneficiary companies, ERA identified a promising potential partner for Mariupol-based heavy-manufacturer Magma: Agroprosperis, one of the leading Ukrainian agricultural exporters, owned by US investment funds. ERA specialists connected Magma with Agroprosperis’ top management and ensured initial contact. The companies held several working meetings online and offline and located potential venues for cooperation.
IT GROWTH SECTOR
YOUTH-DRIVEN IT. The IT incubation program implemented by ERA grantee NGO Social Boost through the platform of the 1991 Mariupol center aims to encourage local youth to experiment with ideas for new IT products and grow beneficiary’s ideas into mature startups.
1991 Mariupol startup development center, the first center in the city and Donetsk region with the goal to become a magnet for creative youth and tech business, opened on October 29, 2019. During its first year of operation, the center offered the following free educational programs: Startup Workout, a six-week intensive course for creating and developing startup ideas which attracted 28 participants; the Internship Program for entry-level specialists in JavaScript, IT marketing and product management with 33 participants and 11 graduates later employed by local companies; and the Startup Incubation Program aimed at developing startup projects and successfully presenting the first minimum viable product (MVP) to investors, where so far two out of eight startup presenters have managed to attract their first seed investments.
In Year 2, 1991 Mariupol hosted 102 open educational events attended by 3000 visitors; 48 of them were viewed online by 8000 viewers. By December 2020, the center plans to complete two Startup
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Course programs and a second incubation program for potential startups, and hold two Demo Days for startup presentations, the largest of which will be held as part of the Priazov Valley Invest Forum. Besides teaching, the center's team initiates open educational events and competitions such as Design Battle South Coast on July 31, 2020, a national competition in which 70 graphic designers from 17 cities of Ukraine took part.
When ERA initiated its partnership with Social Boost, its expected output was for 1991 Mariupol to become a real driver in the local IT ecosystem, which it has established over the course of the last year. Thanks to USAID’s support the center constantly promotes the IT industry in the city and unites IT entrepreneurs, developers, designers, managers, and other digital specialists on its site. Mariupol IT companies see fresh perspectives, and new informal groups of would-be IT entrepreneurs trying to come up with marketable products that are constantly being established, some of whom are planning to join the existing Mariupol IT cluster created by ERA in 2019.
One of the successful stories that happened in 1991 Mariupol is local IT company MakeBeCool. The company’s founder came to the incubation program to launch his IT product for an e-commerce market. In the program, the founder was able to make the first sales of his product, prepare documents for venture investors, understand his potential consumers, and receive high-quality recommendations from the best Ukrainian mentors and experienced IT entrepreneurs. On July 16, 2020, the founder presented his idea to investors, after which he was invited to one of the largest venture capital funds in Ukraine for further negotiations. A private investor also showed interest in the product and invested $20,000, which allowed his team to bring the product to new markets and complete all necessary functionality of the site for end consumers. The company now has significant potential to grow into a large product company with a portfolio of e- commerce products: the team now employs five people, while still participating in the incubation program.
Another successful case is participation in the incubation program of an Estonian team looking for an opportunity to create their own product development team in Ukraine and launch their startup in cities with a low representation of effective construction firms. Their product idea, where one can prototype a home design in just 10 minutes in a mobile application, solves problems of modern construction. The implementation of such a complex project could take years, but within the incubation program the Estonian innovators were able to craft a strategy to minimize their risks and time resources. The software is expected to be partly running by November 2020. At the moment, the Estonian team has attracted five Mariupol-based specialists and has plans to expand its staff in Mariupol in the coming year. Without the 1991 Mariupol Start-up Incubation Program, the Estonian team would not have considered Mariupol (or southeast Ukraine) for their start-up venture.
IT CLUSTERS. With ERA support, representatives of the IT sector have established two clusters in Kramatorsk to implement joint projects to develop the IT community of Donetsk region and form a common vision for development of the IT industry in eastern Ukraine. The creation of the clusters took place under rather difficult conditions during the onset of the COVID-19 pandemic. The ERA IT Sector Lead incentivized and moderated nine online meetings and videoconferences with more than 20 local IT companies to form a common vision of each cluster and find joint motivation for its participants to be united in a formal organizational clustering. Travel restrictions forced potential cluster members to search for safe and stable communication means. Telegram channels where the participants could communicate interactively became a fast and innovative solution, which still plays an essential role in real-time information exchange in the clusters as of the end of the reporting period.
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A professor who is a well-known expert in cluster formation was invited as a special guest to one of the videoconferences and persuaded the IT firm representatives to join forces to make the IT industry even stronger. The East-Ukrainian Technocluster was formalized and registered by nine members as a legal association on September 3, 2020, with plans to launch social projects in medical services, software solutions using artificial intelligence for utility service providers, the IT-Sandbox ecosystem educational project, a startup incubator in Kramatorsk and the creation of a regional technology park for the IT-community. The second cluster, IT Donetchyna Cluster, was registered on September 16, 2020, uniting three IT companies and is now at the stage of signing an MoU with ERA. The third cluster in ERA’s area of operation was registered in Mariupol in August 2019 during the last reporting period by ten local enterprises and continues to cooperate with ERA and the 1991 Mariupol activity, described above, which has become a center of gravity for the IT sector in that city.
SEA OF AZOV TOURISM GROWTH SECTOR
Over the course of Year 2 ERA provided training on tourism product development in Mariupol, Berdiansk, Kyrylivka, Melitopol and Henichesk, covering all major resorts in the Azov region. A total of 105 participants from the hospitality business, restaurants, travel agencies, local authorities and community activists developed new products and offered them to customers in the fall of 2020 to extend the tourism season and attract new clients. The products were built around unique features and attractions of the resorts, example products included a Yoga Weekend with a tour in the Pryazovskyi National Park with yoga practice in pristine nature; or a Mariupol Epochs weekend tour which visits legendary industrial giants, the sea port and Meotyda National Park; conference services in Kyrylivka with meals and accommodation, excursions, photo sessions and conference services; or a Wellness tour to Berdiansk with medical and spa procedures designed for couples who plan to conceive.
To supplement the aforementioned training, 134 people representing local hotel and restaurant businesses, museums, national minorities, artists and local authorities received tools and targeted one-to-one TA on how to turn cultural heritage assets into compelling and commercially successful tourism products. The new cultural products developed will be offered in the upcoming tourism season, attracting unconventional tourists, and changing perception of the Azov region as exclusively a sea, sand and sun destination.
ERA’s efforts to unite businesses and resorts in one tourism destination yielded the first results when after the training in Henichesk on June 24, 2020, local businesses and authorities registered the Hospitality Association of Henichesk Raion on July 29. The association will focus on increasing the level of service quality, renovating tourism infrastructure, and creating a strategy for local community development. In addition, the association plans to establish a fund for development of the resort's infrastructure, which will be sustainably financed through locally levied tourism fees.
Another ERA initiative in promotion of the Azov region as a desirable tourism destination was the launch of the Azov.Travel portal that displays promotional materials to advertise local tourist events and covers developments in the regional tourism sector.
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As contribution to tourism sector diversification, ERA’s Workforce Development team has completed an assessment of the current hospitality curriculum and industry training needs in the hospitality sector. The assessment included a series of focus groups, key informant interviews and online meetings and interviews with tourism sector actors, educational institutions, enterprises, and local governments. This assessment will connect with ERA’s effort to align educational institutions’ offerings with the demands of tourism employers. The interviews and survey findings will be summarized in a dedicated report to be presented to USAID in November 2020 (FY2021 Q1) with recommendations and proposed activities that are planned for implementation in ERA’s remaining years.
VEGETABLES GROWTH SECTOR
Sady Donbasu, one of the biggest apple orchard farms in eastern Ukraine, was inspired by successful export deals to Qatar after an ERA-sponsored participation in international trade fairs in Dubai, and as a result went through a Global GAP (Good Agricultural Practices) audit. ERA has been helping the company since early 2020 by providing advice and technical expertise on how to attain this important international certification which guarantees product safety for consumers and must be obtained by a company wanting to export fresh fruit and vegetables to European Union countries. Sady Donbasu has been preparing its business for the past three years to receive the certificate by rebuilding business processes and upgrading requirements for agro-technological processing, accounting, storage, and environmental standards. The certificate will strengthen the export position of Sady Donbasu and help the company strategically achieve international market access.
In order to continue to support this partnership with Sady Donbasu, ERA plans to issue a grant to Sady Donbasu in year 3, along with supporting another leading east- Ukraine orchard farm, Perspecktyva, growing apples and cherries through an ERA grant. These two grant proposal scope, which are currently under development at the close of this reporting period, could meet ERA’s maximum threshold limit in funding; therefore, ERA is working with these proposed organizations to develop investment business plans. This business planning has helped the companies to better undertake the risks of implementation in uncertain realities. Both companies plan to invest grant funds to improve sorting, storing, and packaging of fresh products, which would enable these firms to enter into new lucrative markets with higher added value products. These two firms are also looking into improvements into year-round storage which will also allow them to organize shipments of fresh apples and cherries throughout the year covering the winter and spring season when supply is limited but prices are high.
Over year 2, ERA’s substantial technical consulting and grant assistance helped Ovochi Stanychnykiv, an agro-cooperative to expand its market and increase sales. This season was turbulent in terms of demand and prices for horticultural products with marketplaces’ temporarily shutdown and the restricted operation of the HoReCa (hospitality, restaurant, catering) sector. This changed traditional trade patterns for the cooperative and the market in general, prompting Ovochi Stanychnykiv to quickly adapt. With ERA’s aid the cooperative amended production and administrative practices that in turn made them an attractive partner for wholesale buyers for the largest local and national retail chains in Luhansk Oblast, Kyiv and Kharkiv. The cooperative calculates that it managed to produce and sell up to 400 tons of fresh tomatoes including 64 tons of niche cherry tomatoes, andaccording to the cooperative’s internal estimates, it is a 10% sales increase compared to the previous year. The map below depicts the new markets Ovochi Stanychnykiv is selling to as of the end of September 2020.
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Figure 1. OVOCHI STANYCHNYKIV COOPERATIVE: MARKETS EXPANSION
In terms of MSME COVID-19 Rapid Response, ERA organized two Local Farmer Festivals, in Berdiansk on August 22–23, 2020 and Mariupol on September 19–20, 2020. The main goals of the two events were to promote farm products among potential consumers, establish communication channels between sellers and buyers through online sales, open new sales channels for farm products and attract clients who have recently shifted to supermarkets as safer places than traditional open-air marketplaces. Almost 50 representatives from Luhansk, Donetsk, Zaporizhzhia and Dnipropetrovsk Oblasts participated in each event. The festivals, held in strict compliance with the quarantine standards of the World Health Organization (WHO) and the Ministry of Health of Ukraine, were styled as rural fairs with gastro shows, masterclasses and open-air film screenings in the evening.
The main goals of the festivals were fully achieved. Rough visual estimates indicate that the two festivals (over four days) were attended by many thousands of visitors; and feedback sessions facilitated by ERA Local Produce Realization Specialist revealed that the total revenue of the representatives was about UAH 3.2 million for Berdiansk and around UAH 5 million for Mariupol; both festivals provided an opportunity for producers to reach preliminary agreements on cooperation, and some began to receive orders through social networks. The feedback collected by ERA specialists shows that these two events made a positive impression on local authorities and had a "wow effect" on participating farmers. Both authorities and farmers expressed interest in holding such festivals regularly if COVID-19 restrictions permit. ERA plans to organize four similar events in 2021 on national and/or religious holidays, with subsequent transfer of event owenership to local authorities and the local business community.
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INVESTMENT ACCELERATION FOR MSMES
ACCESS TO FINANCE (A2F)
In Year 2, ERA used multiple approaches to stimulate lending to micro and small businesses. Previously, lending to micro businesses was hampered by several factors, such as high interest rates, unachievable collateral requirements and complicated bank procedures. To help overcome these obstacles, the team started cooperation with local credit unions and the Western NIS Enterprise Fund (WNISEF). Also, ERA supported promotion of the 5-7-9% government program of subsidized lending by supporting public presentations of the program on March 11, 2020 and a subsequent road show conducted on August 11–22, 2020 in ten towns of Luhansk and Donetsk Oblasts.
In April 2020, ERA signed a grant agreement with the Ukrainian United Credit Union (UUCU) with the purpose of offering micro-farms, beekeepers and micro-tourism businesses loans at rates lower than those in banks. UUCU, as a financial company, can transfer the financial resources of the grant on a repayable basis to local credit unions lending to MSMEs. In total, six local credit unions operate in Donetsk, Luhansk and south Zaporizhzhia Oblasts. At the time of reporting, four out of 38 planned loans have been issued, primarily in Markivka Raion of Luhansk Oblast. The average size of one loan is UAH 80,000, and the total amount of loans granted in Year 2 is UAH 230,000. In close collaboration with USAID’s Credit for Agricultural Producers (CAP) program, which will take over the activity’s longer-term monitoring, this activity will continue to run into ERA’s third year.
In June 2020, ERA signed a contract with WNISEF aimed at creating a Ukrainian legal entity owned and operated by WNISEF. The statutory activity of this enterprise should be to provide guarantees to Ukrainian banks for loans taken by local companies. Thus, a unique financial service has appeared on the market for the first time—a loan guarantee fund for enterprises that meet the operational and financial criteria agreed with ERA. The key selection criterion for an MSME to receive WNISEF’s loan guarantee is its additional social obligations under corporate social responsibility (CSR), wherein part of the borrower’s profit is redistributed to socially important projects. The fund will use the income from the contract with ERA to provide loan guarantees as well. A competition for CSR credit projects was announced in August 2020 and three credit projects are currently under consideration.
One of the obstacles MSMEs usually face in accessing finance is lack of knowledge on preparing business plans and financial statements in accordance with bank requirements. To overcome this challenge, ERA initiated a consulting service focused on attracting investments and bank loans to micro, small and medium-sized businesses. Hired consultants will search for and advise companies on available loan opportunities and create business plans with all required financial documentation to be submitted for receiving a loan in local banks. A loan application is considered successful only if the client company receives real financing from a bank. At the time of reporting, ERA consultants have helped selected enterprises to prepare and submit six applications to various banks. Four clients— three medium businesses from the agricultural sector and one micro enterprise from the manufacturing sector—have signed loan agreements; three borrowers will use the loan resources to procure machinery and the micro-sized client will buy wood processing equipment.
In February 2020, the GoU launched a concessional lending program for MSMEs called 5-7-9%, to subsidize interest rates and, in turn, spur more business investment spending throughout the country. Four state-owned banks initially took part in the program, providing an example for the18 non-state banks which joined the program throughout the remainder of the year. In March 2020, ERA held a large presentation of this program in Kramatorsk with speakers from the Ministry of Economy of Ukraine and representatives of participating banks. However, after the start of the
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program, Luhansk and Donetsk Oblasts lagged behind all other Ukrainian regions in terms of the number of loans issued and their total amount. Key obstacles to this delay were complex bureaucratic procedures in state banks, an unstable economic situation for micro, small and medium-sized businesses including COVID-19 quarantine, consequent pessimistic expectations of MSMEs that limit the desire to invest in business expansion, and lack of business ideas for new goods and services to be offered in small towns.
In June 2020, the GoU program underwent modifications that expanded opportunities for MSMEs: 1) the program began to finance not only the acquisition of assets, but also made it possible to finance working capital; 2) the allowed size of a possible loan increased from UAH 2 million to UAH 5 million. To advertise the new possibilities of the program, ERA organized ten presentations in small towns of target regions. As a result of these working meetings, ERA A2F specialists proposed an experimental PR campaign for the 5-7-9% program within Kreminna raion, to be launched in November 2020. In case the number of requests and applications from local businesses increases, the pilot will be scaled up through the whole region.
INVESTMENTS
In Year 2 ERA incentivized several long-term interventions to accelerate investments for MSMEs by triggering the long-term cycle of investment acceleration with a set of diverse approaches. One such approach that will be piloted by ERA in year 3 is that of contracting Transaction Advisory Services that will match the most competitive SMEs with available capital providers under the powerful support of professional transaction advisors (intermediaries) within18 months. On September 30, 2020 ERA completed the procurement process and signed a subcontract with Soul Partners LLC, an investment banking company that will facilitate market-driven investments to eastern Ukrainian SMEs within the next 18 months. Currently ERA is about to finalize tender procedures with another major transaction advisory service providers that will enable investments to businesses operating in ERA target regions. The implementation of these two subcontracts will help four SMEs to raise at least USD 4.5 million, which will advance ERA’s investment pipeline development.
ERA started discussions with Gazelle Finance regarding market entry into Ukraine and the model of cooperation that will suit all parties involved. It’s a positive sign that a successful investment fund like Gazelle Finance is looking to start operations in Ukraine and ERA can facilitate that interest. In Year 3 ERA plans to formalize the discussions and develop an action plan for joint activities if tentative negotiations have positive outcomes.
Following the release of an RFP in August 2020 for the development of an investment portal for Donetsk Oblast State Administration (DOSA), ERA received several responses from potential vendors and began the procurement process to be completed in the beginning of Year 3. The team expects the official public portal launch to be in four to five months. Also, as a future breakthrough in industrial park development in the region among businesses and local authorities, on September 1, 2020 ERA awarded a grant to NGO GoLocal to implement the project “Fostering best practices in Industrial Park and Industrial Real Estate Development in Eastern Ukraine.” The results of grant implementation will be reported in future quarterly reports.
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As with other teams, ERA A2F interventions also addressed unanticipated challenges as a result of COVID-19’s impact on the local economy. Since MSMEs in Ukraine traditionally have lower resilience compared to big corporate actors, ERA supported MSMEs by providing targeted consulting within one of ERA COVID-19 Rapid Response plan's key directions. The consultations are offered by individual consultants with proven expertise in one or several of the ten fields prioritized by ERA: Business Diagnostics, Strategy Development, Operational Development, Investment Consulting, Accounting and Finance, Human Resources, Marketing and Sales, Production and Value Chains, Certification and Quality, and Energy Efficiency. Selection of both consultants and COVID- affected MSMEs was performed via an online application procedure. By September 30, 2020 this long-term initiative resulted in 40 onboarded consultants and five MSME requests. In Year 3 the consultancy is anticipated to grow significantly which will increase the number of successful business consultancy projects.
TRANSFORMATION Throughout Year 2, the ERA Transformation team successfully completed development of four strategies for cities and consolidated communities in Donetsk and Luhansk Oblasts, and the Luhansk Oblast Development Strategy. The strategies helped ERA partner cities and LOSA to effectively use available resources for local development and set priorities and goals for the long term, as well as make efficient decisions on financial resource allocation and attract financing for implementation of important projects that will increase economic growth and general well-being within these locations. Based on the strategies, the ERA partner cities have selected the highest priority infrastructure projects for potential implementation with ERA support. All these projects were reviewed and evaluated by the Transformation and Infrastructure teams. As a result, the most economically impactful projects were selected for further consideration with ERA support. The projects are described below in the corresponding sections.
During the year, the Transformation team worked on improving the capacity of officials, providing training and expert consulting, and increasing municipality leader’s ability to attract funding for project implementation from different national and international sources. In addition, in Year 2 the Transformation team supported development of Mariupol’s Strategic Economic Development Plan 2021–2030 and the common Transformation Strategy for seven coal cities in Donetsk Oblast, which will be tools for positive transformation. The Transformation team continued close coordination with all partner cities and communities during the quarantine period, researched and assessed the rapidly changing local economic situations and the local response to the COVID-19 pandemic, and helped them to review development strategies and adapt to existing conditions.
The Transformation team held a significant number of offline and online meetings, trainings and events which allowed the creation of local and regional coalitions, established new linkages and partnerships, and improved coordination and communication between partners and stakeholders. A detailed description is provided below by subregions.
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DRIVING VISION
SUPPORT “BIG PICTURE” EVENTS TO PROMOTE THE EAST REGION
On October 29, 2019 ERA co-sponsored the landmark Mariupol Investment Forum (MIF), attended by Ukrainian President Volodymyr Zelenskyi, Prime Minister Oleksii Honcharuk, US Chargé d’Affaires (CdA), USAID Mission Director, Ukraine ministers, top management of the International Finance Corporation, World Bank, European Bank for Reconstruction and Development (EBRD), and many other financial institutions and big foreign investors. The event was investors. The event was important for contributing to the improvement of Eastern Ukraine’s image, opening prospects for new foreign and domestic investments and reviving public interest in current business opportunities in the region. During the forum, participants collectively signed 12 memoranda of understanding (MoU) or cooperation for one billion USD in investments. Four mobile communications operators signed an agreement to ensure 4G broadband cellular network coverage providing fast-speed mobile web access across 90% of Ukraine’s vast territory. The Big Infrastructure project section of this report above contains a description of ERA's cooperation with Ukrzaliznytsia in restoring the railway infrastructure of Luhansk Oblast which was incentivized during the forum.
This high-tech event, was executed effectively with keen attention to logistic details and the inclusion of media through public relations arrangements involving the presence of journalists from over 200 media outlets including Bloomberg, Voice of America and the Wall Street Journal, impressed both Ukrainian and international attendees. Those who attended or were reached via media publications (over 20 million people) were influenced to perceive Eastern Ukraine less as a zone of conflict and more as one representing economic opportunities.
In the run up to the Mariupol Youth Forum, the Ukrainian Leadership Academy (ULA), ERA’s grantee, in cooperation with the Mariupol City Council, the GoU, and Ukrzaliznytsia, transformed the outside of an 11-car train with the «СХІД Можливостей / DAWN of Opportunity» logo and ULA branding. The train transported 500 young leaders representing all 24 Oblasts of Ukraine from Kyiv to Mariupol. The CdA, along with other high-profile participants, attended the train’s highly publicized send-off. ERA designed sweatshirts, bags and notebooks for the forum and shared the DAWN of Opportunitys concept with young participants willing to contribute their own creativity, time and knowledge to develop a vision for Ukraine 2030 that will help the region flourish and become a thriving place to live and work.
The Mariupol Youth Forum received national attention and ended with the Mariupol Investment Forum. In the following months two Youth Forum participants joined work on the Mariupol 2030 strategy. About twenty local youth participants of the forum took part in events organized by ULA Mariupol and joined projects in the city as active volunteers.
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The forum was the impetus for the Night City Mariupol project to create a VR (Virtual Reality) museum for youth in Mariupol implemented by ULA activists. As they were in different cities because of quarantine, the project team decided to implement the idea through city-lights. In June 2020 city-lights appeared in Mariupol with images of Ukrainian classic writers and QR codes giving the opportunity to learn more about these cultural figures, thus reaching more residents. The project’s budget was UAH 43,903, sponsored by the European Union via UNICEF Ukraine.
The forum also helped to strengthen local partnerships in the development of the Mariupol project Port of Cultures—the first nationwide project creating a multifunctional cultural center with a modern narrative exhibition of local identity. A year after the forum, ULA’s Leadership Development Center opened in a building reconstructed in partnership with Mariupol City Council.
LUHANSK GCA
In Year 2 ERA supported development of the Luhansk Oblast Development Strategy 2021–2027, its implementation plan, and the establishment of Luhansk Regional Coalition. In collaboration with LOSA and the USAID-funded DG East, PULSE and CEP projects, in November 2019 ERA initiated and organized the first Luhansk Regional Coalition Forum “From Common Vision to Economic Growth” in Sievierodonetsk. The forum’s key objective was to establish goals and priorities for the socio-economic transformation of Luhansk Oblast.
More than 100 individuals participated in the two-day event, including the Governor of Luhansk Oblast, members of the Ukrainian Parliament, representatives of the public and private sectors and international organizations. Participants discussed solutions for proposed strategic shifts and collaboratively formed a list of projects to be included into the Development Strategy of Luhansk Oblast. The main forum outputs were: coordination of strategic goals and action plans between the parties involved; general informal agreement on key growth points for regional development, dissemination of information about the new vision of the region, and identification of innovation priorities in economic sectors. These declared outputs led to the implementation of ERA grant "Transformation of Regions Through Common Smart Solutions" launched to discover unique opportunities of Luhansk and Donetsk Oblasts in terms of innovative smart specialization in economic development. Recently, the grantee conducted a kick-off workshop for representatives of both Oblasts who will form local working groups to coordinate grant implementation.
In February 2020, LOSA officially adopted for implementation the Luhansk Oblast Development Strategy 2020–2027 and Action Plan 2021–2023. According to the new vision formed by the highly participatory, broad-based coalition, Luhansk Oblast promotes itself as a post-industrial development territory with modern, high-tech chemical and agrarian industrial clusters, a developed engineering sector, and a socially united community with European values and historical traditions. The strategy of Luhansk Oblast through 2027, as well as the strategies of other regions, will come into force in 2021. Currently, the GoU has obliged all regions to review their strategies in accordance with the State Strategy for Regional Development, which was approved on August 5, 2020. Therefore, LOSA
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is currently reviewing the strategy compliance to be finalized by February 5, 20201 or within six months after issuance of the GoU Resolution.
Partners4Growth’s lead expert conducted the Model Cities Study to inform the strategy of ERA Transformation Initiatives. The study provides a comparative analysis of regional economic transformations, including the experience of Pittsburgh, Pennsylvania. The Transformation team now uses this study as its guiding document in its approach to transformation in ERA’s five sub- regions. The team used the Luhansk Regional Coalition Forum’s platform to present the key findings of the study including successes and drawbacks of each city’s transformation experience, as well as potential development models and their applicability to cities in eastern Ukraine. As a next step, ERA translated the study into Ukrainian, received feedback from partner city administrations, and started utilizing the proposed approach in developing a strategy for Mariupol. The coal cities in Donetsk Oblast also expressed interest in Pittsburgh’s transformation experience to be adapted to their own challenges.
NORTHERN DONETSK GCA
ERA started supporting Bakhmut city to develop its strategy back in May 2019. During this process, the neighboring settlements around Bakhmut decided to join the city and form a consolidated community (CC). As a flexible response to unexpected circumstances, ERA proposed to elaborate a Development Strategy for the newly established Bakhmut Consolidated Community, and on April 21, 2020, the strategy was successfully adopted. The Development Strategy has four directions for development with a three-year Action Plan as a separate document. For 2020 Bakhmut CC expected to implement 50 projects included in the Action Plan, and as of July 2020, 41 projects are at different stages of planning and implementation for a total amount of almost UAH 40 million.
CENTRAL DONETSK GCA
ERA facilitated development of Dobropillia CC Development Strategy and its Action Plan, which was adopted in April 2020 with two directions: “Economic Development and Investment Attraction,” and “Comfortable and Safe Space for Work and Life and Quality and Available Services”. The strategy will start functioning after local elections in late October 2020. However, work on its implementation is ongoing: the community has identified priority projects—the city market and “Dream Park”—and now ERA’s Infrastructure team is preparing all necessary documents for further submission to USAID, tentatively in early November.
Similarly, the Economic Development Strategy for the city of Pokrovsk and Action Plan for its implementation were adopted by a working group and community development leaders. The Development Strategy is built on three main directions: “Pokrovsk for Investment” (economic development), “Pokrovsk for People” (infrastructure and leisure), and “Pokrovsk for Ideas” (active and responsible community). Due to changes in the city’s leadership, the city council has not finalized the strategy adoption yet. At the same time, the city council is still selecting priority projects to be implemented under the agreed strategy.
In March 2020, the ERA Transformation team, together with EU4Business and GermanWatch projects, started work with the Coal Cities Platform, which unites seven municipalities in Donetsk Oblast: Dobropillia, Myrnohrad, Novohrodivka, Pokrovsk, Selydove, Toretsk and Vuhledar. The overall purpose of this effort is two-fold: to help strengthen linkages among the cities so that they can advocate for their needs with a common voice to central government ministries and bodies (which are making their own plans to close state-owned coal mines); and to help the region develop
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a common plan for a post-coal economy and advocate for the resources needed to implement it. This is especially important given the anticipation that all remaining state-owned coal mines in the region will be closed within the next five years.
As a starting point, the partner projects organized a workshop in Kyiv to facilitate close coordination between the seven municipalities which have formed a partnership with the Oblast administration, the national government through the Ministry of Regional Development, and the international development community in Eastern Ukraine to support the coal mining cities of the region in their economic transformation. During April–July 2020, ERA facilitated online meetings between the three projects to agree on types of assistance, which resulted in a joint decision to develop a transformation strategy for the coal cities of Donetsk Oblast, as well as preparation of a roadmap for strategy development. Consequently, on August 13, 2020 all stakeholders signed a memorandum. After the first meeting of the working committee in July the process of strategy development began: ERA’s Transformation team dedicated August–September to data collection and analysis including surveys of business and community leaders, and official statistics gathering on each participating city to prepare their profiling.
MARIUPOL
In Year 2 ERA helped Mariupol city council to address their top priority objective—to develop the Mariupol Development Strategy 2021–2030 for transformation in all spheres of the city’s life for the next ten years. On January 27, 2020, ERA supported the workshop and Community Coalition Forum on Mariupol Strategy, where representatives of ERA, DG East and Mariupol city council agreed on the methodology, external expertise needs and coordination approach.
The methodology includes the creation of working groups on ten main areas of city development. The strategic development methodology contains five stages: working groups’ workplan approval (1), data collection including city profiling and two surveys (2), data analysis (3), elaboration of the vision, mission and goals (4), and development of the strategy’s action plan (5). More than 160 people from local government, citizens, universities, civil society organizations and businesses joined the working groups through February–May 2020 and by the end of ERA Year 2 they have managed to achieve four of the five steps. On September 8, 2020, at the Local Development Forum initiated by Mariupol city council and supported by DG East and ERA, Mariupol’s Mayor, deputy and two consultants presented the first results of the working groups, the draft vision and mission. Thirty-seven working group representatives took part in the forum personally and 1,496 visitors viewed the online broadcast on the forum’s website. The Mariupol City Council will officially approve the mission and vision as well as finalize the strategy after local elections in late October.
An ERA international consultant who is a native of Pittsburg provided overall technical leadership for the effort, while sharing Pittsburgh’s transformation experience with members of the Mariupol coalition. Experience of model cities and Pittsburgh’s transformation has served as an inspiration for the Mariupol community: local leaders are working on adapting and implementing external experience in the fields of R&D, monetization of scientific research, and expedite startups ecosystem development. ERA will continue to support this work in Year 3 in the form of an online conference for Mariupol City Council officials with city leaders from various periods of Pittsburgh’s transformation. ERA will promote communication between the municipalities and support them if they wish to establish long-term cooperation, including a formal sister city relationship, if both cities are interested.
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ERA grantee the Ukrainian Leadership Academy has been active in the work of the strategic planning working group IT, Creativity, “Cool Youth”: 24 working group members and students of local universities developed their ideas into projects, the Tourism best of which will be included in the Mariupol Strategy-2030 these sectors should be and its Action Plan. Three primary sectors of the economy prioritized that could become a priority for the development of the city over the next ten years, according to the Mariupol youth survey mentioned above, are tourism and hotel business, information technology, and creative industry. These discoveries will be considered in the Mariupol strategy planning.
In Year 2 ERA supported Mariupol city council in establishing the Mariupol SME Support and Development Center and further building its capacity. Establishment of the center was in direct response to feedback from the SME business community that the city was not doing enough to support SMEs in the community. With the assistance of an ERA consultant, the center elaborated and introduced inclusive, transparent, and accountable procedures and internal business process rules. On May 5, 2020 ERA organized an online training on project management and preparation of grant applications, which enabled five center employees and one representative from Mariupol city council’s department of economy—six participants in total—to finalize and submit to ERA a Concept Note for further strengthening the center. Since August 2020 ERA has been supporting capacity building of the SME center in terms of developing the center’s three-year business plan with a detailed workplan, budget and operational model. For this purpose, in the beginning of Year 3 a selected ERA subcontractor will organize three training sessions and one study tour to Lviv and Ivano-Frankivsk for six representatives to learn the best municipal practices in bettering the business environment and experience of business support institutions, to ensure that the SME center offers high-quality services requested by the local business community.
AZOV SEA COAST
Following recommendations of the rapid assessment of the Sea of Azov region conducted in May 2019, the Transformation team identified several high-priority infrastructure projects related to the community's strategic priorities. With help from ERA, local municipalities re-assessed and adapted concepts according to changes in their budgets, the potential of tourist attractions, and challenges to SMEs due to the COVID-19 pandemic. Three partner cities continue development of the following projects for their joint implementation with ERA: Mariupol Municipal Trading Small Architectural Form (SAF), Berdiansk Conference Hall, and Melitopol Expo Center.
Mariupol Municipal Trading SAF envisages creation of 16 prefabricated bus stops with two vendor kiosks each, planned for further leasing to MSME representatives. The project is included in the implementation plan of Mariupol SME Development Program 2019–2021 and will contribute to strengthening economic benefit to the local economy and building business-related infrastructure.
Melitopol Expo Center includes refurbishment of the former refrigerator factory in Melitopol industrial park to be converted into new expo center space. The purpose of the project is promotion of products manufactured in Melitopol and Zaporizhzhia Oblast on domestic and foreign markets through regular thematic exhibitions, expansion of business relations with Ukrainian and foreign enterprises, financial institutions and NGOs, and establishing partnerships with manufacturers in other regions.
Berdiansk Conference Hall is focusing on the creation of a modern conference space in the Sofit Center for Culture and Leisure, which will function both as a platform for information support for
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businesses and as a venue for round tables, briefings, workshops and presentations, as well as for cultural and social events.
The ERA Infrastructure team developed concept notes for all three projects during the reporting period. In Year 3, if the concept notes are approved by USAID, work will continue on development of project documentation, procurement and contractor selection procedures, and other steps necessary for effective implementation.
COMMUNICATION
The ERA Communications team managed planning and implementation of ERA’s public outreach strategy and all media activities at the local, regional, and national levels. The goal of the Activity’s communication effort is to draw the general public’s attention to the eastern region and focus it on positive developments in the east, disseminate information about ERA’s activities and the opportunities it creates to support professional and business development, and attract investments that create new opportunities for all people in the region to help revitalize the eastern Ukraine economy.
During the reporting period, the Communications team supported 141 public events that were highlighted in regional and national media with a total audience of 8,242,895 people, in addition to the Facebook pages of ERA, USAID, implementing partners and stakeholders. Overall, during the reporting period ERA produced 383 news posts on the ERA Facebook page, reaching over 1,323,210 users with 143,800 engagements. To increase ERA’s exposure to the international community, ERA launched a monthly newsletter featuring success stories and examples of interventions to improve Eastern Ukraine’s economy. The newsletter is distributed to USAID and its implementing partners, OTI, UNDP, the Friedrich Ebert Fund, and other international stakeholders.
During the reporting period the Communications team worked closely with 40 ERA grantees to support brand development and marketing plans, outreach materials design, publications, and video materials production. Overall, the ERA Communications team provided approximately 400 consultations to ERA beneficiaries covering public relations, publications review and design of outreach materials.
ERA focused its communication and outreach efforts through close coordination with the GoU (Cabinet of Ministers, Ministry of Education and Science), regional government officials (DOSA and LOSA) and USAID partner DG East. All public outreach and communications were facilitated under a joint approach with DG East through the communications campaign «СХІД Можливостей / CXID Opportunities».
COVID-19 RESPONSE. Starting in April 2020, the Communications team worked with all ERA sector leads, technical staff and some beneficiaries to help plan and make necessary adjustments to interventions relevant to changing conditions and priorities under COVID-19 restrictions. Most events scheduled for April onward were quickly transformed into online mode, i.e. Skype calls, videoconferences and webinars. ERA ensured that all online events and presentations were appropriately branded, quarantine regulations were met, and new communication channels were identified and approved by USAID (such as Telegram, Viber and Skype, in addition to YouTube and Facebook). The Communications team assisted all ERA interventions to promote online trainings or events in social media.
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To keep the ERA team updated regarding the COVID-19 situation in Ukraine and abroad, the Communications team issued a daily update, which has been sent to ERA staff five days a week since April 1, 2020. The daily updates aggregate information from the Ministry of Health, the Cabinet of Ministers, the City of Kyiv, and other relevant government bodies and agencies so that ERA staff can better keep track of current GoU policies, regulations and restrictions, which in turn helps ERA staff respond in real time to adjustments that may be needed to authorized travel, in-person meetings or in-person events.
To ensure that all ERA components are working in accordance with their workplans, the Communications team provided comprehensive support to ERA’s on-going interventions and development of promotional and marketing materials. These materials integrated positive messages with the clear visual identity of USAID and the СХІД Можливостей / DAWN of Opportunity campaign and were widely distributed on public outreach platforms including Facebook, YouTube, online media outlets, web sites of ERA partners and stakeholders, and other platforms. Information materials included one-pagers for MSMEs, entrepreneurs’ profiles, a variety of online and offline infographics, brochures, plaques, certificates, online banners to promote our trainings, PowerPoint templates, success stories, videos and more.
In the near absence of the possibility to organize in-person events and meetings from mid-March onward (previously one 87 of the team’s standard tools), ERA increased its focus on success stories publishing success stories. Within this reporting period the reprinted by media ERA Communications team produced 87 success stories which were widely reprinted by national and regional media outlets, with approximately 773 publication outputs. USAID and DAI Global also published ERA success stories on their web resources. The sustained approach to producing success stories made ERA’s Facebook page a valuable source of information for media outlets, including national editions such as Uriadovyi Kurier, UNIAN and Golos Ukrainy; media portals bizshid.net and shotam.info; many regional online editions; partner-city sites; the Ministry of Digital Information and Ministry of Economic Development portals, and other regional and national agencies.
PRESENCE IN SOCIAL MEDIA. In addition to ERA’s main Facebook page, the Communications team launched Facebook and Instagram pages to promote Local Farmer Festivals—events that were initiated by the Growth Sector team to increase the visibility of agricultural SME brands from Eastern Ukraine and the Azov Sea region among consumers and facilitate new vendor-client and business to business relations that can continue online. During the reporting period such events were held in Berdiansk (Zaporizhzhia Oblast) and Mariupol (Donetsk Oblast). For these festivals the Communications team, in cooperation with an ERA sub-contractor, developed a visual identity (logo, posters, banners, texts for posts and farmers’ profiles). ERA launched paid advertisements for the events on Facebook and Instagram, reaching an audience of 98,000 people from Berdiansk, Dnipro, Kharkiv, Mariupol, Melitopol, Tokmak and Zaporizhzhia (cities from where the team was expecting potential visitors). As a result, thousands of visitors attended the Local Farmer Festival in Berdiansk and Mariupol.
To promote tourism in the Azov region, the Communications team launched an Azov.Travel page on Facebook. It is designed to promote ERA’s partner cities and sites in the Azov Sea region and tourism products that ERA helps them develop. In addition, ERA created a 3-minute video featuring the attractions, energy and atmosphere of the resort cities and national parks of Azov. The video was distributed in social media and via online resources of tourism associations such as Visit Ukraine and The State Agency for Tourism Development of Ukraine. ERA will also suggest the video be part
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of the project Mandrui Ukrainoiu, a national initiative implemented by the State Agency of Tourism Development to give Ukrainians an opportunity to share their favorite tourism destinations and spots with the rest of Ukraine and beyond.
Masterclasses in journalism were originally planned as two in-person training sessions for journalists, post-COVID these were readjusted to a video format. The masterclasses feature themes of constructive journalism, demonstrate how to turn problems of the region into opportunities, and tell the untold story of east Ukraine’s economy. They were designed to reach out to regional, national and international journalists to improve the image of the east, to dispel myths about the region being entirely a war zone, to advocate and promote success stories, and to give journalists a good grounding in the topics and approaches they can use to pursue high-level professional coverage. In September–October 2020, the masterclasses will be distributed on social media via targeted groups, and through the Internews network and educational platforms. Invites will be sent to Ukraine’s national universities, journalism, and communication departments. For these masterclasses ERA attracted foreign journalists and experts who have lived in Ukraine for many years and know the realities of the east from their own perspectives and experience.
SUPPORTING INFRASTRUCTURE INVESTMENT
ERA’s Transformation team cooperated with partner communities to increase their capacity in attracting desired investment and funds for priority projects implementation. In this regard the team conducted three online trainings on project management and preparation of grant projects for representatives of city councils, cultural, educational and social protection departments, public organizations, SME centers, public utility enterprises and small businesses from Novopskov Consolidated Community, the city of Starobilsk and Mariupol. Jointly with EU4Business project, ERA organized a three-day online training "How to Prepare a Successful Application to the State Fund of Regional Development" for representatives of Pokrovsk, Myrnohrad, Starobilsk and Novopskov city councils.
In August–September, to facilitate implementation of the partner communities’ development strategies, the Transformation team conducted research and identified communities interested in public private partnership (PPP) development. ERA will continue this work in Year 3 and will explore potential PPP opportunities and provide capacity building training and consultations needed to launch the PPP projects.
Through the highly participatory process of strategic economic development planning and implementation, ERA partner cities and communities identified 23 prioritized construction projects. The Transformation team was in close contact with all partner cities and communities, while monitoring the situation caused by the COVID-19 pandemic and keeping up work with local officials who review the strategies in the rapidly changing environment. As a result, potential infrastructure projects for implementation with ERA support were designated: Luhansk Regional Laboratory Center (LRLC) in Sievierodonetsk, Tech Club in Bakhmut Consolidated Community, bus stops with vendor kiosks in Mariupol, Expo Center in Melitopol, Public Space in the open air in Novopskov Consolidated Community, open air cinema and green kiosks in Starobilsk, Berdiansk Conference Hall, convertible skating rink in Bakhmut Consolidated Community, and DOSA Expo Center in Kramatorsk.
Several construction projects with high priority status have been developed in Year 2. Windows and exterior door replacement for the administration building and dormitory (LNAU Slovyansk Phase 1) has 100% project design completed, the Design Acceptance certificate was successfully signed by
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LNAU administration, the Environmental Review Checklist (ERC) was signed by USAID, and an RFP for construction works is underway. Retrofit of the campus-wide heating system (LNAU Slovyansk Phase 2) project design is 60% ready. Thermal insulation and roof repairs for the administration and dormitory buildings (LNAU Slovyansk Phase 3) has completed 70% of the project design.
Other construction projects are under active development: • Renovation of non-residential premises at the Phytosanitary Laboratory in Rubizhne city. The contractor has submitted 90% of project design preparation, and the Design Acceptance certificate was successfully signed by Rubizhne city council on July 16, 2020. The Infrastructure team developed the ERC and sent it to USAID for review, the Environmental Compliance Support (ECOS) is now at the answering comments stage. Due to the certificate protection procedure, Rubizhne city council has requested to postpone the construction start date until after January 20, 2021. • Spalakh IT Hub in Mariupol needs review of the design provided by Mariupol city because of environmental compliance issues which require Expert Review services to revise and certify the design.
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IV. COORDINATION
ERA’s approach to coordination is broad-based and multi-faceted. Coordination begins “at home" within the ERA organization and between the Operations and Technical areas of the Activity. The ERA office structure has program management and operations with Chief of Party, Deputy Chief of Party Operations, and administration and human resources support based in the ERA Kyiv office. Technical and logistics provide support with Deputy Chief of Party Technical, Senior Infrastructure Manager based in Kramatorsk, and Economic Resilience Strategy Lead based in Sievierodonetsk respectively. ERA partner DRC works out of their office in Slovyansk and ERA maintains a project office in Mariupol. With nearly 80 staff, close internal coordination and cooperation is imperative to ERA’s success.
ERA INTERNAL. As the COVID-19 restrictions mandated a work from home policy, ERA has carefully implemented a system of coordinating safe office access upon request as needed with strict limits per department. This has enabled mainly finance and logistics operations access to offices to support the entire program. ERA Component leads have continued individual component team meetings on a regular weekly basis and a bi-weekly all Component Coordination meeting has been established to regularly share highlights, plans and strategic discussion with all teams including grants, MEL and operations. ERA also has a regular, weekly Senior Management meeting which includes the COP and both DCOPs.
USAID AND USAID IMPLEMENTING PARTNERS. ERA coordinates continuously with USAID as needed and on a regularly scheduled bi-weekly basis with the COR and ACOR alternatively with Operations and Technical focus. As the work of ERA has expanded in eastern Ukraine, the Activity has intensified its coordination with other organizations playing key roles in the region’s economic development.
During its second year, ERA continued to coordinate closely and on a regular basis with other USAID partners including the Democratic Governance East (DG East) program, the Competitive Economic Program (CEP), the Energy Security Program (ESP) and the Credit for Agriculture Producers (CAP) program. ERA, through its commitment to proactive cooperation, was involved in design and implementation of joint programming with DG East both in development of the Mariupol Strategic Development Plan 2021–2030 and with CEP in research and assessment of personal protective equipment manufacturing capacity in Ukraine.
ERA and ESP coordinated at national and local levels on vital energy and infrastructure issues in Eastern Ukraine: together with DOSA leadership and the management of Voda Donbasu (the regional water public utility) worked to develop a scope of work for assessing the water infrastructure system. Together with ESP and representatives of USAID, EU, the World Bank and GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), ERA is coordinating our support on the GoU’s emerging national strategy on coal sector transformation with a focus on seven coal cities in central Donetsk Oblast.
GOVERNMENT OF UKRAINE. Throughout the reporting period ERA has increased its regular formal coordination with Oblast partners in Zaporizhzhia, Luhansk and especially Donetsk. In October 2019, ERA management together with the USAID Director of Economic Growth and COR and ACOR, met with the new Governor of Donetsk Oblast and administration representatives. Since that meeting the ERA DCOP Technical has maintained a regular schedule of monthly coordination meetings with the Director of the Department for International Technical Assistance, Innovative Development and External Relations to review ERA program plans and activities and DOSA plans and priorities. Similar meetings happen in Sievierodonetsk, Luhansk Oblast where
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the Economic Resilience Strategy Lead is based and they meet frequently on specific priority programs or LOSA issues with the Head of Luhansk Regional State Administration and the Director of the Department for International Technical Assistance, Innovative Development, and External Relations. Coordination with Zaporizhzhia and the recently added Kherson Oblast is project- oriented and managed mainly through the Economic Resilience Strategy Lead and Growth sector leads focused on Tourism, IT and Agriculture initiatives.
ERA has established close partnerships with 11 municipalities and consolidated communities which includes close coordination with the executive/mayor, deputy mayors and city council as well as key department staff and citizen groups and local civil society and business representatives. ERA’s local government partners include: Luhansk GCA (LOSA) Novopskov Consolidated Community, Starobilsk City, Bilovodsk Consolidated Community; Northern Donetsk GCA (DOSA) Kramatorsk City, Bakhmut Consolidated Community; Central Donetsk GCA (DOSA) Pokrovsk City, Dobropillia City, Mariupol City; Azov Coast (DOSA, ZOSA) Berdiansk City, Melitopol City; Kherson Oblast (KOSA) Henichesk City; Platform for Sustainable Development of Coal cities in Donetsk Oblast (Dobropillia, Myrnohrad, Novohrodivka, Pokrovsk, Selydove, Toretsk, and Vuhledar).
The level of coordination varies depending on the ERA projects the local government is implementing. Those communities which have gone through the Economic Strategic Planning process are mobilized at multiple levels with ERA support to establish working groups for strategy implementation and monitoring. ERA communicates regularly with all partner municipalities to assess progress and changes in development priorities especially during the COVID-19 crisis. As budget support to municipalities was cut and project priorities and capacity to co-finance projects changed the ERA Transformation team continues tomaintain contact with local administrations.
Across all three components ERA frequently coordinated with other key GoU contacts in year 2 including: the Ministry of Education and Science, Ministry of Culture, Ministry of Transport, Ministry of Youth and Sport, Ministry for Development of Economy, Trade and Agriculture, Ministry for Reintegration of Temporarily Occupied Territories (MinTOT). Regular coordination with ministries is conducted with USAID approval and at the department or vice-minister level; all communication with ministers is conducted by the ERA COP in close collaboration with USAID.
INTERNATIONAL AND LOCAL PARTNERS. ERA coordinates with international donor organizations and local NGOs, civil society organizations, agencies and businesses based on component and workstream focus.
The ERA Inclusion component implements workstreams which include increasing beneficiary capabilities and opportunities including Workforce Development coordination with partners such as: CEP, DG East, UNHCR, UNFPA, UNDP, FAO, UCBI II (Ukraine Confidence Building Initiative), IOM, Save the Children, People in Need, AGRO, MoES, local employment offices, Friedrich Ebert Foundation, Senior Expert Service (German Federal Ministry for Economic Cooperation and Development), German Federal Ministry of Education and Research, Goethe Institute in Ukraine.
ERA’s Growth component implements workstreams which include support to Biofuels, Honey, Innovation for Manufacturing, Information Technology, Tourism and Vegetables sectors. Market Expansion and Investment Acceleration coordinates with partners such as: LOSA, DOSA, ZOSA, ESP, CEP, EIB, AGRO, FAO, DFID (through DRC), UNDP, EU4Business, DG East, UCBI II, Ministry of Culture, Ministry of Transport, Ministry of Youth and Sport, 5-7-9% Program, Ministry for Development of Economy, Trade and Agriculture, CAP, USAID EO Business Incubator.
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ERA’s Transformation component implements workstreams which include Driving Vision, Intra- regional Development and Infrastructure Investment and coordinates with partners such as: GoU, DOSA, LOSA, ZOSA, DG East, CEP, Ministry of Culture, EIB, World Bank, EBRD, UNDP, DFID, GermanWatch, EU4Business, PLEDDG (Partnership for Economic Local Development and Democratic Governance, Canada).
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V. PROGRESS AGAINST TARGETS
The table below presents the second-year achievements towards the performance indicators. The details, including disaggregation of each performance indicator, can be found in Annexes 1.1-1.4
Table 1. ANNUAL ACHIEVEMENTS TOWARDS ERA PERFORMANCE INDICATORS
PERFORMANCE FY2 FY2 VARIANCE NOTES INDICATOR ACTUALS TARGETS
1.1 Number of direct and 0 10,000 The Year 2 target for this indicator was modeled on a list of indirect beneficiaries potential infrastructure projects from ERA Year 1, most of receiving improved which are no longer under consideration. The current ERA infrastructure services as a Construction team was reorganized / hired during the first result of USAID assistance half of ERA Year 2. A new, more grounded construction pipeline has since been developed and the future years’ targets (Years 3–6) have been re-modeled based on the current pipeline. 1.2 Number of individual 3,518 2,500 The reason for the +40% variance is mostly due to the shift beneficiaries from from a live / in-person modality of training delivery to a vulnerable and hard-to- mostly online modality during the second half of Year 2 due reach populations in the to COVID-19 quarantine restrictions. Also, a significant target regions number of individuals that ERA expected to report in Y1 Q4 ended up being booked in Y2, Q1. GNDR-2 Percentage of 60% 1 30% After reporting on Year 1 results (which reflected a similar female participants in male / female split of participants) and considering feedback USG-assisted programs we received during ERA’s first Data Quality Assessment designed to increase (DQA), conducted in November 2019, USAID and the ERA access to productive team agreed to revise the GNDR-2 target for future years economic resources (3–6). After ERA gathered more data on likely MSME (assets, credit, income, or beneficiaries from the ERA Growth value chains and cross- employment). cutting sectors, it was decided that the current observed male / female participation rate is likely to persist, so for all future years, the target has been reset to 60%. 2.1 Total amount of new $7,691,852 $5,000,000 The primary reason for the large (more than +50%) variance investments made by for this indicator was the larger than expected uptake of new MSMEs supported by MSME beneficiaries. As with indicator 1.2 above, the switch to USAID online delivery in the second half of the year enabled the program to onboard more MSME clients than originally anticipated. In addition, it should be noted that reporting on this indicator will always reflect a certain amount of distortion, due to the misalignment between the USG fiscal year, which ends in September (and ERA’s reporting cycle) and the Ukrainian fiscal year which ends in December. This will cause a lag in some of the results not being recognized until the subsequent reporting period.
1 Numerator = 2,117, denominator = 3,518
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PERFORMANCE FY2 FY2 VARIANCE NOTES INDICATOR ACTUALS TARGETS
2.2 Number of individuals 711 2,000 There were two primary drivers behind the -65% variance in with new or better this indicator: employment as a result of (1) COVID-19. This indicator was originally modeled during USAID assistance a macroeconomic environment of increasing employment opportunities. Since the COVID-19 quarantine measures introduced in spring 2020, unemployment rates in Ukraine in general, and in ERA’s area of operation, have increased significantly (as have small business failures). Since the depth of the current economic downturn (as well as the length of the current public health crisis) is unknown, it will be difficult to re- model this indicator until the macroeconomic situation in Ukraine has stabilized; (2) The team also envisaged that graduates of VETs assisted in Year 2 (who would have used new ERA-provided equipment and facilities in their learning process) would report on their employment during summer 2020. Due to a shift to distance learning (which, by definition, prohibited use of the equipment) and in some cases delays in equipment purchase and delivery (also caused by lockdown and quarantine restrictions) ERA was not able to capture a certain number of such beneficiaries for this reporting period. 2.3 EG.5-1 USD sales of $69,928,648 $22,695,600 The primary reason for the large (more than +300%) variance firms receiving USG- for this indicator was the larger than expected uptake of new funded assistance MSME beneficiaries. ERA’s Year 1 reported results were (cumulative sales) based on a limited pool of 27 such beneficiaries, while ERA’s Year 2 results were based on 598 such beneficiaries. As with indicator 1.2 above, the switch to online delivery in the second half of the year enabled the program to onboard more MSME clients than originally anticipated.
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PERFORMANCE FY2 FY2 VARIANCE NOTES INDICATOR ACTUALS TARGETS
3.1 Percentage of Activity 17% 2 50% Like indicator 2.2 (above), 3.1 was probably the most direct beneficiaries who “COVID-19 affected” of ERA’s indicators. In short, think their economic beneficiary optimism plummeted dramatically with the onset situation has improved of COVID-19 quarantine restrictions and the subsequent substantially or somewhat macroeconomic contraction that followed in its wake. over the past 12 months Beneficiaries across the board (across all ERA components and sectors) lost jobs, closed businesses (some temporarily and some permanently), and saw reduced working hours and smaller paychecks. In the beneficiaries’ survey from June, eight individuals reported that they had lost their jobs and 77 individuals reported worsened employment conditions due to the COVID-19 crises; eight MSMEs reported that they had to shut down their businesses and 189 MSMEs had to temporarily suspend operations; a total 307 MSMEs reported decreasing sales of goods, products and services; 81 MSMEs had to fire personnel or ask employees to take annual leave without pay, and 57 MSMEs cut salaries. During the September survey, 35% of beneficiaries reported that their economic situation had worsened somewhat or worsened substantially, and almost half of these respondents connected this decline to the lockdown of March–May 2020. In addition, 35% of this group connected worsening conditions to both the lockdown and other reasons such as: the general economic downturn; increasing retail prices (and price gouging; low / declining salaries; lost jobs or the necessity to shift to another (less satisfying / less well compensated) job; inflation; higher prices for raw materials for MSMEs; increased competition (which may have negatively affected operating margins), and, specifically for beneficiaries from the honey value chain, poor weather conditions during the first half of the year and a late start to the pollination / honey production season. CC.1 Number of people 3,391 1,800 As with indicator 1.2, above, the reason for the +90% trained during the Activity variance is mostly due to the shift from a live / in-person modality of training delivery to a mostly online modality during the second half of Year 2 due to COVID-19 quarantine restrictions. Also, there were a significant number of individuals that ERA expected to report in Y1 Q4 that ended up being booked in Y2, Q1. CC.2 Number of 1,621 1,150 This indicator is closely tied to indicators 1.2 and CC.1 (the beneficiaries utilizing new greater the uptake of new V&H2R beneficiaries and number practices, techniques, or of people trained, the greater the likely number of people to business management be counted under CC.2). Thus, the reason for the +50% skills as a result of USAID variance is mostly due to the shift from a live / in-person assistance modality of training delivery to a mostly online modality during the second half of Year 2 due to COVID-19 quarantine restrictions. Also, there were a significant number of individuals that ERA expected to report in Y1 Q4 that ended up being booked in Y2, Q1.
2 Numerator = 277, denominator = 1,625
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PERFORMANCE FY2 FY2 VARIANCE NOTES INDICATOR ACTUALS TARGETS
CC.3 Achievements made 473 25 The team modeled the target for this indicator based on an toward leveraging initial definition that covered three types of “achievements” – Government of Ukraine “infrastructure projects,” “business plans” and “event that (GoU), private sector and benefits ERA beneficiaries” (as per the AMELP approved on other donors funds May 3, 2019). In the AMELP revision approved in Year 2, ERA expanded the definition by adding “other achievements that benefit the region” (see AMELP approved on March 26, 2020) to cover other achievements that do not fall into the original three categories but are nevertheless very important for the region’s development. Thus, for example, in Year 2 ERA succeeded in leveraging UNDP funds allocated for strengthening capacity of ERA partner VETs, which would not have originally been captured. CBLD-9 Percentage of 40% 40% This is a new indicator that was assigned to ERA by USAID U.S. Government-assisted during the first quarter of calendar year 2020. ERA was organizations with required to offer Y2 and Y3 numerator and denominator improved performance 2 20 targets on very short notice, before the project had the Numerator 5 50 opportunity to investigate / vet with technical teams which Denominator partner entities (specifically) would qualify for analysis and what tools (exactly) would be used to assess changes in capacity. The few assessments that were undertaken were done in the very last weeks of the reporting period. The fact that the percentage target was met precisely was pure chance. Nevertheless, now that the methodological issues have been resolved, the team believes the Year 3 targets to be realistic and believes that ERA will be able to start reliably reporting against this indicator in program Year 3.
3 Cumulative number of achievements starting from the beginning of the Activity
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VI. PERFORMANCE MONITORING, EVALUATION AND LEARNING
AMELP REVISION
In Year 2 the ERA MEL team made two major rounds of Activity Monitoring, Evaluation, Adapting and Learning Plan (AMELP) revisions.
The first round of revisions was triggered by: 1) the need to align the AMELP with the ERA Year 2 Work Plan; 2) the setting of targets for the perceptions indicator for which a relevant baseline survey has been completed; and 3) adjustments in response to findings of the data quality assessment (DQA) conducted in mid-November 2019. As a result of this revision, the AMELP approved by USAID on March 26, 2020 reflects the following amendments:
- replacement of performance indicator “2.3 Average percent change in sales of MSMEs receiving Activity assistance” with the indicator “2.3 EG.5-1 USD sales of firms receiving USG-funded assistance (cumulative)” and set annual and life of the Activity (LoA) targets; - determined baseline and set mid-Activity and end-Activity targets for the performance indicator “3.2 Percent of population in target communities who think that in five years there will be more or better economic opportunities in the region which allow residents to stay/live in the region”; - dropped indicator “3.1 Number of contacts made through informational and communications events”. Currently the Communication and MEL teams together with USAID/Ukraine and ERA’s Analytical Service Support Contractor Resonance are working on the development of a new performance indicator which would help ERA to properly capture the impact of communication interventions.
The second round of revisions was run by the team in response to the requirement of the ERA add- on contract from August 2020 to account for the $10 million add-on and extension of the program for a sixth year. This latter revision was due in mid-September and its approval by USAID is still pending as of the end of this reporting period.
SPECIAL STUDIES
PERFORMANCE INDICATORS BASELINE STUDIES. In Year 2 ERA conducted several special studies aimed at gathering information needed for setting targets for two ERA indicators—“3.2 Percent of population in target communities who think that in five years there will be more or better economic opportunities in the region which allow residents to stay/live in the region” and “CC.4 Economic share of value chains and cross-cutting sectors in eastern Oblasts assisted by USAID”. For the first indicator subcontracted research company Kantar surveyed 4,091 respondents from 19 settlements and presented the results for a follow-on Pause and Reflect (P&R) session where the ERA team set targets for the mid-life and end-life of the Activity. The second indicator’s setting required hiring an economist consultant who completed a baseline assessment of the economic share of value chains and cross-cutting sectors. The consultant based the assessment on available official and expert data for 2018. The team shared the report with USAID/Ukraine in early May 2020 and organized a findings discussion in June during a dedicated P&R session.
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MARKET SYSTEMS RESILIENCE ASSESSMENT (MSRA). In Year 2 ERA continued its work on a pilot of applying the market systems resilience assessment (MSRA) framework around the Vegetables value chain in eastern Ukraine. The framework defines market resilience along a continuum of characteristics (domains): connectivity, diversity, power dynamics, rule of law, business strategy quality, decision making quality, cooperation, and competition. The framework posits that the resilience of a system is based on its capacity to adapt and transform over time in the face of stresses and shocks. To assess each domain, select indicators are evaluated based on the results of surveys, interviews and economic research.
After refining the MSRA framework to make it more pertinent to the fruit and vegetables sector in Eastern Ukraine, the team developed and tested a 50-minute data collection survey, which it then used for 18 telephone interviews in June and July. To increase response rates, the team also developed two abbreviated versions of the survey: a 15-minute survey used for telephone interviews with farmers, as well as for in-person interviews with farmers and retailers selling fruits and vegetables at Mariupol markets (26 respondents); and a 15-minute survey for in-person interviews with nine small retail owners/employees in Mariupol. The MSRA team also developed a questionnaire for and conducted 11 key informant interviews that complemented the survey questionnaire, and gathered the economic statistical data needed for the assessment. The original research plan foresaw a shorter survey with a greater number of respondents but several focus groups; this was readjusted considering the difficulties that the COVID-19 pandemic presents in assembling groups and organizing meetings. The team has scored the eight domains of market systems resilience based on results of the interviews and economic data analysis. Seven of the eight domains were given scores of sub-optimal. The MSRA team is currently preparing a summary report and planning for a Pause and Reflect Session to be held in November 2020. Key informant interviews with the Vegetables value chain leads resulted in detailed discussions feeding into the work plan process.
PAUSE AND REFLECT SESSIONS
During Year 2, the ERA team organized and conducted six stand-alone Pause and Reflect sessions and one annual workplanning series of seven Pause and Reflect sessions that reviewed lessons learned from the previous year and plans for the coming year by each of the three Activity Objectives. Considering COVID-19, at the mid-year point ERA revised the learning plan for the remainder of the year. USAID approved the revised learning agenda on June 16, 2020.
The table below presents the dates and topics of Pause and Reflect sessions organized by the ERA team and the sections below present main discussion topics and follow-on steps.
Table 2. LIST OF PAUSE AND REFLECT SESSIONS 2020
PAUSE AND REFLECT SESSION DATE Mariupol Investment Forum lessons learned December 11, 2019 Results of public perception survey December 12, 2019 Gender and vulnerability assessment and inclusion January 16, 2020 Interim results and progress towards performance indicators June 23, 2020 Assessment of share of value chains and cross-cutting sectors in the eastern economy June 25, 2020 The model cities with post-industrial transformation study revisited June 30, 2020 Annual Workplanning Pause and Reflect series (7 sessions) July 2–28, 2020
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PAUSE AND REFLECT SESSION ON MARIUPOL INVESTMENT FORUM. On December 11, 2019, the ERA team gathered to discuss achievements and lessons learned from Mariupol Investment Forum (MIF) that took place on October 30, 2019. As a result of the discussion the team agreed to be attentive and open to similar opportunities, including potential support for the idea of an annual MIF, and to stay in close contact with GoU partners, especially the President’s Office, to be available to support similar initiatives. Where possible, ERA needs more advance planning time for potential future large-scale events and to prepare SMEs for interaction with international clientele well prior to an event, including training and TA preparation for those who have the most potential to benefit. Also, the team agreed to identify a new public outreach activity which highlights Eastern Ukraine’s economic resilience, as well as to follow up on good ideas that emerged from the MIF and Youth Forum.
PAUSE AND REFLECT SESSION ON RESULTS OF GENERAL PUBLIC PERCEPTION SURVEY. On December 12, 2019, ERA technical leads and senior management gathered at the Kramatorsk office to hear a presentation of the results of the public perception survey conducted by Kantar. As mentioned above, the survey’s main purpose was to ask the population of ERA target regions if there will be more or better economic opportunities in this region which allow residents to stay/live here in five years, mirroring ERA performance indicator 3.2. After a Q&A session the participants discussed three types of potential scenarios (worse-case, status-quo and best-case) and provided projections towards the mentioned indicator till April 2021 and June 2023 (end of ERA implementation) in order to help with target setting. While collecting the estimates, the Kantar representative suggested acquiring analysis of other economic-related perception surveys to decide whether it is reasonable to have the numbers increasing through ERA implementation for an indicator with an extremely low level of predictability. This analysis was carried out and is presented in the revised AMELP alongside the new indicator targets.
PAUSE AND REFLECT SESSION ON GENDER AND VULNERABILITY ASSESSMENT AND INCLUSION. On January 16, 2020 in Kramatorsk, Donetsk Oblast, ERA conducted the ERA Vulnerable Populations Integration Pause and Reflect Session which engaged staff and colleagues from USAID DG East and the USAID mission. During this event, the ERA Inclusion team presented the following key findings of the Vulnerability and Gender Integration Strategy:
1. Many vulnerable groups are exposed to similar economic stressors, such as unemployment and loss of business.
2. Some groups, such as LGBTQI and the Roma minority, face unique discrimination such as homophobia and social exclusion.
3. There are cases of intersectionality among the researched groups, meaning that there are mutually reinforcing forms of marginalization. For example, hosting communities often intersect with IDPs, or women of 55+ with unemployed.
4. Problems identified among the observed groups often lay outside ERA’s scope of influence, such as legal documentation issues within the Roma population and access to healthcare for LGBTQI community representatives.
As previously mentioned in this report and based on feedback and results of subsequent focus group discussions, the ERA Inclusion team is developing a gender-vulnerable population guide for the ERA team and will finalize the guide after receiving final comments on the Gender and Vulnerability Integration Strategy from USAID. The team will present the final version in November 2020.
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PAUSE AND REFLECT SESSION ON INTERIM RESULTS AND PROGRESS TOWARDS PERFORMANCE INDICATORS. On June 23, 2020, the ERA team gathered to analyze and discuss the Year 2 6-month results and progress towards the full year’s key performance indicators. The team focused on the indicators that seem to be falling short and determined and analyzed the main factors influencing progress against targets considering pre and post COVID-19 conditions. The team also discussed what adaptive management was happening and would need to happen considering the pandemic. Based on the conclusions drawn, the team is integrating lessons learned into further programming in Year 3 work plan development, and later will revise annual and life of Activity (LoA) targets, if needed, after submission of the Year 3 Work Plan.
PAUSE AND REFLECT SESSION ON THE ASSESSMENT OF SHARE OF VALUE CHAINS AND CROSS-CUTTING SECTORS IN THE EASTERN ECONOMY. On June 25, 2020, ERA MEAL Director and an ERA economist consultant presented results of the assessment of the share of ERA value chains and cross-cutting sectors in the economy of Donetsk and Luhansk GCA and the Sea of Azov region. The team discussed the assessment results—feedback and comments from the technical leads, and ideas/suggestions on other ways to capture or measure ERA input into development of selected value chains and cross-cutting sectors.
PAUSE AND REFLECT SESSION ON THE PITTSBURGH STUDY. On June 30, 2020, Partners4Growth presented the Model Cities Study key findings and ERA Transformation Team Lead presented developments to date towards the adoption of model cities’ experience in the cities of Eastern Ukraine. The team discussed how the study results could be used and what could be introduced into programming for the coming years. The team agreed to translate the study into Ukrainian and share it with ERA partners and interested stakeholders, to create a one-pager or infographic based on the study’s key findings and recommendations to make it more digestible for ordinary audiences, as well as to think about organizing interviews with representatives of the model cities as one approach to talk about the study to a wider audience and attract the attention of ERA strategic partners and other interested stakeholders. In short, the Model Cities Study is currently the strategic blueprint for how the Transformation team is approaching its work with all the cities and ERA sub-regions with which it engages.
WORKPLANNING PAUSE AND REFLECT SERIES. After revision of the ERA Learning Agenda and agreeing upon it with USAID in early June 2020, the work plan development sessions were all held remotely because of COVID-19 restrictions. The Pause and Reflect series consisted of seven meetings remotely between the period of July 2–28, 2020. Each session has one key topic and led to support the work plan process, which was also done without any physical meetups. Besides the sessions described above, there was a kick-off meeting on July 2, where the team discussed COVID- 19 constraints and available options for working interaction, lessons learned from the first wave of grants and the one-stage grant procedure analysis, as well as potential points for intersection between different internal teams. Further, every ERA component sequentially presented the results of its work during Year 2 with the main implementation takeaways for future planning. Once the outcomes had been discussed, the component teams disclosed their plans for the next year by outlining tentative types of interventions and profiles of potential grantees. The work plan activities that followed the P&R sessions ended up with the Year 3 Work Plan submitted on time to USAID on August 30, 2020.
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VII. LESSONS LEARNED
MANAGEMENT
While it is always important to continuously monitor and assess the conditions that can affect Activity implementation, it became an even higher priority once the COVID-19 pandemic arrived in Ukraine. Activity planning became more challenging since it was (and still is) unclear how long the pandemic and quarantine could last. This uncertainty affected ERA intervention planning, disrupted grantee and subcontractor / vendor schedules, effectively halted ERA staff travel (with very few exceptions) and created other numerous unforeseen circumstances. Developing flexible systems to respond to this uncertainty was crucial during the pandemic.
ERA worked closely with its senior management, technical team, administration and logistics team and local public health officials to assess conditions which could impact the decision to postpone or cancel ERA or partner events and activities or shift them to online delivery due to the COVID threat.
ERA senior management put an emphasis on communication to determine if our work processes and risk controls were effective to ensure Activity continuity. ERA senior management regularly disseminated COVID-19 updates to the team. The Activity’s management established frequent, positive and transparent two-way communication with employees, beneficiaries, subcontractors, grantees and GoU officials in order to ensure alignment with these key stakeholders to quickly identify lessons learned and facilitate the new mode of operations.
Since late March 2019, the ERA Communications team has produced and circulated to all ERA staff daily COVID-19 briefs that summarized all information regarding the situation issued by the Government of Ukraine over the past 24 hours as well as a summary of the secondary macroeconomic impact of the health crisis. In addition, ERA senior management held weekly meetings (or more frequently, as needed) to discuss ERA COVID-19 related management issues. During these meetings, ERA senior management continued to assess the situation to identify critical issues and main risks and vulnerabilities brought about by COVID-19 and develop plans for immediate action as needed.
ERA senior management’s priority remains the health and safety of our project staff, partners, and beneficiaries, while at the same time continuing to deliver high quality assistance to our target beneficiaries. ERA has successfully managed to do this since the start of quarantine but must remain hyper-vigilant and quickly apply lessons learned on Activity management during this crisis and rise to the occasion during the quarantine and the post-quarantine period.
GRANTS
Given the situation and the unpredictable nature of the force majeure, the ERA Grants team has learned several key lessons. One of them is that the share of offline activities in the grant can add additional risk in the worldwide pandemic setting. Thus, finding a way of achieving the same or similar outcomes by the means of online activities will significantly reduce those risks. However, in case of practical education, especially for trades that require physical activities, online mode is not always applicable.
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After a re-evaluation of the status of grant package development and the viability of grant packages being successfully processed in the near-term, the Grants team slightly modified its approach to processing grant applications. Namely, in-kind grants can take longer to develop and implement than other grant types, because they require a significant amount of market research for the items to be considered for an in-kind grant. Once an in-kind grant is approved, the procurement process can be lengthy, especially for highly specialized goods that are not readily available in Ukraine. Thus, ERA prioritized Fixed Amount Award (FAA) grants to NGOs that are strategically important and can be processed quickly and efficiently.
TECHNICAL
At the beginning of ERA’s Year 2 implementation, plans were in place to identify a variety of business service providers (BSP) located throughout Donetsk and Luhansk Oblasts and provide the training and support necessary for them to deliver the services needed for eastern MSMEs to expand their markets and improve their access to finance.
The difficult economic situation in the east, and only slowly developing recognition among entrepreneurs and MSMEs of the value of third-party services, indicated that conditions did not exist for a thriving, homegrown BSP sector. While to a neutral observer there certainly is the need for certain services, sustainable demand for them often does not exist. For example, laboratories providing soil and leaf analyses are crucial for determining what pesticides and fertilizers are best, but few farmers recognize that need or are willing to pay for lab services on a scale that justifies an expansion of laboratories located in the east.
Similarly, while strategic consulting firms may be needed there is lack of willingness to pay on the part of potential clients, and they provide a service that requires experienced practitioners who cannot be developed in just one or two years. Especially in the post COVID-19 world of distanced communication, the firms themselves do not necessarily need to be located on the territory of Donetsk and Luhansk Oblasts. Therefore, ERA believes that it is too early to invest significant program time and resources on the development of a wide variety of BSPs and that it is better to dedicate resources strategically where they can demonstrate results, create leverage, and maximize impact. ERA, in the course of its work supporting improved access to finance and its value chain growth sectors, will focus strategically and look for key services that: 1) are necessary, 2) are truly in demand, and 3) need to be, and can easily be, provided locally.
COORDINATION
ERA technical program implementation has benefited from increased and more efficient coordination with partners and beneficiaries throughout Year 2. This year ERA strengthened its productive coordination processes with both governments of Luhansk and Donetsk Oblasts, our primary government partners. In October 2019 in Donetsk Oblast, as the new governor was appointed, ERA introduced a new approach to engage the DOSA office of Director of the Department for International Technical Assistance, Innovative Development and External Relations in sharing and coordinating socio-economic plans and priorities for the region. ERA requested from DOSA to establish a regular monthly coordination meeting with ERA DCOP Technical and representatives from different component teams as an opportunity to inform and update DOSA on ERA progress and to receive input from DOSA and coordinate shared development priorities.
The new more positive coordination with DOSA and the continuation of productive coordination with LOSA enabled ERA to work strategically not only easily and efficiently with government but with donors and international development organizations active in the east. ERA strengthened
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partnerships with regional and local governments and demonstrated its ability to support urgent and strategic development priorities of the region and on a national level. ERA learned that strategic, sustained and customer-oriented partnership and coordination with government partners yields better results with direct positive progress toward program goals and objectives. ERA has supported both Oblasts to develop and refine their strategies and approaches to attracting domestic and foreign investment. As a result, throughout the year ERA coordinated closely with the international donor community to facilitate and leverage their work in the region and even increase their investments in large infrastructure investments.
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IX. MANAGEMENT
During Year 2, ERA assembled a highly specialized team of experts with a clear understanding of how to achieve the Activity’s targeted results and outcomes that was aligned with the Activity’s workplan. By the early half of the year, ERA had fully staffed its Technical team and nearly all its Operations team, which led to improved Activity planning, coordination, financial management and administrative systems. The ERA team adapted to changing conditions—in large part due to the COVID-19 virus threat—in Eastern Ukraine by using flexible systems and developing tools to assess our progress rapidly for results and identify when and how to make corrections.
RECRUITMENT AND HIRING OF STAFF
ERA has been able to attract a collection of highly qualified expat and local staff to support Activity implementation and to achieve or exceed USAID’s goals and objectives during Year 2. ERA had 92 long-term employees (16 in Kyiv, 40 in Kramatorsk, 12 in Sievierodonetsk and 7 in Mariupol), 13 DRC (locally based subcontractor) staff, and four FHI360 (international subcontractor) by the end of Year 2. Except for a few long-term operations positions (needed to replace staff who left the project during the latter part of the year), ERA was fully staffed by the end of Year 2. For a complete list of current full-time long-term staff, refer to the ERA organizational chart.
Nineteen final technical positions were filled during Year 2, including key hires in all three components:
1. Inclusion—Inclusion Training Coordinator, Inclusion Network Coordinator; 2. Growth—Economic Development Coordinator, Honey Sector Lead, IT Sector Lead, Tourism Sector Lead, Investment Sector Specialist, SME Development Officers for Kramatorsk, Sievierodonetsk and Mariupol, Local Produce Realization Specialist; 3. Transformation—Community Development Officer, Social Media and Outreach Specialist, Media and Information Analyst, Graphic Designer, Program Support Officer/ Translator, Environmental Expert, Construction Document Controller, Quality Assurance Expert.
Fifteen Operations positions were filled in Year 2, including two Procurement, one Grants, two M&E, one Finance, one HR, and other administrative staff members. The team also hired a highly experienced DCOP of Operations in November 2019 to accelerate Activity operations.
COVID-19 ADAPTATION AND MITIGATION MEASURES
During Year 2, the ERA senior management team developed security protocols for ERA staff to respond effectively to the COVID-19 pandemic. These protocols enhanced staff safety, addressed the dynamic health situation in Ukraine, and supported Activity continuity in light of this threat.
ERA constantly monitored the risks to the Activity and its personnel presented by the COVID-19 threat during Year 2. The team obtained information from the Ukrainian Ministry of Health, the Centers for Disease Control website, DAI Global LLC resources, and Ukrainian employees at Activity locations. ERA developed the Activity continuity plan during Year 2 that allowed ERA staff to adapt to the current situation, maintain an adequate level of safety, and still achieve the Activity’s goals of boosting the economic resilience of eastern Ukraine. ERA’s overall approach in conducting business operations during the COVID-19 pandemic was to take an incremental and gradual approach that
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corresponds to, and carefully tracks, the Government of Ukraine’s Five-Stage Plan for Exiting the Quarantine and Removal of Restrictions, as shown in the table below.
Table 4. GoU FIVE-STAGE PLAN
Throughout these stages, ERA remained vigilant about the health and safety of all staff, regardless of nationality or location. We followed the GoU’s public health agency best practices and recommended that all staff engage in everyday preventive measures to lessen the spread of germs and avoid illness.
In addition to the Activity continuity plan, ERA developed safety and security protocols to mitigate risks to Activity implementation during the COVID-19 pandemic, including:
• ERA Travel Approval Request (Safety Planning Record). This request form documents the potential risks that ERA staff may encounter during their travels and creates a plan for mitigating those risks. • Guidance on Mass Gatherings for events of 10 or more people. Organizers of ERA and ERA- financed events determined how to safely hold the event and adjust to local circumstances. Because COVID-19 circulation varied in communities, these considerations were meant to supplement national health and safety laws, rules and regulations with which gatherings must comply. That said, we continued to hold as many meetings and events online as possible.
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X. SUB-AWARD DETAILS
During the reporting year, the Activity released RFA to increase access to inputs for beekeeping SMEs in Luhansk, Donetsk and Zaporizhzhia Oblasts. Published on July 17, 2020 with the closing date on July 31, 2020, the RFA proposes an intervention to make key honey production inputs (hives, barrels, trailers) available to beekeepers at a 30% discount. This will stimulate small beekeepers to expand the size of their apiaries to a more economically sustainable scale and will strengthen market relations between beekeepers and input manufacturers. ERA received five applications in response to this RFA. Four applications were selected by the Evaluation Committee for further development and funding. The ERA team has started grants packages development with the selected applicants. Starting from spring 2020, the ERA team worked with its grantees and grant applicants to plan approved and future interventions in response to COVID-19. The grantees and the ERA team had to revise the approach to holding in-person meetings and events. Events that were scheduled for large groups of participants had to be divided into smaller groups. Some grantees also proposed online participation in events along with in-person participation for small groups. For all events that envisioned 10 or more in-person participants, the grantees prepared a thorough package of documentation, including a COVID-19 Mass Gathering risk assessment with a risk mitigation plan and anti-epidemic measures that the grantee will implement during the events. The ERA team reviewed and approved each grantee’s request for in-person events for groups of 10 or more people before they took place.
FIGURE 5. CUMULATIVE OBLIGATED AMOUNT OF GRANTS BY MONTHS
$4,272,912
$3,604,195
$3,494,389
$3,219,009
$2,791,528
$2,389,666
$2,045,085
$1,678,301
$1,203,551
$1,149,836
$1,142,393
Jul-20
Jan-20
Jun-20
Sep-20
Feb-20
Apr-20
Oct-19 Aug-20
Mar-20
May-20
Dec-19 Nov-19
The pandemic and quarantine led to delay in some procurements under in-kind grants, and cancellation of planned travel and some activities planned under all ERA grant types. Given these circumstances, some grantees requested ERA process no-cost time extensions to their ERA grants. ERA signed 13 amendments to grant agreements to extend the grants’ period of performance or/and change the modality of some activities (negligible program changes), namely: 1. Amendment #1 to grant agreement G-Kra-002 "Promotion of MSMEs from Donetsk and Luhansk Oblasts via the development of e-commerce and usage of online trading platforms". Grantee Non-Governmental Organization "Ukrainian Center for Civic Initiatives "Svitlo".
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2. Amendment #1 to grant agreement G-Kra-004 “Economic opportunities for women of Eastern Ukraine”. Grantee ICF "Ukrainian Women's Fund". 3. Amendment #1 to grant agreement G-Kra-009 “1991 Mariupol”. Grantee Public Organization “SOCIAL BOOST”. 4. Amendment #1 to grant agreement G-Kra-011 “Ukrainian Leadership Academy-Mariupol”. Grantee NGO “Ukrainian Leadership Academy”. 5. Amendment #1 to grant agreement G-Kra-010. Grantee online system for monitoring pesticide application “Grand Expert”. 6. Amendment #1 to grant agreement G-Kra-015 “IT Nation”. Grantee Public Association "Global Compact Network in Ukraine". 7. Amendment #1 to grant agreement G-Kra-007 “Moko pizza”. Grantee Private Entrepreneur.
8. Amendment #1 to grant agreement G-Kra-006 "Automatization and modernization of sewing company". Grantee Private Entrepreneur. 9. Amendment #1 to grant agreement G-Kra-014 "Expansion of sewing production". Grantee Private Entrepreneur. 10. Amendment #1 to grant agreement G-Kra-017 “Enhancing students' practical competence skills through modernization of lyceum's equipment”. Grantee Velykonovosilkivskyi Vocational Lyceum. 11. Amendment #2 to grant agreement G-Kra-004 “Economic opportunities for women of Eastern Ukraine”. Grantee ICF "Ukrainian Women's Fund". 12. Amendment #1 to grant agreement G-Kra-013 “Modernization of the work clothes atelier”. Grantee Private Entrepreneur. 13. Amendment #1 to grant agreement G-Kra-018 “Improvement of healthcare services for the population of Novopskovskyi Raion of Luhansk Oblast”. Grantee Private Entrepreneur.
The full list of 42 grants approved by USAID during Year 2 of the Activity’s implementation can be found in Annex 2. By the end of Year 2, several other grant applications were under development or pending USAID approval, including: • NGO Azov Development grant, submitted to USAID for review/approval on September 21, 2020, to enable a supportive environment for non-educated youth and the LGBTQI community of Mariupol for safe self-improvement in creative industries and further integration into city life ($163,737) • NGO Slavic Heart grant to reduce social and economic dependency of gender-based violence (GBV) survivors on their abusers through implementation of a comprehensive approach on socio-economic assistance to GBV survivors in Kostiantynivka and Druzhkivka (Donetsk Oblast); to build the capacity of municipal bodies to help them adapt their approach when working with GBV survivors (approx. $165,691) • NGO Ukrainian Leadership Academy grant to strengthen the capability of the Ukrainian Leadership Academy to engage local youth in social and civic activities, teach them life skills, and help them develop their professional careers in the region (approx. $156,641) • Private Entrepreneur grant to assist private bakery “Tisto” to expand the range and quality of its bakery goods through implementation of the food safety system Hazard Analysis and Critical Control Points (HACCP) and using modern equipment in the food production process (approx. $16,017)
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• Private Entrepreneur grant to improve the quality and expand the range of services provided by the veterinary clinic “White Bear” through procurement of additional diagnostic equipment (approx. $31,096).
In August 2020 ERA received a funded add-on to the ERA contract. As a result, $500,000 has been added to the ERA Grants Fund (bringing the grant ceiling to $15,500,000) to fund some parts of new COVID-19 Response Activities.
The following tables present the Awards and Obligation status of ERA grants component as of September 30, 2020, and a summary of the ERA Grants Pipeline. Table 5. AWARDS AND OBLIGATIONS STATUS
Completed/Closed Grants 5 $284,433 Awarded/ In Progress Grants 45 $4,637,990 Total Obligated Amount 50 $4,922,423 Total Amount Liquidated - $1,647,834 Unliquidated Balance $3,274,589 ERA Grant Fund Unobligated Balance $10,577,577
Table 6. ERA GRANTS PIPELINE SUMMARY FOR YEAR 2
# Amount
Identified Current Grant Priorities 17 $1,732,862
Future Grant Opportunities 61 $7,026,423
Subtotal: Identified Current Priorities + Future Opportunities 81 $8,759,285
Available funding for future TBD grants activities $1,818,292
Sub-total: Identified + TBD Future Grants $10,577,577
TOTAL: Obligated + Identified + Future TBD $15,500,0004
4 $15,500,00 = $4,922,432 (Obligated from Table 5) + $8,759,285 (Identified Grants from Table 6) + $1,818,292 (Future TBD from Table 6)
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