Konotop – Open Investment Area!

Local economic development plan, Konotop city UTC Sumy region

PLAN LOCAL ECONOMIC DEVELOPMENT Konotop City United Territorial Community

Konotop – open investment area!

This Plan was prepared with technical support from the Mayors for Economic Growth initiative of the European Commission. It was reviewed by the experts of the World Bank and commended as good by the Mayors for Economic Growth initiative. Its content is owned by and remains the sole responsibility of Konotop City Council.

Ukraine December - 2019

Local economic development plan, Konotop city UTC Sumy region

Preface

Dear community partners,

Konotop is a city of Cossack glory, a powerful railway junction with developed infrastructure, located in the most picturesque and ecologically clean part of Slobozhanshchina. By joining the European Union's Initiative “Mayors for Economic Growth”, we have made a voluntary commitment to channel every effort into creating a favorable business environment for community economic growth as well as attracting investment and increasing employment. Being aware of future challenges, a fundamentally new approach to planning has been applied in consolidation with the private sector and local community. The Local Economic Development Plan has been devised due to effective teamwork, systematic involvement and constant round-table discussions. Our city has a number of problems, but at the same time it has considerable potential for development. City officials, local community leaders, and the business community feel responsible for the future of the community, they are ready to collaborate, dedicate their time and resources to achieve the targets that were jointly defined and outlined in the Plan. We want the Konotop city United Territorial Community to become a truly open investment area and developing the Plan is the first step towards the community well-being. I am absolutely convinced that the realization of the planned intentions will allow developing Konotop as a territory comfortable for life, work, comprehensive personality development, implementation of project initiatives and profitable investment. The community is the only "organism" and it depends on each of us whether its economy will be healthy. Development is possible only through interaction, so we are open to dialogue, we are interested in cooperation and effective partnership!

Regards, Mayor Artem SEMENIKHIN

______To obtain a copy of the Local Economic Development Plan of Konotop city United Territorial Community, refer to: Liudmila Gapeeva, Department of Economy, Konotop City Council Address: 8, Myr Avenue, Konotop City, Sumy Region, 41600 Phone: +3 8 (05447) 6 61 66, 2 63 75 Email: [email protected] Website: http://konotop-rada.gov.ua/ Skype: ekonomkonotop

Local economic development plan, Konotop city UTC Sumy region

Content

Preface ……………………………………………………………………… 2 1. Executive Summary ………………………………………...……………… 4 2. List of Tables and Figures…………………………………..……….……... 5 3. List of abbreviations………………..…………………………………….… 5 4. Introduction to the Plan …………………………………………………….. 5 5. Process of Local Economic Development Plan Development …………….. 6 6. Local Economic Analysis ……………………………………….………….. 7 6.1. Analysis of Local Economic Structure ……………………………… 7 6.2. Local Cooperation and Networking ………………………………… 8 6.3. Business-friendly, Transparent and Corruption Free Administration… 9 6.4. Access to Finance …………………………………………………….. 10 6.5. Land and Infrastructure ………………….………………..………….. 10 6.6. Regulatory and Institutional Framework …………………………….. 11 6.7. Skills and Human Capital, Inclusiveness ……….……………………. 12 6.8. External Positioning and Marketing ………………………………… 13 7. SWOT Analysis …………………………………………………………….. 14 8. Vision and Objectives .……………………………………………………... 14 9. Action Plan ………..……………………………………………………….. 16 10. Financing Scheme ………………………………………………………….. 18 11. Monitoring Indicators and Mechanisms .…………………………………... 19 12. Annex …………………………………………………………………….. 22 Annex 1. City Mayor Ordinance Annex 2. The composition of the working group

Local economic development plan, Konotop city UTC Sumy region

1. Executive Summary Konotop is an administrative, railway, industrial and cultural center of Konotop district and a united territorial community. It is located in the western part of Sumy region. It is the second largest community in the region with 89.9thousand of people, 54.5% of them is women, 45.5% is men. 71.6% is the population aged 15-64 years. The territory of OTG is 10,294 thousand hectares, including 4,378 thousand hectares - the city. In the sectoral structure of local industry mechanical engineering prevails(33,3%). Growth rates of industrial production are stable, with annual1-2% increase. The foreign trade positive surplus is maintained. The main source of financing of capital investments is own funds of the enterprises (their specific gravity is 71%). 2,768 businesses provide 25% of population with jobs. Share of revenues from small businesses to the city budget is 34.2%. The main strengths of the community are: free production space, land and business and investment premises; interest of local authorities in implementing development projects, having relevant experience; favourable location and developed basic infrastructure. The main weaknesses of the community: low attractiveness of the community to investment; lack of a system of business motivation at the local level; poor staff skills to work in small business, low level of knowledge and skills in the field of entrepreneurship. Community vision: "Konotop is Open Investment Space!", with favorable conditions for business development, modern business infrastructure and intellectual resources, comfortable for life and implementation of project initiatives. Objectives: 1.Improvement of mechanisms for implementation of community investment policy. Actions: Compile inventory and create a database of available sites ("Greenfield", "Brownfield"), premises and objects of public and private property that can be offered to potential investors. Develop a community investment passport. Develop a Regulation on the implementation of an investment management system in the City Council with a typical investor escort algorithm). Develop a long-term program for attracting investment in community development. Update the Investment Activity plan (bilingual version - Ukrainian, English) on the official site of the City Council. Disseminate information on investment potential, "success stories" to the community through electronic media, online resources, and social networks. 2. Development of city infrastructure to support entrepreneurship. Actions: Reconstruction of CAS (part of the first floor of the building municipality), providing the CAS with computer equipment, furniture and software. Introduce Electronic Queue Service. Introduce support from the city budget for the implementation of business projects (compensation for loans raised by enterprises). Conduct a cycle of leadership school training for start-ups, business owners, public asset representatives. Conduct optional financial literacy classes in schools. Conduct classes with elements of business education for the able-bodied population not temporarily involved in the labor market. The total financial need for implementation of the LEDP activities is 7.3 million UAH (303.9 thousand EUR), including: 1.6 mln. (66,8 thousand EUR) - the city budget; 4.5 mln. (187.5 thousand EUR) - the state budget; 0.9 million UAH (37.2 thousand EUR) - financing of partners; 0.3 mln. UAH (12.5 thousand EUR) - financing which will be recruited from alternative sources (donors).

2. List of Tables and Figures 4

Local economic development plan, Konotop city UTC Sumy region

Table 1. Action Plan Table 2. Financing Scheme Table 3. Monitoring Indicators and Mechanisms

3. List of abbreviations EU Initiative M4EG - European Union Initiative “Mayors for Economic Growth” LEDP - Local Economic Development Plan EU - European Union UTC - Unified territorial community IFI - International financial institution CAS - Center of administrative services Working Group - group of participants in the planning process NGO "IICD" - NGO "Interregional Institute for Community Development"

4. Introduction to the Plan Konotop is a city of regional importance, administrative, railway, industrial and cultural center of Konotop district, united territorial community located in the western part of Sumy region (125 km from Sumy; 247km. from Kyiv). The population of the community is 89.9 thousand people, 54.5% of which is women, 45.5% - men. The population aged 15- 64 is 71.6%. The territory of OTG is 10,294 thousand hectares, including 4,378 thousand hectares occupying by the city. On October 25, 2018, the Konotop City Council took a decision to join the EU's M4EG Initiative aimed at sustainable local economic development. Thus, the city council confirmed the determination, to cooperate with the public and the private sector, create a supportive business environment, improve the conditions for community economic growth and employment. The basis of the local economy is the real sector represented by industrial complex (40% of city budget revenues) and entrepreneurship (34.2% of revenues). Encouraging investment in sectoral projects will add value products, create new jobs, promote the growth of industrial volumes production, will increase economic sustainability and reduce the outflow of personnel. The construction of city business supporting infrastructure will help to overcome imbalances and makes it possible to expand services. Within the framework of the EU M4EG Initiative, a LEDP has been developed, which in the period 2020-2021 years will become an instrument of implementation of actions, projects for improvement of mechanisms implementation of community investment policy, development of city infrastructure support entrepreneurship. LEDP is a solution-oriented document of special purpose aimed at fulfilling the tasks of local economy through joint efforts of the city authorities, the private sector and civil society. LEDP is a separate document in a community-first developed municipal planning system. However, it is not all-inclusive, it does not replace other documents but it is based on it. It considers the Plan of local economic development on the period 2020- 2021, programs of support and the development of businesses, programs of investment development. It takes into account the statements of the Program of socio-economic development for 2020-2021, the program of support and development of entrepreneurship, the program of investment development. Several sources of financing are intended to be used for the implementation of the LEDP activities, including the city budget from the Investment Development, Support and

Local economic development plan, Konotop city UTC Sumy region

Development of Small and Medium-Sized Entrepreneurship, the Community Development Budget, the state budget, partner and donor funds.

5.Process of Local Economic Development Plan Development The LEDP was prepared by a working group involved by the city's Investment Development Commission, created by the decree № 387-OD of December 1, 2017. Participants with experience in the field they represent, with an appropriate professional level, were involved in the development of the LEDP. Achievements in the implementation of development projects and an active public position were welcomed as additional factors. The group consisted of 11 people, including 7 women and 4 men. There were 3 representatives of the authorities; 1 representative of education; 1 representative of the employment sector; 2 representatives of the public sector; 3 representatives of the business community; 1 community representative (city council deputy). Specialists from the executive committee of the city council, employment services, public utilities, private and public sectors were involved in collecting the necessary baseline data, conducting analysis, public polls, preparing proposals and particular sections of the LEDP. Four meetings of the working group, meetings of experts responsible for the preparation of thematic blocks were held during the development of the LEDP. At the first planning stage (that lasted in July 2019), a basic analysis of the local economic structure was carried out, and a content pack was prepared for section 6 of the LEDP. At the second stage (that lasted in August 2019), the working group carried out a SWOT analysis. It analyzed the strengths and weaknesses of the community (internal factors) and evaluated the community's position among other Ukrainian communities with which Konotop is competing for new jobs and investments. They also evaluated the competitiveness in the context of the analysis of external factors: opportunities and threats. At the third planning phase (that lasted in September – October 2019), the community's vision for the future was formulated, the current status of each of the goals was discussed, and consensus was reached on the steps that have to be taken to achieve the changes. Each stage of the planning involved researching and gathering information, analyzing and conducting discussions between participants, drawing conclusions and including them by responsible bodies in the LEDP project. Among the basic principles and approaches that have been used in the development of the LEDP are: transparency and consideration of public opinion - openness at all the stages of planning, equal dialogue between all participants of the process; balance - ensuring the balance of interests of business, citizens and authorities when taking concrete actions; efficiency - ensuring the achievement of positive results at the minimum cost of resources; predictability - consistency of planning, maintaining logical relationships, and compliance with the overall Vision; systematized work - conducting a comprehensive analysis of all the basic components, laying the groundwork for monitoring; reality is in line with the community's capabilities and needs.

Local economic development plan, Konotop city UTC Sumy region

6.Local Economic Analysis 6.1.Analysis of Local Economic Structure Konotop is a city of regional importance, the administrative, railway, industrial and cultural center of Konotop district, a united territorial community, located in the western part of Sumy region (125 km from Sumy city; 247 km from Kyiv city). The population of the community is 89.9 thousand of people, of which 54.5% are women and 45.5% are men. 71.6% of the population is aged 15-64. The territory of the UTC is 10,294 thousand hectares, including 4,378 thousand hectares of the City. The sectoral structure of the local economy is represented by industrial enterprises, trade and services, developed housing and communal complex, construction, budgetary sphere. Agriculture was added after the creation of the UTC. The sectoral structure of local industry is dominated by mechanical engineering 33.3% (historically formed industrial zone), focused both on domestic and foreign markets. The business card of the city is the aircraft repair plant of SC “Aviakon”, LLC “Motordetal- Konotop”, the enterprises of the railway. The food industry at the level of printing and publishing has 13.3%, light industry, metallurgy and metal processing, production of building materials and glassware, production and processing of wood and manufacture of articles occupy 6.7%. Revenues from budget-forming enterprises make up more than 40%. The growth rates of industrial production are stable, with an annual growth of 1-2%. The positive balance of foreign trade is kept. The amount of the exported products is 20,1 thousand US dollars, imports are 15,7 thousand US dollars. Machines, equipment and mechanisms; electrical engineering equipment; not precious metals and goods made of them; foods of animal and vegetable origin prevail in the commodity structure of export. In 2019, 309 million UAH was implemented from all sources of financing of the capital investment. The main source of financing of capital investments are the own funds of enterprises (their share in the total volume of capital investments is 71%), which are directed to technical re-equipment, segmental modernization, energy saving. In recent years, the most important sources of investment in local infrastructure development have been the state budget (state regional development fund, state budget subsidies to local budgets for the implementation of measures for socio-economic development of individual territories), city budget (development budget), grants and credit financing of partners, IFI. They are focused on road facilities, modernization of engineering communications, renovation of buildings of the budget sphere. Small and medium-sized enterprises have a significant place in the community economy: 11,7 thousand people are employed in 2,768 businesses (25% of the employed population). The share of revenues from small business to the city budget is 34.2%. 90% of the total number of business entities are individuals-entrepreneurs. Small and medium-sized businesses are represented by trade, production, construction, transport, services, warehousing, wood and metalworking. In commodity pattern (427 stores, 6 registered markets) continue to prevail, retail sales of foodstuffs, but the balance with the non-food sector still remains (the difference is 3%). There are 71 restaurants, which generally satisfy the demand of the community. The enterprises of city can make the competitive products of eventual consumption, majority from them produce special stuff. Thus, they need the expansion and diversification of markets of production distribution. Among retentive factors is the subzero technological state of industrial production (because of the physical wear of capital assets), slow introduction of the newest technologies, insufficiency of their own investment resources. Trade remains the prevailing type of activity, however such amount of trade suggestion falls short of the existing demand. There is the misbalance in the field of 7

Local economic development plan, Konotop city UTC Sumy region services, that is mostly exist in a domestic sector. There are no businessmen that work in the sector of ІТ technologies and engineering. The sector of domestic tourism is not involved in any activity. The activity of a building complex is exceptionally aimed at the internal and district segment and is mostly concentrated on a collaboration with budgetary and communal spheres, that is why it can not be a driver for the development. The consolidation and increase of industrial complex, the development of service business is the most promising from the point of view of a further increase. The encouragement of investments in branch projects will allow to increase the added value of products, to create new workplaces, will assist the increase of industrial production volumes, will strengthen economic constancy and will decrease the outflow of personnel. The development of municipal infrastructure dealing with the support of business will give an opportunity to overcome misbalance and extend service business.

6.2. Local Cooperation and Networking 142 municipal public organizations are registered in the community the activity of which is carried out in such different directions and spheres as charity, religious, youth, sport, educational, cultural, veteran and patriotic, association and organizations of a military type and others. Themost active organizations, related to the sphere of enterprise, economic development and the implementation of youth initiatives are civil organizations "Interregional Institute of Community Development", "Konotop Youth Asset ", "New time", "The Union of Konotop Community". The special type of collaboration is the support of habitants‟ initiatives , within the project "Public budget" (solving the most urgent problems of the community at the expense of municipal budget money). In 2019 6 projects, the total value of which is 500 thousand UAH (20,8 thousand EUR), was supported by a citywide voting and will be implemented during 2020. Competitive support of projects aimed at the development of public organizations is carried out. In 2019 7 projects the total value of which is 100 thousand UAH (4,2 thousand EUR) were fulfilled. One more direction of the activity is the fulfilling of projects is in the field of education (a collaboration with professional education, the service of employment). For example, the department of modern technologies and flexible methods of the preparation of skilled electric gas welders was founded on the base of a professional school due to Ukrainian-Polish project. The range of deliberative bodies such as council on business development: commission on investment development, public council is founded at a city council. Some separate brunch special groups are working. Recommendations of these bodies are taken into account at making decisions and represented in documents. Commission on investment development in detail took care to the questions of development of Local Economic Development Plan. Public council is working for conducting negotiations with a public sector, it is a youth governing project. The Association of businessmen and enterprises of small and midsize businesses of Konotop implements the assistance and defense of business interests, the District employment service deals with personal issues. Among additional needs pointed out during the special purpose meetings are communication with city authorities; getting accessible information concerning the possibilities of the financial support of start-ups; getting information concerning the uninvolved resources (areas, apartments, productive infrastructure and other); implementing

Local economic development plan, Konotop city UTC Sumy region municipal business oriented tutorial programmes; getting in time administrative service (without waiting in queues and in comfort terms). The basic kinds of collaboration are public listening; regulator procedures; dicussions, meetings, conferences for special target groups aimed at solving problems of development of business, involvement of investments; trainings, seminars, „focus meetings‟ - knowledge and experience exchange, advising on exact problems. Such kind of cooperation as sociological researches is not widespread and is conducted only while strategic and specific documents preparation. Public sector, LEDP are planning to implement tutorials for strengthening of collaboration and cooperation with local business communities. The collaboration in the sphere of implementation of initiatives "Public budget" will go on, arranging a competition of public projects.

6.3. Transparent, free of corruption administration that assists of business development Company aspires to open, predected and transparent environment, based on the principles of participation, inclusivity, accountability and supremacy of law. In 2019 Konotop city United Territorial Community joined the Association of open cities, declaring the intentions to implement electronic services (the service of electronic petitions and is working), now it is among seven leading communities which increased the transparency of investment sector (researches were conducted by the program "Transparent Cities "). Due to effective work of the City Council executive branches of the rating grew from 2,2 to 8,2 points during a year, . The documents worked out in the process of regulator activity are placed on the General open data state web-portal. The prescriptive order of the municipal chairman that contains the range of measures is adopted to prevent corruption actions. The City Council has some experience of successful collaboration with IFI, state funds and grand programs in different spheres: energy-savings, transport, electronic services implementation, educational and medical services, infrastructure, youth exchanges and business development. The information for inhabitants, business, public asset is placed on the renewed City Council website ; a twenty-four hour hot line is working. The procedure of special target programmes, realization of regulator activity, the rules of arranging competitions and initiatives implementation are created to provide of only approach. Advisory or coordinating body which deals with conducing the "authorities - business" dialogue, the discussions of urgent problems and presenting the necessary information on a local TV channel is founded. Administrative services are provided by the structural unit of the executive committee - Administrative Services Center (154 services), which is located on the ground floor of the City Council. Annually Almost 78 thousand people (municipal UTC and district) visit this unit. The considerable number of visitors predetermines the necessity of spatial optimization of CAS and implementation of corresponding services. LEDP deals with the problem solution of private sector by means of providing the access to modern business-knowledge (training programs introduction); distribution of business-having special purpose information; creating conditions for getting in time administrative services ( reconstruction), input of electronic turns.

Local economic development plan, Konotop city UTC Sumy region

6.4. Access to Finance Personal funds of enterprises (71% capital investments) that are spent on technical renovation, segment modernization, energy-saving remains the main source of capital investments. During the last years the most significant sources of investments in the development of local infrastructure have been the money of the state budget (The State Fund of Regional Growth, subvention from the state budget to the local budgets for socio-economic development of separate territories), the money of municipal budget (the budget of development), grand and credit financing of partners, IFI. All these sources of finance are spent on road economy, engineering communications modernization, renewing the buildings of a budgetary sphere. There are15 branches of bank institutions, a credit union, that provide different loan services for business on the territory of the city. However interest rates of these sources are mostly high and the terms not simple, thus potential borrowers having no experience of collaboration with credit establishments and following stereotypes do not use these possibilities widely. Business entities cause an advantage of two regional business support fund programs on competitive principles. The general amount of sponsorship can be about 500 thousand UAH for one declarant on one project; the general amount of compensation from a regional budget can be about 125 thousand UAH. However, as analysis shows use this resource is not almost used. There is a range of the donating programs, that support business projects, aimed at solving such problems as employment, external partnership, cooperation, innovations, formation of additional cost in some productive activities. The Governmental program - the "Accessible loans" of micro and small business support will begin to function in February 2020. According to the results of the poll conducted by the department of the City Council only insignificant part of municipal businessmen (about 10 %) know about this resource and only 2% are ready for cooperation). The problem of financing is constantly discussed at the business development coordinating council meetings , the information about available grand and credit programs is systematically published. Nowadays there is not any programs of business support that would help to decrease the credit loading and stimulate subjects to attract necessary debt funds. The only financial instrument of support that is used is the differentiation of rates of the united tax depending on the types of activity. LEDP is supposed to implement the support for the realization of business projects from the municipal budget (the compensation of the credits attracted by the enterprises from a municipal budget ): to provide businessman with permanent information about possible sources of finansing, special purpose competitive programs and advisory assistance: to cultivate "stories of success".

6.5. Land and Infrastructure The territory of UTC is 10,294 thousand ha, including 4,378 thousand ha - the city. Podlipnensky Starostinsky district with villages: Podlypne, Kalynivka, Lobkivka on an area of 577 ha. The rest of the land is occupied under agricultural land (private, collective, state property). The structure of the land fund of the Konotop Territorial Community is: agricultural enterprises - 3321,01 ha; citizens who were granted land for ownership and use - 3356.4 ha; establishments, institutions and organizations - 1141.80 ha; industrial and other enterprises - 10

Local economic development plan, Konotop city UTC Sumy region

241.94 ha; enterprises and organizations of transport, communication - 355,36 ha; military units, enterprises, organizations, institutions - 68,65 ha; organizations, enterprises and institutions of nature protection, health, recreational and historical and cultural purpose - 0.05 ha; joint ventures, international associations with participation of Ukrainian, foreign legal entities and individuals - 46.20 ha; reserve land and land not allocated for ownership and permanent use within settlements - 1620.71 ha; forestry enterprises - 139.63 ha; water utilities - 2.21 ha. The city budget receives over UAH 14.5 million on average a year (604.1 thousand EUR) land lease payments; 1 million UAH (42 thousand EUR) fees for the lease of property belonging to communal property (135 existing agreements). The Master Plan is being updated, a new zoning for the central part of the city has been developed. The plan was discussed in the form of public hearings. To increase the level of interest of potential investors in investing in the development of the community economy, the City Council is modernizing communal and social infrastructure. Roads are being reconstructed, a modern diagnostic center, a children's clinic and a maternity ward have been created, thermo-modification of buildings of educational institutions is being carried out, and the rolling stock of electric transport is being updated. According to the analysis conducted by specialists of the department of communal property, small premises of communal property, located in operating establishments, for the arrangement of pharmacy booths and banking rooms are in greatest demand; basements for sports clubs; office rooms; premises for trading activities; premises of industrial zone, for realization of production mini-projects in processing industry. The created UTC provided an additional territorial resource that can be used for the implementation of projects in the agro sphere, animal husbandry and fish breeding. Requests for large areas are under way for the implementation of solar energy projects. The main problems are the lack of an investment product (there is currently no accurate database of available sites, premises and private property that could be offered to potential investors). There are several sites, but the output needs updating. The vast majority of municipal property is in poor condition. Obtaining the rights to lease land can take more than a year, complicated procedures for land acquisition, replacement of appointment. The rights to lease or ownership of communal property are granted in accordance with the procedure established by the regulatory act, which today needs to be reviewed. LEDP envisages the creation of an investment product: inventory of sites, property and database creation, development of a community investment passport with identified promising investment sites, continued investment in infrastructure upgrades (within existing programs), simplification of procedures in the field of leasing relations (within the framework of plans) .

6.6.Regulatory and Institutional Framework The executive committee of the city council implement measures for deregulation of the local economy and help to reduce the administrative barriers that hinder the development of business in the community, which are influenced by the powers of local governments. For example: reviewing existing regulations to simplify procedures, reducing tax burden. Among the obstacles faced by business (start-ups, start-ups, investors): the tax burden; duration and complexity of obtaining permits; lack of complete information, haphazard procedures; staff "hunger"; constant queues at registration of documents, reception of administrative services; limited financial resources.

Local economic development plan, Konotop city UTC Sumy region

As a result, low rates of new business creation, slowdown or slow development of existing businesses, lack of interest of investors. Obstacles are minimized through a power-to-business dialogue: no city regulatory act aimed at administrative or economic regulation of business activity is adopted without first discussing with the business community. It is at this stage that the business is actively involved in the process, making proposals, adjustments. These include making decisions about local taxation, advertising, small architectural forms, land lease arrangements, property sales, and more. It is envisaged to strengthen interaction, partnership with the Association of Entrepreneurs and SMEs, a business asset. Establishment of municipal investment management will allow systematic work with investors; the mechanism of compensation from the city budget for credits involved in the implementation of business projects will become an additional incentive for business development; reconstruction / staffing of CAS, introduction of electronic service will create conditions for prompt, high-quality and comfortable receipt of administrative services.

6.7. Skills and Human Capital, Inclusiveness The average number of full-time employees in the city is 17 thousand; the number of registered unemployed is less than 1.4 thousand. In the local labor market, there is a growing shortage of skilled workers who have the latest technology, capable of working on modern machinery and equipment. The main sectors that are in dire need of skilled personnel are: construction, housing and communal services, industry, services. Executive committee of the city council support targeted partnership projects in the direction of youth vocational training. For example, a Ukrainian-Polish project was implemented at the Higher Vocational School. As part of the project, a department for training skilled workers in the profession "Electro-gas cooker" was opened. Modern technologies and flexible methods of organizing training, internships based on a Polish partner are applied. Local labor development policy, in cooperation with the Employment Center, is primarily aimed at eliminating hidden unemployment, involving unemployed people of working age, including people with disabilities, to economically active activities, expanding community practices. There is a joint activity of the Employment Center and the employers in promoting the employment of the unemployed. Among the problematic issues that prevent start-up entrepreneurs from successfully starting and operating effectively are lack of knowledge, lack of experience, lack of required skills in organizing and running a business. It is proposed to integrate into such a mechanism such important links as the student's "professional self-determination" (context of primary business orientation with laying the groundwork for further acquisition of relevant skills and competencies for success in business or professional career) and "self-employment" of the unemployed (fracture context). Self-belief schemes and business stereotypes from a potential start-up entrepreneur). LEDP envisages introduction of training programs on business motivation, development of leadership potential of start-up entrepreneurs, owners of operating business, representatives of public asset; education of financial consciousness, business skills in youth; business-oriented training for the self-employed population. The practice of implementing partner projects will continue.

Local economic development plan, Konotop city UTC Sumy region

6.8. External Positioning and Marketing Konotop is the second city, after the regional center, by key indicators of socio- economic development. Along with a number of advantages (convenient location, a branched railway junction, an established industrial complex, social and cultural base, etc.), which should contribute to the external positioning of the city, there are also problematic aspects, so the city council is attracting and investing in the modernization of communal and social infrastructure. Roads are being reconstructed (over 20 million UAH (833.3 thousand EUR) have been invested in 2019 only), a modern diagnostic center, children's clinic and maternity ward have been created (costing 75 million UAH (3.2 million EUR). thermo- modification of buildings of educational establishments (EU grant project of 13.5 million UAH (400 thousand EUR), budgetary funds) is carried out, the rolling stock of electric transport is updated. The community seeks to develop in partnership and cooperation, is a member of the Association of Ukrainian Cities, Association "Energy Efficient Cities of Ukraine", one of the first signatories of the "Covenant of Mayors" initiative, has experience of cooperation with donors and IFI, maintains ties with the twin city Mezdra (Bulgaria) in the field of cultural and educational exchange. Collaboration with Dresden in the implementation of projects on youth exchange "International Dresden Dialogue" has been established. A basic logo and a promotional package have been developed and are planned to be supplemented with an investment product (investment passport, investment proposals). The executive committee of the city council hold image events (e.g. brand exhibition- fair "Konotop hundred", project "Buy Konotop", celebration of "Konotop battle", thematic festivals, etc.), take part in various information and communication events, participate in meetings, but the activity is fragmented, there is no systematic work in the promotion, a clear positioning of the city in the business circles as an attractive investment. The results of the surveys conducted by the NGO "IICD" indicate that the external perception of the community continues to shape the historical and cultural sphere. For the most part, Konotop is associated with the heroes of the eponymous work by G. Kvitka- Osnovyanenko, the Konotop Witch, the Konotop Battle (the victory in 1659 of Hetman of Ukraine Ivan Vyhovsky), with the railway city, in some cases, with the city where the tram is located, “Aviakon” plant. LEDP is expected to establish a clear system of investment management in the community to promote the investment product and inform about the investment potential, with an emphasis on "success stories"; ensure the visibility of the community online through the investment page.

Local economic development plan, Konotop city UTC Sumy region

7. SWOT Analysis The Working Group, in preparing the SWOT analysis, looked at the strengths and weaknesses of the community in different perspectives, opportunities and threats, with a focus on the real economy and its potential for growth, creating employment opportunities and increasing resources for development.

Strengths Weaknesses Convenient geographical location, relative Low investment attractiveness of the proximity to the capital, regional center. community. Developed transportation, large railway Absence of the generated investment junction. product and promotion of the city. Availability of free production areas, land Unpreparedness for small business, low and premises for business and investment. level of knowledge and skills in the field Interest of local authorities in of entrepreneurship. implementation of development projects. Lack of local business incentive system. Availability of free niches and reserve of Insufficiently developed business market development (there are no infrastructure. businessmen that work in the sector of ІТ technologies and engineering. The sector of domestic tourism is not involved in any activity) Opportunities Threats Introducing mechanisms to stimulate the real Outflow of human resources from the city sector of the economy (tax benefits, special abroad, to other regions. economic zones). Unstable and unpredictable legislation Improving the investment climate (creation affecting local regulatory decisions. of general conditions of investment activity, The deterioration of the image of the state, stabilization of national currency, investment not the interest of investors in cooperation. rating of the state, transparent regulation). Exacerbation of geopolitical instability. Attraction of resources of state and regional support programs, obtaining cheap external loans, attracting grant funding.

8. Vision and Objectives The vision and objectives of the local economic development of Konotop city UTC were formed by a working group based on the analysis of the local economic situation, taking into account the preservation of logical connection and local interests. The vision, agreed in the dialogue process, is a description of a better economic future for the united community. Vision: "Konotop is an open investment space!", With favorable conditions for business development, modern business infrastructure and intellectual resources, comfortable for life and implementation of project initiatives.

Objectives:

Local economic development plan, Konotop city UTC Sumy region

1.Improvement of mechanisms for implementation of community investment policy. Results: A database of attractive investment objects to be offered to potential investors has been created. Generalized, within one document, community investment benefits, projects that will be presented to potential investors. The work of the executive committee in the direction of attracting the investment resource is regulated; the procedures for interaction, the algorithm for proper support of investors / projects in the community are introduced. A program has been developed that determines the priority areas of investment development, forms and types of attraction of investments in the community. Website for promotion of community investment products among potential investors has been updated. Information was disseminated among potential investors, partners, aimed at shaping and promoting the image of the community as an attractive investment area. 2.Development of city infrastructure to support entrepreneurship. Results: Renovated, according to the principle of "transparent spatial planning", the premises of CAS and staffed workplaces to ensure proper comfort of visitors, staff for timely, quality provision of administrative services. An electronic service was introduced to reduce physical queues and save time for CAS visitors. Support from the city budget for the implementation of business projects (compensation from the city budget for loans attracted by enterprises). Trainings for start-ups, business owners, public asset representatives are conducted; classes for education of financial consciousness, business skills in youth; classes with elements of business education for the able-bodied population not temporarily involved in the labor market.

Local economic development plan, Konotop city UTC Sumy region

9.Action Plan The Working Group has identified the specific actions of the Action Plan, the implementation of which should lead to the achievement of the set vision and objectives. Some measures have been discussed and critically evaluated for consistency with the overall vision and objectives as well as being consistent with the following principles: promoting the achievement of the goal;" not being isolated "; clear planning and financial justification; the ability to implement and achieve visible results in a timely manner. Table 1. Action Plan Estimated Building Duration Monitoring Key Objectives Actions / Projects ideas Partners involved costs Results blocks (start/finish) indicators UAH/EUR 1.Local 1.Improvement of 1.1.Compile inventory and 01.02.2020- Department of 39600/ A database of attractive Included in the base Cooperation mechanisms for create a database of available 01.04.2020 Economy, Department 1650 investment objects to be offered and completed at least and implementation of sites ("Greenfield", of land resources, to potential investors has been 10 land plots, 10 Networking. community "Brownfield"), premises and Department of created municipal / private 2.Transparent, investment policy objects of public and private municipal property, property free of corrupti property that can be offered to industrial enterprises of on administrati potential investors the City on that assists 1.2.Develop a community 01.04.2020- Department of 59400/ Generalized, within one An investment passport of business investment passport 01.06.2020 Economy, executive 2475 document, community investment of 50 copies was development. committee of the City benefits, projects that will be produced and 3.Access to Council presented to potential investors distributed finance. 4. External Positioning 1.3. Develop a Regulation on 01.01.2020- Department of 49800/ The work of the executive Adopted 1 document - and Marketing. the implementation of an 01.06.2020 Economy, executive 2075 committee in the direction of the decision of the City 5.Land and investment management committee of the City attracting the investment resource Council to approve the Infrastructure system in the City Council Council is regulated; the procedures for Regulations with a typical investor escort interaction, the algorithm for algorithm) proper support of investors / projects in the community are introduced. 1.4.Develop a long-term 01.08.2020- Department of 53400/ A program has been developed Adopted 1 document - program for attracting 01.01.2021 Economy, executive 2225 that determines the priority areas the decision of the City investment in community committee of the City of investment development, forms Council to approve the development Council and types of attraction of Regulations investments in the community 1.5.Update the Investment 01.05.2020- Department of 68100/ Website for promotion of Adopted 1 document - Activity plan (bilingual 01.12.2020 Economy, Specialists 2838 community investment products the decision of the City version - Ukrainian, English) of executive committee among potential investors has Council to approve the 16

Local economic development plan, Konotop city UTC Sumy region

on the official site of the City of the City Council been updated Regulations Council responsible for administration of the site 1.6. Disseminate information 01.01.2020- Executive committee 13200/ Information was disseminated There have been at on investment potential, 20.12.2021 of the City Council, 550 among potential investors, least 8 publications "success stories" to the Department of partners, aimed at shaping and community through electronic Economy and media promoting the image of the media, online resources, and involved community as an attractive social networks investment area 1. Regulatory 2.Development of 2.1 Reconstruction of CAS 01.02.2020- Executive committee 5500000/ Renovated, on the principle of Reconstructed part of and city infrastructure (part of the first floor of the 20.12.2021 of the City Council, 229167 "transparent spatial planning", the building, 25 jobs Institutional to support building municipality), CAS premises and workplaces to created Framework. entrepreneurship providing the CAS with ensure proper visitor comfort, 2.Transparent, computer equipment, staff for timely, quality free of furniture and software administration services corruption 2.2. Introduce Electronic 01.02.2021- Executive committee 300000/ A service was introduced to 1 software resource administration Queue Service 20.12.2021 of the City Council, 12500 reduce physical queues and save introduced, jobs that assists of CAS time for visitors connected business development. 2.3. Introduce support from 01.04.2020- Executive committee 1000000/ Support was secured to stimulate Compensation to at 3.Access to the city budget for the 20.12.2021 of the City Council, 41667 investment activity of least 2 enterprises (this) finance. implementation of business Department of business enterprises(targets), 1 document was 4.Local projects (compensation for entities implementation of development adopted - City Council Cooperation loans raised by enterprises) projects (compensation for loans decision approving of and raised by enterprises) the Regulations Networking. 2.4. Conduct a cycle of 01.02.2020- Department of 127200/ Trainings for business motivation, 8 training cycles were 5. Skills and leadership school training for 20.12.2021 Economy, experts 5300 development of leadership conducted (3 trainings Human start-ups, business owners, involved potential were conducted per quarter). 120 Capital, public asset representatives people were involved Inclusiveness 2.5. Conduct optional 01.02.2020- Department of 65000/ Classes were held to educate 50 lessons conducted. financial literacy classes in 20.12.2021 Education, experts 2708 financial consciousness and 1500 students are schools involved business skills in youth involved 2.6. Conduct classes with 01.02.2020- Konotop City District 20000/ Classes for business-oriented self- 100 events were held elements of business 20.12.2021 Employment Center, 833 employment of the population for 1500 people education for the able-bodied Department of business were conducted population not temporarily entities involved in the labor market When planning the costs, the euro rate of UAH 24.00 was used. 17

Local economic development plan, Konotop city UTC Sumy region

10.Financing Scheme Participants in the planning process addressed the issue of potential internal and external sources of funding for the activities from which it is possible to mobilize the resource, and formed a scheme with financial capabilities. The responsible contractors will be guided by this scheme when seeking funding. Table 2. Funding scheme

Estimated Sources of financing (UAH / EUR) Actions costs Funding gaps Remarks (UAH / EUR) Upper level Local budget Business Donors budgets 1.1.Compile inventory and create a database of available sites 39600/ 39600/ ("Greenfield", "Brownfield"), premises and objects of public - - - - - 1650 1650 and private property that can be offered to potential investors 1.2.Develop a community investment passport 59400/ 59400/ - - - - - 2475 2475 1.3. Develop a Regulation on the implementation of an 49800/ 49800/ investment management system in the City Council with a - - - - - 2075 2075 typical investor escort algorithm) 1.4.Develop a long-term program for attracting investment in 53400/ 53400/ - - - - - community development 2225 2225 1.5.Update the Investment Activity plan (bilingual version - 68100/ 68100/ - - - - - Ukrainian, English) on the official site of the City Council 2838 2838 1.6. Disseminate information on investment potential, 13200/ 13200/ "success stories" to the community through electronic media, - - - - - 550 550 online resources, and social networks 2.1 Reconstruction of CAS (part of the first floor of the 5000000/ 1000000/ 4500000/ building municipality), providing the CAS with computer - - - - 229167 41667 187500 equipment, furniture and software 2.2. Introduce Electronic Queue Service 300000/ 300000/ - - - - - 12500 12500 2.3. Introduce support from the city budget for the 1000000/ 200000/ 800000/ implementation of business projects (compensation for loans - - - - 41667 8333 33334 raised by enterprises) 2.4. Conduct a cycle of leadership school training for start- 127200/ 55200/ 72000/ - - - - ups, business owners, public asset representatives 5300 2300 3000 2.5. Conduct optional financial literacy classes in schools 65000/ 65000/ - - - - - 2708 2708 18

Local economic development plan, Konotop city UTC Sumy region

2.6. Conduct classes with elements of business education for 20000/ 20000/ the able-bodied population not temporarily involved in the - - - - - 833 833 labor market 7295700/ 1603700/ 4500000/ 892000/ 300000/ Total - - 303988 66821 187500 37167 12500

11.Monitoring Indicators and Mechanisms The progress of the implementation of actions LEDP will be monitored quarterly by a team of experts in accordance with the schedule (monitoring plan). The monitoring process will track the achievement of the interim expected results for specific reporting periods and discrepancies will be fixed to obtain an overall picture of the dynamics of implementation of the LEDP. The progress and results will be evaluated by the experts of the EU M4EG Initiative on the basis of progress reports on the implementation of the LEDP, which will be submitted to the Secretariat of the Initiative once every six months.

Table 3. Monitoring Indicators and Mechanisms Expected Results Duration Actions Month Month Month Month (start/finish) 1-6 7-12 13-18 19-24 1.1.Compile inventory and 01.02.2020- A database of investment-attractive - - - create a database of available 01.04.2020 objects to be offered to potential sites ("Greenfield", investors (documents for at least 15 "Brownfield"), premises and land plots, 10 municipal / private objects of public and private property) completed property that can be offered to potential investors 1.2.Develop a community 01.04.2020- Generalized, within one document, - - - investment passport 01.06.2020 the community's investment benefits to be presented to potential investors (an investment passport of 50 copies produced and distributed) 1.3. Develop a Regulation on 01.01.2020- The work of the executive - - - the implementation of an 01.06.2020 committee to attract the investment investment management system resource is regulated, the in the City Council with a procedures of interaction are typical investor escort introduced, the algorithm for proper algorithm) support of investors / projects in the community (1 document was adopted - the decision of the City

Local economic development plan, Konotop city UTC Sumy region

Council to approve the Regulations) 1.4.Develop a long-term 01.08.2020- - Developed a program that - - program for attracting 01.01.2021 defines priority areas of investment in community investment development, development forms and types of attraction of investments in the community (adopted 1 document - the decision of the City Council to approve the Program) 1.5.Update the Investment 01.05.2020- Preparatory procedures were Updated a website with - - Activity plan (bilingual version 01.12.2020 carried out, documents for information about - Ukrainian, English) on the placement were prepared investment objects / projects, official site of the City Council investment benefits to promote community investment products 1.6. Disseminate information on 01.01.2020- Information was disseminated Information was Information was Information was disseminated investment potential, "success 20.12.2021 among potential investors, partners disseminated among disseminated among among potential investors, stories" to the community aimed at forming and promoting the potential investors, partners potential investors, partners aimed at forming and through electronic media, online image of the community as an area aimed at forming and partners aimed at forming promoting the image of the resources, and social networks of attractive investment (2 promoting the image of the and promoting the image community as an area of informative publications made) community as an area of of the community as an attractive investment (2 attractive investment (2 area of attractive informative publications informative publications investment (2 informative made) made) publications made) 2.1 Reconstruction of CAS (part 01.02.2021- To define the developers of design The design and budget The contractors and the Renovated, according to the of the first floor of the building 20.12.2021 estimates, contracts are concluded documentation was technical supervision are principle of "transparent municipality), providing the prepared, the state defined. Agreed. Work has spatial planning", premises to CAS with computer equipment, examination was passed begun. Equipment, ensure the proper comfort of furniture and software furniture and equipment visitors, staff (acts of suppliers identified. The performance of works). 25 contract was concluded. jobs are completed for timely and quality administration of services. 2.2. Introduce Electronic Queue 01.02.2021- - - Service providers 1 service was introduced to Service 20.12.2021 identified. The contract reduce physical queues and was concluded save time for visitors 2.3. Introduce support from the 01.04.2020- Provision for clear regulation of The regulatory procedure Agreements have been Compensation was provided city budget for the 20.12.2021 procedures and conditions for has been completed. signed to ensure to stimulate investment implementation of business granting compensation (draft Adopted a document - the cooperation and activity of enterprises 20

Local economic development plan, Konotop city UTC Sumy region projects (compensation for loans decision of the City Council, decision of the City Council functioning of the (targets), implementation of raised by enterprises) analysis of regulatory impact) to approve the Regulations mechanism (agreements development projects have been concluded with (compensation was provided at least 2 banking to at least 1 enterprise (this)) institutions). Compensation provided to stimulate investment activity of enterprises 2.4. Conduct a cycle of 01.02.2020- Conducted trainings for business Conducted trainings for Conducted trainings for Conducted trainings for leadership school training for 20.12.2021 motivation, development of business motivation, business motivation, business motivation, start-ups, business owners, leadership potential (2 sets of development of leadership development of leadership development of leadership public asset representatives trainings (3 trainings per quarter), potential (2 sets of trainings potential (2 sets of potential (2 sets of trainings (3 30 people involved (3 trainings per quarter), 30 trainings (3 trainings per trainings per quarter), 30 people involved quarter), 30 people people involved involved 2.5. Conduct optional financial 01.02.2020- Conducted classes for raising Conducted classes for Conducted classes for Conducted classes for raising literacy classes in schools 20.12.2021 financial consciousness and raising financial raising financial financial consciousness and business skills among the youth (12 consciousness and business consciousness and business skills among the sessions held, 360 students skills among the youth (12 business skills among the youth (12 sessions held, 360 involved) sessions held, 360 students youth (12 sessions held, students involved) involved) 360 students involved) 2.6. Conduct classes with 01.02.2020- Business-oriented self-employment Business-oriented self- Business-oriented self- Business-oriented self- elements of business education 20.12.2021 classes were held (25 ones were employment classes were employment classes were employment classes were held for the able-bodied population held for 375 people) held (25 ones were held for held (25 ones were held for (25 ones were held for 375 not temporarily involved in the 375 people) 375 people) people) labor market