USAID ECONOMIC RESILIENCE ACTIVITY: SECOND SIX-MONTH IMPLEMENTATION AND COORDINATION PLAN
This document was produced for review by the United States Agency for International Development. It was prepared by the 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.
USAID ECONOMIC RESILIENCE ACTIVITY Second Six-Month Implementation and Coordination Plan
Program Title: USAID Economic Resilience Activity
Sponsoring USAID Office: USAID Ukraine
Contract Number: 72012118C00004
Contractor: DAI Global, LLC
Submission Date: January 25, 2019
Author: DAI Global, LLC
CONTENTS
ACRONYMS AND ABBREVIATIONS IV EXECUTIVE SUMMARY 1 INTRODUCTION 3 ACTIVITY LOCATION AND INSTITUTIONAL CONTEXT 3 GRANT FUND 4 RESULTS FRAMEWORK/CAUSAL MODEL 5 WORKPLAN INTERVENTIONS AND DELIVERABLES 7 OBJECTIVE 1— ASSISTANCE TO STABILIZE THE ECONOMY OF EASTERN UKRAINE 7 OVERVIEW 7 1.1 PUBLIC SECTOR ECONOMIC INFRASTRUCTURE INVESTMENT 7 1.2 SUPPORTING LOCAL AUTHORITIES TO ACCELERATE INFRASTRUCTURE INVESTMENT 9 1.3 VULNERABLE POPULATION ECONOMIC INCLUSION 9 OBJECTIVE 2—SUSTAINABLE DEVELOPMENT OF MSMES 12 OVERVIEW 12 2.1 CROSS-CUTTING OBJECTIVE 2 ISSUE: ACCESS TO FINANCE 13 2.2 CROSS-CUTTING OBJECTIVE 2 ISSUE: WORKFORCE DEVELOPMENT 17 2.3 VEGETABLES GROWTH SECTOR 18 2.4 HONEY GROWTH SECTOR 21 2.5 IT GROWTH SECTOR 22 2.6 CROSS-CUTTING INNOVATIVE MANUFACTURING GROWTH SECTOR 25 2.7 RENEWABLE ENERGY 26 2.8. CROSS-CUTTING OBJECTIVE 2 ISSUE: ADAPTIVE MANAGEMENT LEARNING REGARDING GRANTS REACH 27 2.9. CROSS-CUTTING OBJECTIVE 2 ISSUE: BUSINESS-ENABLING ENVIRONMENT AND ADVOCACY FOR IMPROVED LOCAL LEGISLATION 27 OBJECTIVE 3 — BUILD CONFIDENCE IN THE FUTURE OF THE EASTERN UKRAINIAN ECONOMY 29 STRATEGIC PLANNING AND CREATING A REGIONAL VISION 32 QUICK START ACTIVITIES 34 3.1 BUILD LOCAL VISIONS AND PLANS FOR ECONOMIC TRANSFORMATION 34 3.2 IMPLEMENTATION SUPPORT AND ISSUING GRANTS FOR TRANSFORMATIVE SME INFRASTRUCTURE 35 3.3. DRIVE POSITIVE PERCEPTIONS OF ECONOMIC TRANSFORMATION IN LUHANSK AND DONETSK OBLASTS 35 CROSS-CUTTING ISSUES 37 COMMUNICATIONS 37 ENVIRONMENTAL COMPLIANCE 39 MANAGEMENT 40
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RISKS AND ASSUMPTIONS AFFECTING IMPLEMENTATION 44 COORDINATION PLAN 45 1. ACCELERATING DONOR FUNDING 45 2. ACCELERATING DONOR FUNDING FOR MSMES 46 3. COORDINATION, INFORMATION SHARING, AND PARTNERING WITH DONOR PROGRAMS 47 4. COORDINATION WITH THE GOVERNMENT OF UKRAINE 51 PERFORMANCE INDICATORS AND TARGETS 52 ANNEX A: WORKPLAN–SUMMARY OF INTERVENTIONS ERROR! BOOKMARK NOT DEFINED.
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TABLES AND FIGURES
Table 1: Strategies to Facilitate Economic Resilience ...... 4 ble 2: Local Governments in the Donetsk and Luhansk Oblasts ...... 33 Table 4: IFI-funded MSME Support Programs ...... 46 Table 5: Projects Presenting Opportunities for Joint Partnering ...... 48 Table 6: Donor Programs Requiring Intensive Coordination ...... 49 Table 7: Programs Without Material Overlap ...... 50 Table 8: Indicators and Targets Year 1 ...... 53
Figures Figure 1: Causal Model ...... 6 Fure 2: Objective 3 Causal Pathways and Integrated Feedback Loops ...... 30
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ACRONYMS AND ABBREVIATIONS AMELP Activity Monitoring, Evaluation, and Learning Plan
A2F Access to Finance
APS Annual Program Statement
ARDS Agricultural and Rural Development Support
ATO Anti-Terrorist Operation
BDS Business Development Services
BSP Business Service Providers
CC Consolidated Community
CEP Competitive Economy Program
COP Chief of Party
DCCI Donetsk Chamber of Commerce and Industry
DCFTA Deep and Comprehensive Free Trade Area
DCOP Deputy Chief of Party
DGE Democratic Governance East
DOSA Donetsk Oblast State Administration
DRC Danish Refugee Council
EBRD European Bank for Reconstruction and Development
EIB European Investment Bank
EMMP Environmental Mitigation and Monitoring Plan
ERA Economic Resilience Activity
ERC Environmental Review Checklist
EU European Union
FAO Food and Agriculture Organization of the United Nations
FAS Field Accounting System
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FHI 360 Family Health International
FOM Field Operations Manual
GCA Government Controlled Area
GIZ Deutsche Gesellschaft f ür Internationale Zusammenarbeit (German Corporation for International Cooperation )
GOU Government of Ukraine
GUC Grants Under Contract
HO Home Office
ICT Information, Communication and Technology
IDP Internally Displaced Persons
IEE Initial Environmental Evaluation
IFC International Finance Corporation
IFI International Financial Institution
IRC International Red Cross
IT Information Technology
KfW Kreditanstalt für Wiederaufbau ("Reconstruction Credit Institute")
LGBTI Lesbian, Gay, Bisexual, Transgender, and Intersex
LOSA Luhansk Oblast State Administration
LNAU Luhansk National Agrarian University
MEG Mayors for Economic Growth (EU Initiative)
MEL Monitoring, Evaluation, and Learning
MEO Mission Environmental Officer
MOE Ministry of Education
MOU Memorandum of Understanding
MSMEs Micro, Small, and Medium Enterprises
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NGCA Non-Government Controlled Area
NGO Non-Governmental Organization
NIF Neighborhood Investment Facility
NIS New Independent States
OTI Office of Transition Initiatives
PPP Public Private Partnership
PWD People with Disabilities
R&D Research and Development
RFA Request for Application
SDC Strategic Development Committee
SFFI State Finance Institution for Innovations
STTA Short-Term Technical Assistance
SWOT Strengths, Weaknesses, Opportunities, and Threats
TAMIS Technical and Administrative Management Information System
TdH Terre des Hommes
TOT Training of Trainers
UCBI II Ukraine Confidence Building Initiative II
UCMC Ukrainian Crisis Media Center
UNDP United Nations Development Programme
UNOPS United Nations Office for Project Services
U-LEAD Ukraine Local Empowerment, Accountability, and Development Program
USAID United States Agency for International Development
USA United States of America
VET Vocational Educational Training
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EXECUTIVE SUMMARY
The USAID Economic Resilience Activity (ERA/the Activity) implementation team is pleased to submit this Second Six-Month Implementation and Coordination Plan covering the period of February 1 to September 30, 2019. While technically the second six months of the Activity run through August 27, 2019, we have widened the aperture to both include more detail on what we will do this February (originally covered in our initial six-month plan), and to align future workplans to USAID’s fiscal year by including September.
Under Objective 1, assistance to stabilize the economy of eastern Ukraine, the Activity has three work streams designed to reach large numbers of conflict-affected people. Based on evidence collected during our Damage Assessment in the first phase of the Activity, we are redirecting our focus in Objective 1’s first work stream onto small, but high impact, public infrastructure projects to alleviate bottlenecks affecting micro, small, and medium enterprises (MSMEs). We aim to benefit large numbers of people in the communities where we undertake these projects. We plan to begin work on two projects in the Donetsk Oblast—the repair of the Railway Bridge in Siversk and the Waste Sorting Facility in Lyman, which were both identified during the rapid assessment. We have identified an additional construction project in the Luhansk Oblast—the Phyto-Sanitary Laboratory for plant testing in Rubizhne. We will continue to identify other possible projects, and we are exploring to what extent we can support the relocation of the Luhansk National Agrarian University back to the Luhansk Oblast.
Under Objective 1’s second work stream, the Activity will work to help unlock funding for community construction projects of a larger magnitude by helping local authorities better prepare their projects to be investment-ready. And, because a stable and resilient economy is one that gives opportunities to its most disadvantaged citizens, there is a third work stream, targeted at vulnerable populations, that: 1) supports MSMEs that employ vulnerable persons to expand their operations; 2) gives grants to non- governmental organizations (NGOs) that support vulnerable populations’ engagement in the economy; and 3) funds improved practical skills development for lyceums educating unemployed and underemployed youth in trades that are in high demand locally.
Under Objective 2, which supports the sustainable development of MSMEs, we are focusing on the three value chains selected and analyzed during our rapid assessment: vegetables, honey, and information technology (IT), and two new sectors that have since been added. Major interventions we have planned for each rapid assessment value chain include:
Vegetables—a Pathfinder Farmers program for intensive agronomic and marketing coaching; developing private partnerships to provide technical assistance; developing private partnerships with industry players to co-invest in business; and supporting equipment and infrastructure improvements at farmers’ markets. Honey—developing partnerships with value chain actors to increase investment in the supply chain; beginning technology transfer through roundtables and study tours; developing capacity of agricultural technical schools and extension services; and improving coordination between beekeepers and farmers to reduce bee mortality. IT—initiating partnerships for curriculum development and training; supporting development of career development centers at universities; adapting and developing curricula at universities and
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private training programs; providing business development support; increasing visibility of the IT sector in eastern Ukraine; initiating discussions on the creation of IT associations or clusters in Kramatorsk and Mariupol; increasing access to English Language courses; and assessing the potential for an IT training center/incubator/accelerator that builds on prior USAID investments.
We have begun a cross-cutting program to support innovation in manufacturing and will provide technical support and training for business development and innovation in manufacturing companies. We will also perform a value chain analysis for alternative energy, design a cross-sectoral intervention for energy efficiency, and conduct a field trial of alternative solid fuels for greenhouses.
Under our access to finance work, we will organize workshops, and train trainers for them, to support enterprises to get information about financing possibilities and to increase their capacity to obtain financing. We will also support credit unions with grants to enable lending at lower interest rates.
At the start of the Objective 3 section of the workplan, a full five-year transformative vision for the region is laid out. Objective 3 aims to build confidence in the future of the eastern Ukrainian economy and the ERA team will do that by harnessing successes from Objective 1 and 2 and supporting small scale MSME infrastructure and an improved business enabling environment that provides inclusive opportunities to constituents. The ERA team will also lay the groundwork to attract investment and accelerate donor funding in the region, including by building local capacity to be able to obtain large scale infrastructure projects and attract FDI after the cessation of active conflict in the medium term 1. During the second six months of the Activity, this objective team will begin by fast tracking three cities/ locations selected that already have well-prepared strategic plans (such as Mariupol) to receive assistance on creating better infrastructure to support MSMEs. We will also support the selection of one infrastructure project in the cities’ plans for co-financing consideration by the Activity. Additionally, the Objective 3 team will support the development of local plans for economic transformation in four cities/consolidated communities (CCs). These strategic plans are critical for attracting international financial institutional funding. The Activity will also raise the profiles of local entrepreneurs, innovators, and reformers, working with youth and local institutions to develop programs to publicize and encourage local initiatives and entrepreneurship.
The implementation plan also includes the Activity’s approach to the cross-cutting issues of communications, environmental compliance, and management. To develop a positive perception of economic transformation in eastern Ukraine, our Communications Director will establish a well- coordinated outreach program with team members, national, and international stakeholders. Our strategy will be finalized once we receive recommendations from USAID about the specifics of campaign branding and the requested scope. In the case of environmental compliance, using the Initial Environmental Evaluation (IEE) as a foundation, the Activity will establish the environmental management system needed to support all three objective teams’ interventions. Finally, in the area of management, the implementation plan presents an updated staffing plan put in place to carry out all of the interventions described in detail herein. Staff are currently based across three offices (Kyiv, Kramatorsk, and Sievierodonetsk) and a fourth (in Mariupol) should be operational by the end of the year. The staffing plan clearly indicates the allocation of staff resources across these four offices.
1By medium term we mean approximately two years after the region stabilizes and active conflict ceases.
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Central to our approach is a coordination plan with other projects supporting development and change in Ukraine. Although listed as a separate deliverable in the USAID contract, we have incorporated the coordination plan herein, as effective coordination is a critical success factor for many of Activity’s interventions and is thus an integral part of the implementation plan. Not only will ERA support local authorities and MSME’s unlock financing from other donor organizations, we will coordinate and collaborate with other donor programs to avoid duplication, learn from each other, and strengthen each other’s efforts. In addition, the Activity will proactively coordinate its interventions with the relevant Ukrainian governmental entities.
INTRODUCTION
ERA aims to boost the economic resilience of eastern Ukraine in the face of the conflict that has left industry ransacked, communities divided physically and politically, and the social, financial, and physical assets that underlie resilience nearly nonexistent. The Activity will contribute to USAID/Ukraine’s Development Objective (DO) 2: Impacts of Russia’s Aggression Mitigated; and Intermediate Results (IR) 2.1: Conditions Improved for Reintegration; and 2.4: Common Civic Values Increasingly Embraced Across Ukraine.
ACTIVITY LOCATION AND INSTITUTIONAL CONTEXT
During the first twelve months of the Activity, the team will focus its interventions in the government- controlled areas (GCAs) of the Donetsk and Luhansk Oblasts to strengthen and enhance integration with the rest of the country. As the Activity progresses, the team may expand the geographic focus to other eastern oblasts, with approval of the Contracting Officer’s Representative (COR).
For purposes of this Activity, “eastern Ukraine” refers to the Oblasts of Donetsk, Luhansk, Kharkiv, Dnipro, Zaporizhzhia, Odesa, Kherson, and Mykolaiv, as per the Activity contract. The focus on eastern Ukraine does not limit the geographic scope of the Activity, since interventions will also link eastern Ukraine with other parts of the country, the European Union, and international markets.
While the focus of the Activity is the private sector, our team will closely cooperate with both Donetsk and Luhansk Oblast administrations. Furthermore, under Objective 3, the team will work closely with consolidated communities, cities, towns, and municipalities.
The Activity contract defines resilience as the ability of people and enterprises to mitigate shocks and stresses, reduce chronic vulnerability, and facilitate inclusive economic growth. The table that follows illustrates some of the types of interventions that relate to building local economic resilience of an absorptive, adaptive, and transformative nature. This provides context to the interventions and how they enable individual entrepreneurs, MSMEs, communities, and regions to be more resilient to shocks and stresses.
The Absorptive column shows how each category (individual entrepreneurs, MSMEs, communities, and the region) can absorb shocks and stresses that result from conflict, as well as potential future shocks and stresses. The Adaptive column shows how the Activity aims to make each category of beneficiary adept at not just absorbing stresses but adapting behaviors and systems to succeed under changing circumstances. The last column demonstrates game-changing strategies to ensure that actors pro-
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actively anticipate changing dynamics and set up systems to ensure that negative impacts are never felt by those who face shocks and stresses. More resilient market systems are proactive continuous learning systems. There can be a perceived tension between some elements of a resilient system (such as redundancy of market channels and suppliers) and efficiencies at the enterprise level.
TABLE 1: STRATEGIES TO FACILITATE ECONOMIC RESILIENCE
RESILIENCE CAPACITY ERA WILL BUILD LOCALLY Scale Absorptive Adaptive Transformative Microenterprise/ individual Increase productive assets Job retraining, new skills Proactive continuous entrepreneur/ women, hard to (such as bee hives), savings improvement of skills and reach populations, and and access to finance via learning about market vulnerable group individuals credit unions and grants, demand to meet changing crop/income diversity, market needs. skills and education level MSME s, including women - Access to finance , orders, Strong relations with Proactive planning, diversified owned and women-managed potential orders buyers, trade networks operations, monitoring enterprises and vulnerable and market trends, investing in hard to reach populations as competitive technologies, part of the workforce and strong innovation, and design entrepreneurial owners technologies. Systems in place for learning about dynamic market opportunities. City/ community level Inclusive l ocal government Insurance available and Proactive planning , business - services for constituents, affordable to all groups, friendly regulations, business including vulnerable MSME infrastructure supportive infrastructure, populations—coordinated encourages new market infrastructure, roads with USAID Ukraine investments and start-ups Democratic Governance East ( DGE) Region Inclusive l ocal government Insurance available and Proactive planning, business - services for constituents, affordable, SME friendly regulations, business including vulnerable infrastructure encourages supportive infrastructure populations (coordinated new investments and with DGE) start -ups
GRANT FUND
Throughout many of the workplan interventions, we will utilize grants to achieve objectives. We will follow the process outlined in the approved Grants Manual. To respond to the needs of specific interventions and partners, we will design a number of selection processes.
The Annual Program Statement (APS) will present program objectives, the types of partners the Activity seeks to collaborate with, and ways to collaborate with ERA. A wide range of potential partners will have the opportunity to submit short concept notes that will compete to move onto a second stage. The team will then work with selected partners to co-design the final application activities, performance milestones, and budget. This process enables the Activity to attract the most competitive and committed partners with which to collaborate to increase co-investment and sustainability of partnership activities. Where concept notes are received that are not best suited for a grant, the Activity may develop a memorandum of understanding (MOU) instead and directly finance activities with the partner.
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Alternatively, the project will use a single-stage Request for Application (RFA) process for rapid response grants where the eligibility and selection criteria are more narrowly defined and targeted at a specific type of partner and objective.
The technical team will design the APS and RFAs to ensure that the eligibility and selection criteria encourage the right types of partners: those with demonstrated capacity, commitment, and sustainable strategies.
RESULTS FRAMEWORK/CAUSAL MODEL
In Figure 1 below, red arrows show the causal pathways activated under this workplan from February to September 2019.
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FIGURE 1: CAUSAL MOD EL
Outputs Intermediary Outcomes Outcomes Impac ts Figure 1. Activity Causal Model 340, 000 beneficiaries Increased 80% of households in O1: infrastructure O1: Reconstruct small- receiving improved competitiveness of eastern Ukraine think bottlenecks Red s scale infrastructure infrastructure services eastern Ukrainian the economic reconstructed bottlenecks due to U.S. government municipalities situation in their assistance (1.1) households has Represent second O1: Issue grants to improved over the six-month workplan support local 8,000 Trained 5,200 beneficiaries utilize past 12 months (3.2) pathways workforce and skills (CC1), 12,000 new practices, development (e.g. IT vulnerable and techniques, or business Moms and model management skills, hard-to-reach Increased number Pathfinder farmers) populations (1.2) making businesses more profitable (CC2) of private training providers O2: Build new Improved business sustainably evidence-based enabling environment, providing training income Increased and standard of living inGCA advocacy skills for SME infrastructure aligned to the needs MSME business- of the region improved Conditions reintegration for enabling environment Curricula aligned to the needs of the region O2: Facilitate trainings developed for selected 8,500 individuals to provide skills in partner institutions Increased demand by MSMEs with new or better Market Linkages production employment in and/or O2: Build BSP capacity Facilitated through target industries Improved access to productivity to support the needs Market research, (2.3) inward buyer visits, finance for of businesses in entrepreneurs and growt h value chains aggregation, prepare MSMEs SMEs in eastern Ukraine Improved O2: Facilitate market and trade Pathfinder farmers confidence in linkages & value addition fairs/study tours More new sales the future of agreements GCA among O1: grants to MSMEs secured by USAID- ↑ Sales of Ukrainians $20 mil in new supported MSMEs beneficiaries (2.3)
investments & new mkts O3 Build visions and People inspired to secured by MSMEs plans for economic join in MSME and and entrepreneurs transformation Capacity entrepreneurial (2.1) to leverage IFI funding Activities O3 A new Larger percent of Common Civic Population in targeted shared Values Increasingly O3 Issue grants for value chains and regional communities think that Embraced transformative MSME 1,500,000 contacts cross-cutting sectors vision for the industries and sectors infrastructure from USAID- in Eastern oblasts economy of other than the most supported assisted by USAID the Donbas traditional for the region O3 Communicate communications (CC.4 ) emerges 6 MSME | SECOND successes SIX-MONTH and IMPLEMENTATIONand information AND COORDINATIONwill be PLAN important to the US AID.GOV opportunities events (3.1) local economy in 5 years (3.3)
WORKPLAN INTERVENTIONS AND DELIVERABLES Annex A—Summary of Interventions contains a monthly plan for all interventions, key tasks and deliverables, expected achievements, and projected performance indicator achievements.
OBJECTIVE 1— ASSISTANCE TO STABILIZE THE ECONOMY OF EASTERN UKRAINE
OVERVIEW
Objective 1 emphasizes quick support to reach as many people as possible to stabilize the economy of eastern Ukraine. The emphasis will be on public infrastructure projects and creating economic opportunities for conflict-affected vulnerable people and assistance to local businesses that have suffered from the conflict. We have planned three workstreams:
1. Public sector economic infrastructure investment; 2. Supporting local authorities to unlock infrastructure investment; and 3. Supporting the economic inclusion of vulnerable populations.
1.1 PUBLIC SECTOR ECONOMIC INFRASTRUCTURE INVESTMENT
During our rapid assessment of damage caused by the conflict, we identified two public sector projects in the Donetsk Oblast that we felt could be done relatively quickly and benefit the entire communities of Siversk and Lyman. We recommend continuing with these projects. While we identified an additional four private sector projects to further examine, they were for relatively large amounts of money but with little increase in employment and revenues. In general, we felt that five years after the start of hostilities, there was little “low-hanging fruit” for reconstruction in the private sector: too few medium- sized investments for rehabilitation of conflict-damaged sites with high impact. We also felt that the provision of relatively large grants to private enterprises could open the project up to accusations of favoritism and market distortion. We have therefore turned our efforts to finding more public sector projects and have identified renovation of the Phyto-Sanitary Laboratory in Rubizhne as our third construction project. In the current planning cycle, we will survey farmers’ and urban markets to find opportunities where new or reconstructed infrastructure will significantly improve farm to market sales (see Objective 2 Intervention 4). Finally, support for the relocation and reconstruction of the Luhansk National Agrarian University will be explored (see Cross-cutting Objective 2—Workforce Development).
Siversk Railroad Pedestrian Bridge
The Siversk Railroad Pedestrian Bridge was chosen for its economic benefit to a conflict-disrupted region, project simplicity, and high visibility. Siversk, in Donetsk Oblast, was the scene of combat in 2014 and experienced severe economic disruption. The mayor of Siversk requested assistance in repairing the 140-meter wooden pedestrian bridge, which spans railroad lines and is the only pedestrian connection between two sides of the city. It is also the only pedestrian access to the railway station from the eastern side. The city has made many patchwork repairs to the bridge but understands that the load- bearing safety level of the bridge is inadequate.
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The city, with a population of 11,000, is literally cut in half by the railway tracks. The closest crossings are an automobile crossing 1.4 kilometers to the north and an automobile crossing 2 kilometers to the south. If the bridge eventually gave out and you had to get to a place directly across the tracks from the train station, you would have to make your way across the train tracks (a safety hazard by any measure) or by walking about 35 minutes out of your way. The project not only eases contact, both personal and business, between the two halves of the city, it makes the railway station far more accessible to one half of the city’s citizens. We believe it is a low-risk, high-visibility project that has a relatively low price tag at $250,000 and broad public benefit.
Lyman New Waste-Sorting Facility
The construction of a new waste-sorting line in Lyman, Donetsk, was chosen for its economic and environmental benefit to this conflict-disrupted community. This relatively simple project could be co- financed by the city and started quickly. Lyman was the scene of combat in 2014 and experienced severe economic disruption. The mayor of Lyman requested assistance with building a new waste-sorting line that will be operated by a city-owned enterprise. The facility would allow recycling of raw materials in demand by local businesses and reduce waste dumped outside of town. Lyman currently has no modern waste management system and dumps waste in piles on the outskirts of the city, a common practice that is dangerous and harmful to the environment. Lyman views the waste-sorting facility as a first step towards reducing the volume of waste dumped in the open while it seeks to secure financing for a general long-term solution. The sorting line will process approximately 35 tons of waste annually, create 15 new jobs, and provide raw material inputs to at least 10 local MSMEs. The city estimates it would bring in a badly needed new revenue stream of about $250,000 per year. The cost of the investment is $750,000. The city has told us it would be willing to provide the site and up to 10 percent of the cost, but that is still subject to approval of the city council.
Phyto-Sanitary Laboratory, Rubizhne
The Phyto-Sanitary Laboratory scored strongly for: bringing economic benefit to a priority value chain (a large number of agricultural MSME beneficiaries); alleviating economic disruption caused by the forced relocation of the laboratory from Luhansk; contributions already made by local authorities; possibility of a quick start; and good visibility aspects. The estimated cost of the project is $100,000.
The laboratory in Rubizhne, Luhansk Oblast, does seed and plant testing of imports and exports, and it also provides seed and plant analysis for commercial growing, storage, and processing sites. It is used by approximately 100 business entities annually, from small proprietor farms to large processing and storage operations. Demand for the lab’s services is growing rapidly, almost doubling from 2017 to 2018. The laboratory has 28 employees (40 percent female; 5 percent IDPs; and one disabled person). The repair project will create nine additional jobs because the renovation will enable the lab to create a new department of bacterial and viral analysis. The lab charges small fees for services and after the renovation will be able to increase its own-source revenues by about 36 percent to $15,000 annually.
It is the only such laboratory in the Luhansk Oblast, which is a burden for farmers who have to travel long distances for such services. The renovation of the laboratory will accelerate testing throughput and decrease waiting time for clients. The state-owned operation has already invested in upgrading 91 square meters of the premises, including repair of the exterior, mechanical systems, and two laboratory testing rooms. The renovation of an additional 72 square meters will include upgrading the growing
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room, the virology and bacteriology testing room, a sanitary dining and shower area, the boiler room, and the sample storage facility.
Project Identification and Feasibility Assessment
We are continuing to identify further projects. As mentioned above, we will survey farmers’ and urban markets to find opportunities where new or reconstructed infrastructure will significantly improve farm to market sales. This will be integrated with Objective 3 efforts to build confidence in the future of the East Ukraine economy, since expanded access to markets and improved attitudes towards locally-grown food among urban consumers will have a dramatic effect on perceptions on economic optimism among smallholder farmers. Over the course of the Activity we will strive to address this at a regional (oblast scale) and not only in individual cities. We will also explore support for the relocation and reconstruction of the Luhansk National Agrarian University.
1.2 SUPPORTING LOCAL AUTHORITIES TO ACCELERATE INFRASTRUCTURE INVESTMENT Local government authorities generally do not have the in-house technical skills to translate their ideas and visions into realizable, concrete projects whose size and cost are based on market realities. In addition, given the complexity of large-scale infrastructure projects, local government staff may not have sufficient skills to manage project implementation.
Local government authorities also need to have access to a wide pool of capital—public and private, domestic and international—to respond to growing demands for better infrastructure, services, and jobs. Local authorities in eastern Ukraine have not been able to tap sources of capital because of lack of investor confidence and a limited track record of successful transactions.
The Activity will organize workshops and training for local authorities’ managers and staffers responsible for conceiving, implementing, and managing infrastructure projects. Where needed, we will also provide assistance on how to prepare a business plan or environmental assessment, and how to collect data to determine project costs.
We will support municipal and oblast authorities to increase their capacity to conceptualize local development projects in a commercial way, and to help them reach out to International Financial Institutions (IFIs) and the private sector to establish public private partnerships (PPPs). The Activity will help local governments to view IFIs and the private sector as technical and financial partners, re- orienting the focus of local government officials from submitting state-funded proposals to developing, owning, and operating income-generating infrastructure projects that attract private financing. We will collect information about IFI infrastructure-lending facilities and help local authorities market their projects. Essentially, the Activity will assume the role of a broker, bringing parties together and finding common points of interest to establish win-win partnerships.
1.3 VULNERABLE POPULATION ECONOMIC INCLUSION
Intervention 1: Support strategic enterprises benefiting vulnerable populations
The Activity will provide grant support to MSMEs that have successfully operated in the Donetsk and Luhansk Oblasts and have the potential to benefit vulnerable populations. Our subcontractor, the Danish Refugee Council (DRC), will lead the outreach to identify potential grantees, leveraging its
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networks and its knowledge of businesses and the needs of vulnerable communities. Preference will be given to economic clusters in line with the rapid assessment findings and where the targeted MSMEs have a demonstrable track record of follow-through (loan repayment and/or grant milestone achievements). In rural areas, these grants will largely concern agriculture and may include transportation services, aggregation and storage solutions, adoption of improved technologies, and services either previously unavailable to the local communities or discontinued because of the conflict. In some cases, these grants may also further mitigate the negative effects of the ongoing armed conflict (e.g. be given to beneficiaries who lost their businesses due to the conflict and are now repairing and rebuilding). The ERA Gender and Inclusion Advisor will work closely with DRC on this intervention including any learning that comes out of it.
Grants under Objective 1 are designed to be quick responses to a clear challenge or community need. Co-financing and application requirements will be simple and limited to take into account the applicants’ needs and capacity levels, ensuring that selection processes are open to those who have not already received donor support while making sure they are committed to their projects.
We estimate the average grant size will be $5,000 to $25,000, that an estimated 15 will be awarded in Year 1, with a pipeline of additional MSMEs to be awarded early in Year 2. Total budget is: $250,000 obligated Year 1; $500,000 in pipeline.
Intervention 2: Supporting vulnerable and hard-to-reach groups through local NGOs and private partners
This intervention is specifically designed to reach the most vulnerable and marginalized people living in the conflict-affected Donetsk and Luhansk Oblasts and to improve their economic security by enhancing employment and entrepreneurship opportunities. This intervention will be implemented through local NGOs and private partners that have experience and trust within the communities they work. Priority will be given to those local NGOs and private service providers with grassroots knowledge of the needs of the vulnerable groups identified by USAID. These beneficiaries could, for example, be a local NGO that works with individuals from the LGBTI community or with vulnerable women, or a private company that buys from or sells to the target community and can provide capacity building under a performance-based grant. This intervention will also assist the most vulnerable and marginalized people by creating economic opportunities, building capacity, and supporting vocational educational training (VET). Along with supporting individuals, the activities will strengthen their communities, thus extending positive effects to the whole community. In addition, this intervention builds on similar projects being implemented since 2014 in eastern Ukraine by other stakeholders, including USAID-funded initiatives.
In this first stage, NGOs will carry out economic vulnerability assessments of their target populations through roundtables and share information with the Activity for cross-intervention learning. From there, they will use the funds to provide workshops, conduct trainings, and organize study tours. We estimate the average grant size per local entity to be $50,000 to $250,000 2 and foresee two partners in the workplan timeframe, with an additional eight to follow over the life of the project. The estimated total budget for this workplan timeframe is $150,000 for two grants of $75,000.
2 This is a range seen in previous DRC work for similar work and the large range represents differing capacities and geographic reach of local NGOs.
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Intervention 3: Technical support to lyceums and for targeted skills development for the unemployed and underemployed
Grants under this intervention will be provided mostly to lyceums/technical trade schools that cater to vulnerable, underprivileged populations often incapable of otherwise paying for university-level education. Young people in the region often lack the opportunity to develop practical skills during their studies at these educational institutions. The most common reason for the limitations is insufficient equipment and technological resources; these institutions simply cannot provide their students with the necessary instruments, technology, and tools to study and train. The result is a theory-heavy curriculum that largely prevents students from obtaining the practical skills highly demanded by employers. Young graduates therefore struggle to secure employment in their chosen field, and often are forced to seek lower-paid, unqualified work. This situation has long-term effects and poses strategic threats to the economic well-being of the oblasts—poverty, unemployment, and eventually, workforce migration and depopulation.
The target educational institutions should: 1) serve vulnerable population groups; 2) develop practical education curricula for professions demanded by the labor market (especially value-chain opportunities identified in the rapid assessment); and 3) propose activities that equip and furnish (or refurbish) classrooms with modern equipment that fills gaps in skills development and practical learning by doing. We estimate that the average grant size per educational institution will be $75,000,3 and that there will be approximately two grants in the first workplan period as a pilot, to be expanded in the next fiscal year if successful. Estimated total budget this workplan period is $150,000.
OUTREACH APPROACH TO OBJECTIVE 1
Economic Response outreach activities: Under Objective 1 the Communications team will focus on delivering key messages to local communities and the general public about the opportunities and results created by ERA in rehabilitating conflict-damaged infrastructure. We will create communication assets that ensure audiences understand the positive socio-economic impact of our interventions on local communities and the benefits for local business development. Success stories will focus on vulnerable populations, workforce development, economic growth of small businesses, and the boost to local revenues from successful infrastructure projects. We will work with media, local authorities, nongovernmental groups, international assistance programs, and donors organizations to expand outreach to targeted groups, ensure the visibility of our work, and share information about our successes. We will organize infrastructure site opening events with participation of local and regional authorities, USAID, international partners, local citizens, and media.
3 This number is based upon DRC experience in the region working with similar institutions.
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OBJECTIVE 2—SUSTAINABLE DEVELOPMENT OF MSMES
OVERVIEW
In this planning period, the Activity will support the growth of MSMEs across three growth sectors (IT, honey, and greenhouse and intensive vegetable production) as well as innovation among manufacturers, which is cross-sectoral. We will also perform a value chain assessment for bioenergy (such as pellets, briquettes, biomass). We will provide technical assistance and co-financed investment support to strengthen private sector competitiveness in local and global markets by helping sector participants diversify their products, build market linkages, improve quality control, and increase productivity.
The weakness of the technical and professional education system in the region is a severe bottleneck for overall economic growth and market competitiveness. The Activity will identify training needs, support the capacity of local groups to deliver technical assistance and improved curricula, and strengthen connections between employers and public and private educational institutions. Performance and commitment-based partnerships will be iterative and competitive, rewarding MSMEs and local service providers that deliver results and make financial commitments toward sustainable business objectives.
QUICK START ACTIVITIES
GROWTH / CROSS -SECTORAL INTERVENTION QUICK -START ACTIVITIES Greenhouse and intensive vegetable production Pathfinder Farmers begun for intensive agronomic and marketing coaching for five smallholder farmer clusters to improve production practices aimed at new markets. Includes collaboration with USAID’s Agriculture and Rural Development Support (ARDS) in Lyman to train smallholder suppliers to the vegetable processor Vsesto Salads and Pickles. Vsesto cost-shared new processing equipment with ARDS which allowed the factory to increase production. ERA and ARDS are now working to improve the quality and availability of vegetables grown by smallholder farmers in Lyman so that this earlier investment has positive economic impact further down the value chain. Alternative solid fuel field test to assess economic and operational viability of converting greenhouse stoves from coal, gas, and firewood to pellets made from local agricultural waste. Three to five working greenhouses in Stanytsia Luhanska. The Activity will work with ten agricultural enterprises (seven in Donetsk Oblast and three in Luhansk Oblast) to help them address issues of productivity, cost reduction, marketing, and market reorientation toward national retail and export markets. Honey The Activity will facilitate at least one roundtable in each targeted oblast, in collaboration with each oblast’s regional development agency, to help improve beekeeper/farmer coordination to reduce bee colony deaths due to lack of information about the timing of pesticide application. The Activity will prepare a presentation on how such coordination works in other countries. Short-term training for state veterinary service experts, beekeeping instructors, and leading beekeepers from Donetsk and Luhansk Oblasts in bee disease diagnosis
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and prevention at Gadyach Agricultural College, the leading institution in this sector. Training will help prevent further major occurrences of bee death as in 2018 with accompanying declines in profitability . IT In collaboration with the Donetsk Chamber of Commerce and Industry (DCCI), the Activity will organize two roundtables (in Kramatorsk and Mariupol) to draw from IT company owners/managers exactly which short training courses they need right now to help their staffs. This information will be used to design the first round of IT workforce development and we will aim to hold the first of the two roundtables in February .
2.1 CROSS-CUTTING OBJECTIVE 2 ISSUE: ACCESS TO FINANCE
Expanding access to finance for MSMEs in eastern Ukraine requires interventions on both the demand (borrower/enterprise) side as well as the supply (lender/financial institution) side. On the demand side, the Activity will help potential borrowers understand the eligibility criteria and requirements of existing credit facilities targeted at MSMEs, whether IFI-funded or state-funded, and give them hands-on support with the application process. On the supply side, the Activity will engage with a range of financial institutions and with existing IFI-supported credit lines to stimulate lending to MSMEs. The Activity’s support will entail a mix of financial and technical assistance to lower the transaction costs for borrowers, research to assess the feasibility of a product, and data collection to support future interventions.
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2.1.1. Demand-side interventions
There are multiple national and oblast subsidy programs that MSMEs can access provided they can obtain better information and coaching on the application process. Nationally, these include interest-free five-year loans to small farmers (up to $18,000), compensation of 50 to 70 percent of the cost of domestically produced equipment for agricultural cooperatives, and 90 percent of the cost of agricultural extension services for small farmers. Oshchadbank offers a small business loan program, Buduy Svoye (“Build Your Own”), that is effective for existing small businesses.
In addition, a number of IFIs, including KfW, will be establishing credit facilities for MSMEs in 2019. MSMEs need coaching on business plan preparation, loan and grant application preparation, as well as on bringing their accounting practices and legal status up to standard. The Activity will build the capacity of local business service providers (BSPs) that will study the requirements of these programs and develop training programs to help MSMEs increase their access to these sources of finance. The workshops will be timed to coincide with deadlines for various programs.
During this implementation period, we will cast a wide net, aiming for breadth rather than depth, to ensure that a significant portion of MSMEs in the region have access to training on how to finance their businesses. ERA will strive to ensure that MSMEs owned by or employing vulnerable populations such as women, youth, the disabled, and IDPs, are included in these training opportunities.
Subsequently, more tailored assistance will be provided to a smaller cohort of MSMEs based on a more in-depth business diagnostic and needs assessment. These services would include the drafting of business plans, feasibility studies, and financial modeling to enhance the bankability of MSMEs. In addition, BSPs will provide individual coaching on organizational development issues such as governance, human resources, business processes, and more. In selecting MSMEs for in-depth technical assistance, ERA will not work solely with high-growth and commercially viable enterprises but will also seek to develop enterprises that are owned by and/or work with vulnerable populations. The Western NIS Enterprise Fund has been successful at facilitating access to finance for social enterprises and can serve as a good financing platform.
Currently, there exist other donor-funded programs for MSME development such as the EU4Business program, the European Bank for Reconstruction and Development (EBRD) advisory program for MSMEs, as well as support services provided through regional development agencies, chambers of commerce, and business associations. The Activity will coordinate with these programs and design its interventions to minimize overlap and duplication of efforts.
Specific interventions under this component include:
Prepare and maintain an inventory of current MSME credit facilities to increase transparency and allow borrowers to compare product offerings. The inventory will summarize offerings by commercial banks, leasing companies, and credit unions, as well as special state, national, and IFI lending facilities. We will update the inventory quarterly. Preparation/adaptation of training curriculum . We will review existing materials and, if necessary, adapt and repackage them into a comprehensive curriculum that reflects the need for basic business skills among the general population of MSMEs, as well as for more specialized
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sectoral, technical, and regulatory knowledge. All training materials will include facilitator and participant guides in English and Ukrainian or Russian (depending on identified preference of beneficiaries), incorporate adult-learning methodologies, and contain evaluation tools to measure participant learning (e.g. pre-test and post-test). To ensure consistency in approach and quality of service delivery, we will conduct a training of trainers (TOT) for the selected BSPs. Rollout of business skills training . The Activity will work with oblast administrations, business associations, and other key stakeholders to roll out the business skills training in different localities. During this performance period, the project will organize two sessions to test and tweak the materials based on trainer and participant feedback. Organize “Financing Your Business” half-day workshops for MSMEs to provide information, together with credit providers, about available financing options, eligibility criteria, application procedures, and other requirements. A “consultation clinic” can be organized at the end to allow one-on-one time between MSMEs and financial institutions. We plan to conduct two sessions during this performance period.
2.1.2 Supply-side interventions
Through the APS process, partner with credit unions to expand access to credit for individual entrepreneurs and individual farm households in the Donetsk and Luhansk Oblasts. We will issue a call for prospective credit union partners through the APS. As part of the due diligence process for the APS, the Activity will conduct an in-depth institutional diagnostic of credit unions working in eastern Ukraine, to ensure an equal number of unions in the Luhansk and Donetsk Oblasts. The diagnostic will verify the viability of the selected credit unions, assess their capacity to serve MSMEs, and identify potential areas for technical assistance. Based on the results of the diagnostic, the Activity will co-design a lending facility with the selected partner credit unions. For this period, there will be an initial cohort of two credit unions—one in Donetsk and one in Luhansk. The grant funding will be made to the two credit union associations, the Ukrainian National Association of Savings and Credit Unions (UNASCU) and the All-Ukrainian Credit Union Association (AUCUA). a. Grant for lending capital. The association can on-lend the grant capital to credit union members at low or no cost, which will enable the credit union to provide loans to private entrepreneurs at a cheaper rate. Currently, credit unions charge 21 to 24 percent per year and through this facility, interest rates can be lowered to 14 to 17 percent. Unions interviewed during the rapid assessment confirmed that this would be an acceptable rate for the lender and the borrower. b. Technical assistance fund to engage consultants to work on product development, streamlining of credit procedures, and strengthening risk management. Coordination with CAP . The Credit to Agricultural Producers (CAP) has been providing technical assistance to credit unions, primarily targeting those working with agricultural value chains. ERA will build upon the activities already provided by CAP to strengthen and revitalize the credit union system in eastern Ukraine. Potential areas of collaboration with CAP: o Joint institutional diagnostic of potential partner credit unions.
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o Technical support in the co-creation process of a lending facility with UNASCU and AUCUA. o Integration of ERA-supported credit unions into the current cohort of CAP-supported credit unions for cross-learning opportunities. o Extend CAP training to ERA-supported credit unions, and vice versa. o Joint CAP-ERA workshops/forums on topics of common interest, e.g. financial literacy, expanding access to finance to rural and agricultural consolidated communities, using IT- enabled solutions in lending methodology, etc. Work with credit unions, banks, and other financial institutions to ensure inclusion of vulnerable populations. ERA will seek to understand specific barriers faced by IDPs, Roma people, youth, and women in accessing finance from formal financial institutions. As part of the institutional diagnostic for credit unions, the project will examine current lending practices and identify areas for intervention. These interventions may consist of training for credit officers to adopt a gender-lens approach in credit analysis or developing new lending methodologies and products that are more suitable to the risk profile of these populations. For instance, the introduction of community-based savings groups and the use of group-lending models have been effective in other post-conflict settings not only in enhancing access to finance, but also in promoting social cohesion and re-integration. After assessing needs, we will pilot financial inclusion outreach activities such as a targeted training to a marginalized group (such as Roma people, complete with information on how to get the ID documents that would be necessary to obtain a loan). Facilitate access to finance for high-growth value chains . The Activity will explore innovative financing mechanisms and partnerships with local government authorities, financial institutions (banks, credit unions, leasing companies), and IFIs to address the financing needs identified during the interventions detailed below for the IT, honey, and intensive/greenhouse vegetables value chains. Over this performance period, interventions will develop a pipeline of projects that will need financing. Initiate discussion with IT education and training partners on student loans. ERA will gather additional information on demand for student loans to determine the feasibility of an education loan for IT students, potentially supporting specific partners by collecting data on the demand for financing among IT students and gathering information from financial institutions that have experience providing education loans. Data collection on client behavior and attitude toward credit. The rapid assessment showed there is reluctance among MSMEs and private entrepreneurs to obtain credit. It highlighted that we need to better understand the actual demand for credit and how it would be used., as well as on attitudes toward credit and the formal financial system, will enable the Activity to design more targeted and evidence-based interventions. We will use the training sessions to collect this information from participants. The rapid assessment recommended that the Activity create a special credit facility for IDPs and MSMEs with Oshchadbank during Year 1. However, we have decided not to pursue this recommendation for two reasons. First, we will be providing grants to vulnerable groups under Objective1 interventions and UNDP will be starting a new European Union (EU) program in March to provide micro-grants to IDPs. To create a parallel credit facility would create some confusion. Secondly, there are a few municipalities that have moved away from the purely grant-based regional Kurkul program for farmers to establish partnerships with banks to provide interest rate rebates for MSME loans. For example, the Pokrovsk
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City Council has such a partnership with PryvatBank that ties loan interest rebates with taxation incentives. Rather than developing an Activity-driven credit facility, we will work with municipalities and consolidated communities selected under Objective 3 to facilitate the replication and adaptation of proven Kurkul programs.
2.2 CROSS-CUTTING OBJECTIVE 2 ISSUE: WORKFORCE DEVELOPMENT
The Activity has embedded workforce development interventions throughout its growth sector work streams. It will leverage and build the capacity of local service providers, bringing in experts to provide training of trainers and coaching where not available locally.
As a quick-start intervention, the project team will work with the Donetsk and Luhansk regional employment centers to adapt their bi-annual employer surveys to capture labor market information in the three selected value chains. Data will help identify specific employer skills needs, occupations in high demand, vacancies, and educational requirements to inform labor market interventions. This task will also serve to develop better labor market information and intelligence for educational institutions, policy makers, and job seekers.
Potential relocation of Luhansk National Agrarian University complex
ERA is in the early stages of exploring an opportunity to assist with the relocation and capacity building for the Luhansk National Agrarian University. While construction, if needed, will not start within the current planning cycle, exploration of this long-term intervention will begin in the first quarter of 2019.
The Luhansk Oblast Administration has designated workforce development as a priority, with the goal of retaining and attracting employees to the oblast. It has chosen the relocation of the Luhansk National Agrarian University from Kharkiv as its top priority. This dovetails with the conclusions of the rapid assessment that identified lack of local educational resources in value chain sectors. Before the conflict, the university system was located primarily in the NGCA and was relocated to Kharkiv during the fighting. The university rector is preparing preliminary plans for relocation and the oblast has reached out to ERA for assistance on this large, high-impact, long-term endeavor.
In the event that the rector and the oblast pledge to commit meaningful human and material resources to the project, we plan to begin a multi-phased intervention in the current planning cycle. The first phase will be an assessment of staffing, curriculum, and construction needs. In discussion with the EU and UNDP, ERA suggested that the relocation project has no comprehensive plan and that the first step should be technical assistance to support the creation of a complete feasibility and implementation plan with budget and timeline. The EU Delegation and UNDP agreed that this would be a useful contribution from ERA to managing a multi-donor intervention.
The university’s initial planning foresees a project of several years with the opening of a main campus in the Sievierodonetsk urban corridor followed by up to five extension campuses in the Oblast. The university partnership will potentially include renovation of facilities, faculty and administration capacity building, the development of online learning platforms, and planning of extension services. The Activity would help the university to recruit competitively an American agricultural university to guide the project to include modern and relevant science, equipment, and curricula.
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2.3 VEGETABLES GROWTH SECTOR Interventions in this value chain are designed to expand the share of regional vegetable producers in the wholesale and retail markets of the Donetsk and Luhansk Oblast GCA and assist them in breaking into new markets in Ukraine and abroad.
Intervention 1. “Pathfinder Farmers” program for intensive agronomic and marketing coaching
Smallholders and emerging commercial farmers will benefit from the “Pathfinder Farmer” intervention, which started in January 2019. Access to, and expansion into, new and more sophisticated markets will be the key driver for increasing investment, improving productivity, and increasing sales for intensive vegetable producers. The goal of “Pathfinder Farmers” is to support an initial group of lead farmers who will provide an example to others in the communities around them. Under this intervention:
About 25 to 50 farming households across four to five communities with a high concentration of growers will receive intensive agronomic and marketing coaching from the Activity agronomist; longer term, we will explore collaboration with private extension models driven by agro-input suppliers. Peers and neighbors will be invited to seminars held at the Pathfinders’ farms to disseminate knowledge in producer clusters. Coaching will include participatory market research to identify the Pathfinders’ target markets for their produce in the 2019 season. There will be support for business-to-business meetings with the goal of obtaining contracts for their produce. We may provide, as a pilot, some packing materials or other goods needed to facilitate sales into target markets. Through its coaching and market research, the Activity will complete an initial identification of locations where investment in market infrastructure could help meet identified market demands and benefit smallholder communities to inform subsequent grant evaluation and negotiations. The Activity will fund three domestic study tours to help transfer experience from the more advanced vegetable growing region of southern Ukraine and to begin discussion with agro-input suppliers that have limited marketing in eastern Ukraine since the conflict.
PRODUCER TYPE LOCATION TARGET END MARKET Emerging commercial Stan ytsi a Luhanska Cherry tomatoes to Kyiv/Kharkiv greenhouse (Luh ansk Obl ast ) supermarkets Smallholder Tr iokhizbenka, Polovy nkine Rose tomatoes, cucumbers to Luh ansk greenhouse (Luhansk Oblast) Oblast regional supermarkets, direct trade contracts with wholesale markets Emerging commercial Soledar hromada (Don etsk Cabbage, peppers, potatoes to Dnipro open soil Obl ast ) ATB supermarket Smallholder open soil Kostianty nop ol (Don etsk TBD Obl ast ) Smallholder open soil Lyman hromada (Donetsk Vs es to Salads and Pickles factory Oblast )
The Pathfinder Farmer intervention builds on earlier work in the region by the Agricultural and Rural Development Support (ARDS) activity, specifically in the Lyman hromada where ARDS funded new processing equipment for the Vsesto Salads and Pickles factory. Thanks to this equipment the factory significantly increased production and would like to increase purchases of raw material from smallholder
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farmers in Lyman and surrounding communities. Towards this end Vsesto, ERA and ARDS are launching a joint effort to improve cabbage, carrot and tomato cultivation techniques among smallholder suppliers, educate them better about the varietal and quality requirements of the factory and generally improve farmer to processor coordination. Vsesto has agreed to purchase seeds and agricultural inputs for a demonstration plot on the land of one of its smallholder suppliers to demonstrate new varieties and improved cultivation techniques. This plot will be overseen by the ERA agronomist.
The Activity will map potential private sector partners that can, in subsequent seasons, begin to drive the provision of agronomic and marketing extension in line with the sale of agro-inputs and services. These potential partners include:
International seed and agricultural input providers with representative offices in Ukraine. Local agricultural input retail stores in local markets and communities. A (semi-)commercial cooperative extension service established with starter funds from oblast administrations. Bioenergy providers (see Section 2.7 on Bioenergy).
Intervention 2. Develop private partnerships with agricultural MSMEs to provide technical assistance
A number of agro-enterprises, (including processors, aggregators, and emerging commercial farmers) are not yet ready to make substantial investments in expanding their businesses. Increased access to technology and development of market linkages under Intervention 1 will help businesses upgrade. Additional technical assistance for agro-MSMEs, including processors and other actors not included in the Pathfinders program, will be available competitively under a business development RFA.
The approach for agricultural enterprises will begin with a management and marketing audit by agricultural markets experts to help companies:
Identify bottlenecks in enterprise management that can be addressed to improve productivity. Assess and improve capacity to reach and negotiate with markets to reduce risk. Develop a market expansion strategic plan that includes needed investments and clear milestones for reaching target end markets.
Intervention 3. Develop private partnerships with commercial producers, processors, exporters, and agro-input suppliers to co-invest in business expansion
Identification of potential private partners that are prepared to make additional investments in their businesses will begin in Year 1. Such partners would be more commercially oriented producers, processors, exporters, or agro-input supply companies that need to acquire new technology and equipment, upgrade aggregation and packaging facilities, and invest in their supply chains to meet quality standards. Under the APS process, the Activity will begin to receive concept notes for co-financing business expansion. There will be a strong link to our access to finance component for the companies to finance their contributions. Similar to Objective 1, companies that have been impacted by the conflict and have already made investments to repair and rebuild will be given preference.
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The APS process will enable a period of co-creation and negotiation with competitively selected companies to mobilize private investment by leveraging strategic grant support. Since the co-creation and negotiation period takes time, no grants may be awarded in Year 1. However, the Activity will begin to build its pipeline of partnerships to be awarded in Year 2.
The Activity will also work with private laboratories to find approaches to increase soil, water, and leaf testing by smallholder farmers. This is one of the most effective means by which vegetable growers can increase productivity, optimize fertilizer use, and reduce loss from disease. The use of these services by smallholder and even mid-size farmers is extremely low. It is necessary to increase knowledge of the benefit of these services and possibly offer them closer to smallholder production clusters by establishing sample collection points or small field laboratories.
Intervention 4. Identify and support equipment and infrastructure improvements at farmers’ markets
The Activity will support retail trade opportunities for smallholder farmers through grants to farmers’ markets and local produce stores on the condition of contributions from private partners and/or local governments. The Activity team will help the oblasts identify opportunities for market infrastructure and equipment investments by gathering critical information about wholesale and retail markets in GCA cities (including informal farmers' markets). In the Donetsk Oblast’s Agricultural Strategy for 2020 there is $25,000 for renovation of a city-owned facility in Bakhmut for a store specializing in locally sourced produce and $35,000 for equipment for farmers’ markets.
The Activity will identify whether there is overlap with Objective 3 support for city councils and opportunities to leverage public resources for such investments. Smaller MSME grants for private investment at these markets may be awarded under the Objective 1 rapid grants program and may extend to support for larger construction projects under Objective 1 work stream 1. For promising communities that do not yet meet eligibility requirements (i.e. no legal status of farmers’ market), the Activity may provide technical assistance to develop a strategy for development of a formal market that could be supported in Year 2.
Interventions to improve market infrastructure for smallholder farmers in GCA cities should be integrated with Objective 3 efforts to improve perceptions of the east Ukrainian economy and help communities develop a new economic vision. Amongst smallholders is widespread discouragement about loss of traditional markets located in the NGCA, at the same time that they are only partially accessing markets with significant population centers in the GCA. In later planning periods ERA will launch a public campaign for the popularization of local produce focused on its safety (in concert with investments in better sanitary conditions at farmers’ markets), quality, and regional “identity.” We will investigate options for an advertising campaign that highlights the positive aspects of buying from local smallholder farms and gives a face to the region’s producers.
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2.4 HONEY GROWTH SECTOR
Intervention 1. Disseminate knowledge and encourage technology transfer through initial roundtables and study tours
The Activity will share key findings and lessons learned from the rapid assessment with potential partners. Under this intervention we will:
Host six workshops (with associations, beekeepers, and aggregators) to share key lessons from the assessment, provide an initial quick training on the prevalence and prevention of antibiotics in honey, and gather information to inform later training of trainers, which will include more topics and in-depth capacity building. Facilitate dialogue at the workshops between beekeepers and suppliers that improves market linkages. Organize study tours to enable strategic stakeholders identified in the assessment to learn about key value chain challenges and solutions, including bee disease, diagnostics, organic bee- keeping requirements, and processing standards.
Intervention 2. Develop private partnerships with honey value chain actors to increase investment in the supply chain
The rapid assessment showed that there is an opportunity for beekeepers in eastern Ukraine to scale honey production and sell to existing honey markets if they can meet the required quality standards. To improve beekeeping profitability, small apiaries need to invest in more hives and automated machinery to grow to a more economical scale (more than 100 bee colonies).
Under the APS, we will identify private partners that are interested in making strategic investments in the honey supply chain (larger beekeepers, cooperatives, processors, and aggregators). Small grants for the most vulnerable may permit co-financing some apiary equipment under Objective 1, but the intention of the APS is to attract partners that will invest in more sustainable business models for expanding apiaries by leveraging private investment. Some companies have expressed interest in collaboration as a means to increase the volume and reliability of honey supply in the region (for example, Mir Meda, Ukrainsky Med and national leaders such as Askania-Pack). There are already limited practices among some of these companies to offer small loans to honey suppliers to support expansion. In addition, through its work with the credit unions (see Access to Finance section above), the Activity will also work with honey producers to facilitate financing for the purchase of additional beehives and equipment.
In addition, organic certification is another potential way for exporters and local beekeepers to increase the value of honey. The Activity will approach partners interested in investing in organic honey to develop private partnerships. As part of the co-creation process, we will work with applicants to assess the viability of this investment model as well as to better understand the requirements of other potential partners, such as the oblast administrations, which already have subsidy and compensation programs for many other kinds of agricultural producers.
We will also explore which IT-enabled solutions could support knowledge transfer and training for beekeepers. As bee deaths have increased due to pesticides, solutions might include the development of
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mobile apps that would help farmers inform beekeepers about pesticide-spraying periods or other information that would mitigate bee deaths.
As the Activity begins to negotiate partnerships, it will concurrently develop training-of-trainers (TOT) materials to support partners’ capacity, particularly in apiary management, value addition, quality certification, workforce development, and extension services. The TOT will continue to be informed by and adapted for the types of partnerships that arise through the APS process. We will also work closely with the Food and Agriculture Organization of the United Nations (FAO) to support their development of an information platform for beekeepers, possibly even supplying content and instructional videos.
Intervention 3. Build capacity of agricultural technical schools to deliver quality beekeeper education and prepare future extension capacity in the workforce
The Activity will develop demand-driven training materials and build the capacity of local instructors to specifically address local educational needs. The Activity will meet with the two top local schools to assess capacity and needs before engaging industry experts from other parts of Ukraine and abroad to develop the program.
This intervention will complement and be informed by the TOT materials developed under the previous intervention. We will take a two-pronged approach: working through private partners and supporting educational institutions to build long-term workforce capacity.
Intervention 4. Improve coordination between beekeepers and farmers to reduce bee mortality
We will conduct two roundtables with beekeepers, local agricultural officials, and representatives of farming organizations to facilitate dialogue, coordination, and planning between farmers and beekeepers to reduce bee mortality. Roundtable goals are:
A productive dialogue where the beekeepers express their concerns and desires for reform in a professional way to government officials and industry representatives. A realistic assessment of the mortality crisis in the 2018 season and its causes. A roadmap for improving coordination in 2019 (e.g. a warning system for pesticide use), sharing examples of such coordination in other countries.
There will also be discussion at the roundtables of field testing a coordination system in selected locations in Donetsk and Luhansk supported by the Activity, with the opportunity for stakeholders to apply through the APS for grant funding.
2.5 IT GROWTH SECTOR
The biggest challenges for the IT growth sector in eastern Ukraine are the availability of qualified entry- level specialists, the limited capacity of local IT MSMEs to invest in their growth, and the lack of collaboration and information sharing within the IT sector in eastern Ukraine and with the rest of the industry.
While many IT players complain about the lack of student preparedness, very few can articulate exactly what is needed. We have made contact with the largest IT firms in the country, and only those in Lviv
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are addressing the problem of training both on their own and through educational institutions. In eastern Ukraine, the private sector and academia have no formal collaboration system to ensure that skills developed at universities meet the demands of the IT labor market. We aim to leverage the experience of the Lviv firms and universities and get them involved as much as possible to support skills development for IT students that will truly prepare them for the job market.
Intervention 1. Build off rapid assessment to fill knowledge gaps and initiate IT partnerships
While the initial labor market assessment revealed a significant shortage of skilled IT workers, much needs to be learned about what has worked, what specific skills are needed, and which institutions are best positioned to supply them. In addition, under Access to Finance, we will initiate discussions and information gathering around demand and access to student loans. Activities in support of a better understanding of the IT labor market include:
Outreach and information gathering with existing IT-related donor programs to inform design and areas for collaboration and amplification. Create an inventory of all IT-related tertiary training institutions, detailing courses, participants, and faculty. Series of IT roundtables to facilitate an in-depth discussion on IT firms' skills and training needs and potential partners.
The study will help inform partnerships in education and training, as well as how to create IT centers in Mariupol and/or Kramatorsk under Intervention 2.
Intervention 2. Develop private, NGO, and institutional partnerships to finance development of career centers, co-working spaces, incubators, and accelerators
IT firms and employers are concerned that young people lack awareness of the IT sector and do not have access to information about employment and educational pathways that can lead to IT careers. Primary and secondary school teachers also lack IT awareness and thus do not direct or encourage their students to pursue IT-related studies. The effect is a small pool of college and university students who pursue IT degrees reducing the number of potential employees in the Donetsk and Luhansk Oblasts.
The information gathered above will help inform partnerships to facilitate the creation of IT center(s) in Mariupol and/or Kramatorsk such as career centers at universities, co-working spaces, incubators, or accelerators. Our main vision is co-funding spaces and programs for training, collaborating, career development, and socializing. Many incubators have degenerated into empty spaces where facilities are rented out—we need to co-create sustainable center(s) in partnership with local and national partners, learn from successful models, and scale effective approaches. Partnerships supported by ERA will require partners’ commitment to providing a full ecosystem of activities for young people and a manager committed to getting people into the facility.
Based on information gathered under Intervention 1, we will encourage key partners to apply for grants under the APS to create career development centers at universities.
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Intervention 3. Adapt and develop curriculum at universities and private training programs
A critical intervention is in support of curriculum and capacity for training in IT. This intervention will be informed by Intervention 1. Subsequently, we will support universities and private training programs by:
Identifying universities willing to experiment with new or revised curricula relevant to the labor market, as well as identifying private companies interested in and willing to support improvement and initiate partnerships under MOUs. Engaging with European or American universities to: strengthen IT curricula; upgrade faculty skills; undertake research and development; participate in short-term exchanges and sabbaticals; and access their updated curricula, know-how, and the tools they use to stay current. Supporting the IT sector to advocate for greater autonomy from the Ministry of Education (MOE) to adapt IT-related curricula and programs to local market realities. This can be accomplished by helping the IT sector to form an association or cluster that could agglomerate knowledge, skills, resources, and advocacy across the value chain (see Intervention 6). Potentially expanding existing IT programs such as IT Moms, WOW Teachers, and School Boost.
ERA will develop and share an RFA targeted at local actors to support curriculum and workforce development under small grants. ERA technical teams can facilitate initial linkages and support the initial process and strategy development but, for this to be partner-driven, small grants to local actors may be necessary to cover part of the cost of curriculum development, partner mobilization, and study visits.
Intervention 4. Develop private partnerships with Ukrainian IT firms that can apply for project support to develop and scale business
We will provide opportunities for IT MSMEs to apply for technical assistance funds and anticipate three to six companies receiving business development support in Year 1. IT companies stagnate because most IT entrepreneurs lack basic business, marketing, accounting, and management skills. During the rapid assessment, the Activity team discussed opportunities with IT MSME leaders who seek to grow their businesses but lack the skills to reach higher value markets. In particular, those companies seeking to develop and market their own IT products (i.e. diversify away from outsourcing), find it difficult to raise capital.
Aligned with this intervention, we will work with our partners to incorporate business management for IT engineers and startup founders as part of our support for curriculum development and training.
Intervention 5. Increase visibility of IT sector in eastern Ukraine and initiate early discussions on creation of IT associations or clusters in Kramatorsk and Mariupol
One way of getting more people involved in the IT sector is to spread awareness and build a higher public profile for the sector. To increase the visibility of eastern Ukraine IT, the Activity will support:
Design of competitions, hackathons, and other challenges through its partners that would incorporate real-life solutions needed by market actors in other growth sectors. Communication and participation at key events. Showcasing of innovations developed by IT companies in eastern Ukraine.
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An awareness campaign about the IT sector for young people and their parents, with special focus on getting vulnerable groups involved.
The Activity will investigate promoting a higher profile of the sector by initiating discussions on the creation of associations or clusters in Kramatorsk and Mariupol.
Intervention 6. Increase access to English language courses
As noted in the rapid assessment, English language skills in the IT sector are lacking. The Activity will:
Identify key constraints and reasons for low levels of English education. Develop and support English language learning capacity for university students, faculty, and practitioners under the grants program and in line with recommendations from IT partners developed under Intervention 1.
2.6 CROSS-CUTTING INNOVATIVE MANUFACTURING GROWTH SECTOR
In addition to other growth sectors, innovative manufacturing could have strong economic potential in the region. The Activity aims to enhance the capacity of small and medium industrial firms in the region to implement innovations in processes and products that will lead to increased profitability and economic sustainability. Sixteen industrial enterprises across both oblasts were preliminarily assessed in December 2018 to inform program design and to identify potential partners. They included firms from the machine-building, metalworking, plastics, and glass sectors with employees numbering from 6 to 450. Our assessment revealed that the region supports a small number of innovative manufacturers, while most firms need assistance to begin integrating innovation into their production practices.
Intervention 1. Provide technical support for business development and innovation in manufacturing companies
The Activity will develop a process by which companies can express interest in taking part in the program and receiving support from the Activity’s technical specialists. Companies can seek our help with market research, basic management consulting guidance, as well as information on intellectual property protection, end markets, standards and certification systems required in new markets, energy intensity of production, identifying distributors in new markets, and other professional skills.
Intervention 2. Provide training to groups of companies with similar training needs
Through its interactions with companies, the Activity will conduct a simple gap analysis of skills and training needs. The Activity will then organize six workshops that Activity staff and local consultants could deliver to groups of companies with similar needs.
The Activity will gather existing materials developed by other donors and programs and adapt them as needed. Where additional expertise and support is needed, the Activity will hire Ukrainian or regional consultants to support the training and deliver it with a local service provider.
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Interventions 3. Develop private partnerships with high potential manufacturing partners
Based on demonstrated capacity and commitment under the programs provided under Interventions 1 and 2, the Activity will develop an initial MOU “deal note” with an estimated five companies to provide tailored assistance that is longer-term and more strategic. The deal note will outline the roles and responsibilities of the Activity and the private partner. The Activity will hire local service providers, complemented by international experts if necessary, to deliver the agreed scope of work. The deal note will build in performance-based mechanisms to ensure buy-in from the partners. The agreement with the service provider will also have performance incentives.
Among the strongest candidates to emerge from the initial assessment are:
A machine-building enterprise in Kramatorsk that wishes to diversify its clientele beyond Ukrainian metallurgical companies. A window and door manufacturer in Vuhledar interested in improving its regional marketing. A polymer manufacturer in Sievierodonetsk that needs consulting on how to produce improved polymers used in shoe soles. A machine-building plant in Druzhkivka that specializes in natural gas pipeline parts and wishes to break into the European market.
In addition to anticipated requests for more customized technical assistance, almost all firms have identified equipment needs. Firms will have the opportunity to submit a competitive concept note application for grants to acquire equipment as well as for technical assistance needed to implement their business strategy. These grants will require high partner co-financing. It is likely that, in Year 1, partnerships will not yet be formalized under co-financing grants but that the Activity will have an initial pipeline of potential private partners.
2.7 RENEWABLE ENERGY
In this workplan period, the Objective 2 team will assess bioenergy use and production as a potential growth sector by carrying out a value chain analysis, coordinate with other donor projects on energy issues in the region in order to accelerate funding, and carrying out an alternative solid fuel greenhouse field trial.
Intervention 1. Conduct bioenergy value chain analysis
In this planning period, the Activity will conduct a value chain analysis of alternative energy production in the form of biofuels (biogas, pellets, and briquettes from agricultural and forestry waste or specially cultivated energy crops). The study will be led by the Activity’s newly hired energy expert and will draw on experience from earlier USAID-funded energy projects in the region. Biofuels manufacturing is a growing sector in rural communities, but at present it is more oriented toward export to energy plants in Poland than toward domestic demand. A brief assessment of wind and solar will be made resulting in a determination of whether or not they merit further in-depth assessment.
The following themes will also be assessed in this planning period:
1) Viability of transitioning public infrastructure from coal and natural gas to locally produced biofuels (pellets, fuel briquettes, and biogas) and how this transition can be stimulated. At
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present, production of biofuels from agricultural and forestry waste is a growing sector in the region. However, Eastern Ukraine is lagging behind other regions of Ukraine in using these resources. 2) Activating external funds available for energy efficiency (such as a 100 million Euro fund from the European Investment Bank) by training construction companies in Donetsk and Luhansk to install insulation materials according to EU standards. 3) Maximizing synergy with the Ukraine Energy Security Project (ESP). ERA can offer high- resolution regional data about raw material supplies, potential private and public sector partners for biofuel projects and can help design regionally appropriate interventions, which will complement ESP’s knowledge of national energy networks and policies and energy infrastructure design. 4) Co-financing of projects to reduce the energy intensity of manufacturing and industrial agricultural firms. For example, Agroton, the largest agricultural company in Luhansk Oblast, has converted all of its offices, grain storage facilities, and livestock barns to receive heating from agricultural waste.
Intervention 2. Cross-Objective and donor project coordinated intervention design on electricity sources
The above-mentioned assessments will contribute to Activity design for the next planning period. In addition, we will investigate how the Activity can contribute to energy infrastructure projects in the region. In particular, Luhansk Oblast suffers from severely damaged, underpowered, and unreliable electricity sources. Resolution of this issue is beyond the abilities of the Activity alone, but through advocacy, specialized research, and engineering, the Activity may be able to stimulate solutions together with international donors and government agencies.
Intervention 3. Alternative solid fuel greenhouse field trial
As a quick-start intervention, the Activity will also support smallholder greenhouse farmers in assessing new heat sources to replace natural gas and coal as well as firewood. The Activity team has already initiated an economic and management review of pellets made from agricultural waste as a greenhouse heating source; we will procure equipment this year to field test this system in three to five smallholder greenhouses.
2.8. CROSS-CUTTING OBJECTIVE 2 ISSUE: ADAPTIVE MANAGEMENT LEARNING REGARDING GRANTS REACH
Over the summer, the Objective 2 technical team and the grants management team will analyze whether vulnerable and hard-to-reach populations applied for and won grants. If they are under-represented, the team will come up with outreach and capacity building strategies to apply in Year 2.
2.9. CROSS-CUTTING OBJECTIVE 2 ISSUE: BUSINESS-ENABLING ENVIRONMENT AND ADVOCACY FOR IMPROVED LOCAL LEGISLATION
Based on the results of the rapid assessment and our Objective 3 work, the Activity will provide support to local stakeholders in coordination with DGE to boost the enabling environment. We will train local BSPs to do the economic analysis necessary to bolster these efforts, as well as train business
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membership organizations (BMOs) and interested NGOs on effective advocacy. We plan to develop the training materials and deliver a pilot training for BSPs and BMOs in either Kramatorsk or Mariupol.
OUTREACH APPROACH TO OBJECTIVE 2
MSMEs Development: Within Objective 2, communication needs will be tailored to individual sectors. Our outreach efforts aim to dispel myths, improve the perception of locally produced products, and build confidence in the competitiveness of local products in new regional and global markets. We will target our audiences with two core messages: (1) ERA provides excellent opportunities for local producers to receive grants to develop their business; (2) ERA assists businesses in learning new technologies and presenting their goods and services to meet new consumer expectations. For example, through trade fairs, city days, roadshows, marketing materials, media campaigns in local and national press, and TV and radio spots, we will market local food as “hip and healthy,” rather than “uncompetitive and dirty.” With the goal of developing brand recognition for agricultural products, slogans such as—“Grow in the east – sell in the west” or “Produce in the east – sell to the west,” etc.—will be created. All sectors under Objective 2—IT, innovative manufacturing, alternative energy, etc.—will receive a similar, but customized treatment based on their particular needs.
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OBJECTIVE 3 — BUILD CONFIDENCE IN THE FUTURE OF THE EASTERN UKRAINIAN ECONOMY The goal of Objective 3 is to build confidence in the future of the Objective 3 Transformational Vision: ERA will help eastern Ukraine become eastern Ukrainian economy. ERA resilient to the shocks of destructive conflict and build confidence in the will help leaders and citizens of future. Namely, ERA will help create better work and income earning eastern Ukraine develop and opportunities and, together with DGE, will help foster better public implement their visions for the services desired by constituents.1 ERA will enable MSMEs and future, while making sure that champions for the improved private sector (such as the Mayor of Mariupol) news about their successes to transform the economic landscape with a balanced, innovation-driven reaches not only the people of the economy that draws upon the region’s historic strengths in advanced east but of all Ukraine. The manufacturing. ERA will help the region unlock the potential of information Objective 3 team will use the technology, higher education and research, financial services, agricultural, and energy solutions. The five-year ERA strategy is to transform the region into lessons learned and successes of one that has the capacity to plan for, attract and leverage international work under Objectives 1 and 2 to investment and create an engine of economic growth. facilitate the development of a vision for the region that reflects the wishes of its citizens and the requirements of a transformed economy. Due to Objective 3 interventions, the region will be able to attract investment and flourish. The Objective 3 team will also provide technical and financial support to realize some of the small-scale business infrastructure investments required for regional transformation. The flow chart below (Figure 2) illustrates some of the pathways in which the successes of Objective 1 and 2 will feed into the transformational role of Objective 3. This chart also draws from the logical framework presented in the ERA contract.
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FIGURE 2: OBJECTIVE 3 CAUSAL PATHWAYS AND INTEGRATED FEEDBACK LOOPS
SPs help secure IFI ERA facilitated-successes O3 Strong Economic Vision financing for large scale (CCs get to new in Value Chains (O2) and introduced infrastructure, SPs support ideas for SPs, existing small scale MSME Infrastructure Services champions assisted to fufill infrastructure, improved (O1) Communicated ambitious plans) business enabling environment
Economy better Improved confidence Increased Investment integrated with Ukraine & including the new markets (including (Ukrainians MSMEs, IDPs, oppurtunities from increased sales from O2, GOU, donors in Short MSMEs increased services O1) term, FDI in longer term)
↑ Diversified economy (including both new Increased economic sectors and thriving resilience MSMEs)
1Note that: SP= Strategic Plan, IFI= International Financial Institution, for other acronyms see acronym list
ERA’s work under Objective 3 will help communities develop a broad-based vision for the future—how to best serve the local population and support private sector growth—and then draft the strategic plans to realize that vision. We will help communities implement their strategic plans and provides technical and financial assistance to realize investment projects that are part of those plans. As part of Objective 3, other Activity interventions will coalesce into a roadmap for the future designed to build confidence in the east by addressing the needs and concerns of a broad swath of the population. The strategic plans we plan to support are not ends in themselves. Rather, they are blueprints for the allocation of funds to improve the business enabling environment and to provide better public services desired by constituents, as well as being the first step to obtaining infrastructure financing from a number of sources. Additionally, the process of creating these plans will contribute to increasing local confidence in the future. The ERA team will work with cities and consolidated communities to create transformative SME infrastructure, which will include business incubators, accelerators, local markets, and public services that support multiple MSMEs. Furthermore, ERA will be transformational by accelerating other larger regional infrastructure investments through capacity building, technical assistance, linking, consulting, and coaching.
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Based upon DAI’s experience in other transitional economies, there are three critical elements for a successful vision to enable transformative development:
1. Direction—a clear understanding of the course forward. 2. A critical mass coalition of constituents: drawn from as broad a base and walks of life as possible. 3. A local engine that is almost always a combination of (a) money and (b) a powerful champion (or multiple champions); It is critical that there is someone who “owns” the vision and helps pay to realize it.
In the places these already exist as a solid foundation, like Mariupol, ERA will skip right into working on developing action-oriented SME infrastructure improvements. The Mayor’s team has a strong vision for the development of the city as well as a comprehensive and systematic approach to the development of all spheres of life in the city. Meanwhile, citizens are very positive about the changes that are already taking place in the city. One woman in the port told ERA staff “The city has begun to revive.” The central part of the city has been repaired, significant cultural events and festivals are taking place. Public transport is improving, and condominium associations are repairing residential buildings. Forty percent of the city’s annual budget goes to development. The Mayor’s prioritized Strategy of Development of Utilities and Services has already been implemented. In 2019, the city is developing a Strategy of Opportunities. They expect ERA’s assistance and ERA is pre-positioning to proactively engage and support the development and execution of this strategy.
In three other promising locations, such as the most committed consolidated communities with well- prepared strategic plans, we will provide the information, examples, coaching and inspiration to jump start them to be able to achieve all three requirements for successful economic development. Along with our implementation support, they will also be candidates for grants for transformative MSME infrastructure.
In four communities that do not have these three elements mentioned above, we will work with them on a strategic plan that reflects the local vision for the future direction of their communities and that can serve as a basis for obtaining IFI infrastructure financing. We will also coordinate with other donor- funded projects that engage local governments in planning.
As noted above, one of the critical elements for developing a successful vision is including constituents from a broad base. The process must engage not just public officials and business communities, but also marginalized and vulnerable populations, so that they feel they are heard and respected, and that they are on the same team as their local government. To that end, we will:
1) Inspire youth to create solutions and inspire their communities. We will launch activities for youth and school children to form a new vision and motivate local government. This will include contests, inspirational study tours, and learning. In each city where we will support the development of a strategy, we will hold a competition among youth for the best video film about the vision of the future community. Furthermore, during the life of the project, we will support start-up weekend competitions, youth festivals, and study tours to other cities of Ukraine that can serve as a good example of economic development. 2) Leverage university capacity to build the workforce engine of tomorrow. We are going to attract universities to participate in working groups for the development of strategies in communities. Together with partner universities such as Dal University in Sievierodonetsk, which has already agreed to the project, we will facilitate the creation of development
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projections by senior students in those communities where they were born and where they plan to return after graduation.
All of this is designed to accelerate Ukrainian and donor investments, and to create the capacity to attract additional private sector investment. Currently, it is difficult to attract foreign direct investment to the region while there is a military conflict. But we will create conditions for attracting investment in the future, by showing the way to Ukrainians to invest successfully in targeted value chains under Objective 2. We will support the offices of economic development in communities, local and regional economic development agencies, and the Donetsk Chamber of Commerce and Industry. During the information campaign, we will promote the new brand of Eastern Ukraine as dynamic and open-for- business. We will support businesses in the participation of national and international fairs and conferences. We will explore providing technical support for the industrial parks in Mariupol, Kost iantynivka and Rubizhne. Investors and residents alike will only increase their confidence in the region if there are successes and they are made aware of these successes.
The Objective 3 team’s work with cities and consolidated communities will continue throughout the life of the project. In Year 2, we will move towards creating a shared regional vision. We will find commonalities among local government missions to create and promote a shared vision with neighboring communities and cities up to the oblast level and provide to them the same support that we are providing to cities and consolidated communities.
STRATEGIC PLANNING AND CREATING A REGIONAL VISION As a first step in local government strategic planning, the Activity will coordinate with DGE and other donor and GOU units to support the creation of a shared vision for the economic future of the region through engagement with a wide group of stakeholders. Unlike other approaches, the Activity’s method for strategic planning and its implementation results in a doable implementation plan that engages community stakeholders from business leaders to underrepresented populations. These plans are not wish lists: only activities that can be carried out are included.
In this planning cycle, the Activity will select four local governments with which to conduct strategic planning. We will also choose three local governments that already have strong plans to support implementation of transformative economic infrastructure projects. The selection of strategic planning partners—cities or consolidated communities—will take into account their financial and human resource capacity to carry out strategic planning. We will also coordinate with other donor-funded projects that engage local governments in planning.
It will not be until Year 2 that we will move towards creating a shared regional vision in a coordinated effort. We will find commonalities among local government missions to create and promote a shared vision with neighboring communities and cities up to the oblast level. We will use a variety of public fora to create interest and public participation. Activities will include public hearings, roundtables, roadshows, and multimedia campaigns.
BACKGROUND ON CONSOLIDATED COMMUNITIES
Objective 3 team participated in the rapid assessments and took the lead on the internal political economy analysis. Work was done to clarify the starting points for progress on the local consolidation of communities and the number and quality of strategic plans in the region. The information gathered
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provides an evidence base on which to build the Objective 3 interventions and is presented in summary here.
In 2019 and 2020, the Government of Ukraine plans to finish creating its targeted consolidated communities (CCs) in its push toward decentralization. All cities are slated to become CCs but the transformation of cities into CC has not yet begun in the Donetsk and Luhansk Oblasts. Rural CCs are comprised of villages without a large urban center. Most of the consolidated communities formed to date are rural. On December 23, 2018, the local elections for eight consolidated communities in Luhansk Oblast were postponed due to martial law and are supposed to take place at some point in 2019.
TABLE 2: LOCAL GOVERNMENTS IN THE DONETSK AND LUHANSK OBLASTS
CONSOLIDATED FUTURE NU MBER ESTABLISHED LOCATION COMMUNITIES NOT OF CONSOLIDATED CITIES CONSOLIDATED YET FORMED COMMUNITIES COMMUNITIES (INCLUDING CITIES) (INCLUDING CITIES) Luhansk Oblast 7 9 19 28
Donetsk Oblast 18 10 35 45
Total 25 19 54 73
Comparing the total number of local governments listed in the table above with the number of local governments with any type of strategic plan in the table below makes it clear that visioning and strategic plans are needed.
Status of strategic plans for economic development, Luhansk and Donetsk local governments
CITIES AND FUTURE ESTABLISHED ESTABLISHED CONSOLIDATED CITIES CONSOLIDATED CONSOLIDATED COMMUNITIES COMMUNITIES COMMUNITIES (INCLUDING CITIES) Plans adopted by 8 9 17 17 councils Plans in development 3 5 8 8 No plans 14 5 19 48
Many of the existing strategic plans were created with support from UNDP and the EU-financed Ukraine Local Empowerment, Accountability and Development Program (U-LEAD). However, few of the cities and CCs with plans have started real implementation efforts.
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QUICK START ACTIVITIES
In February 2019, we will:
Conclude local capacity research. This research, already begun, will include analysis of local governments’ capacity in strategic planning and development and will identify local media outlets and civil society organizations focused on economic development issues. Based on this research, we will create a database of local government, NGOs, and media. Assess and filter potential partner cities/consolidated communities . The city selection process for the first round has already begun and should be completed by the last week of March. The selection process will include: distribution of questionnaires; evaluation of feedback; preparation of a short list of potential cities/consolidated communities; and site visits to several potential partner cities. The Activity has already reached out to Mariupol to begin discussion on its priorities for economic development.
3.1 BUILD LOCAL VISIONS AND PLANS FOR ECONOMIC TRANSFORMATION
The result of the Activity’s work will be strategic plans for economic development for the four cities selected that are founded on a new local vision and that lead directly into implementation without a break in activities.
The eight basic steps in our strategic planning process are:
1. Formation of a Strategic Development Committee (SDC), the key body responsible for creation of the strategic plans. The SDC is comprised of 30 to 35 members invited by the mayor and includes local policy makers, civic actors, representatives of educational institutions, entrepreneurs, other private sector actors, MSME representatives, and industry leaders. 2. Economic Environment Scans, resulting in data-driven profiles of the communities that include a survey of business’ attitudes toward the local economic environment. 3. Community Mission Statements. 4. Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis of strategic plan priorities. 5. Action plans, with goals, objectives, and tasks to address priorities that can be realistically implemented. 6. Compilation and adoption of the strategic plans. 7. Immediate implementation of high-priority, short-term objectives that show either quick benefits or plant the seed for longer-term goals. 8. Monitoring and updating the strategic plan: collecting information to test the impact of implemented projects and using this feedback to adapt.
At key points throughout the process, the broader community will be given opportunities to review findings and encouraged to provide input. Completing the first six steps will take from six to eight months. ERA will also provide assistance in implementing first-year activities identified in the strategic plans after they have been adopted by municipal councils. The Activity will pay all costs related to on- site consulting for the creation of the community-based strategic plans for economic development and for support in the implementation phase.
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3.2 IMPLEMENTATION SUPPORT AND ISSUING GRANTS FOR TRANSFORMATIVE SME INFRASTRUCTURE
Together with the Mayor of Mariupol’s team, and based upon existing strategies, we will finalize an MSME infrastructure project for Mariupol that also fits the goals of ERA. The Mayor confirmed that all the projects jointly implemented will receive co-financing from the city budget and Metinvest funds. This discussion will advance during the second half of the fiscal year, to be implemented in the second year of the project.
Three cities/consolidated communities that already have well-prepared strategic plans will be selected for implementation support and as candidates for grants for transformative MSME infrastructure, such as business incubators, accelerators, local markets, and public services that support multiple MSMEs. The Activity consultants will assist in establishing a system for implementation in city councils. The cities/consolidated communities, with the support of local Activity consultants, will select one infrastructure project from the strategic plan to improve the economic infrastructure. After USAID approval, the Activity will issue co-funded grants for their implementation.
3.3. DRIVE POSITIVE PERCEPTIONS OF ECONOMIC TRANSFORMATION IN LUHANSK AND DONETSK OBLASTS
It will be important for Ukrainians to be aware of positive developments in the region. Individuals, especially youth and the unemployed, need to have positive role models and know that others like themselves have found ways to improve their lives despite the challenges of the region. The Activity will work to raise the profile of local entrepreneurs, innovators, and reformers. It will also work with local institutions to develop and publicize business awards programs and mechanisms that reward local initiative and encourage entrepreneurship.
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OUTREACH APPROACH TO OBJECTIVE 3
For Objective 3, the Communications team will drive positive perceptions of economic transformation to build confidence in the future of the region. They will highlight dynamic and innovation-driven aspects of economic activity and draw upon pride in the region’s historic strengths in advanced manufacturing. The ERA team will create “buzz” to inspire entrepreneurs and motivate people to remain in the region.
The approach will shift gradually over the Activity’s life span. In the beginning, there will be a greater emphasis on highlighting dynamic champions, and leaders with whom ERA has begun to work. As the Activity progresses, the Communications team will be able to increasingly highlight ERA results and success stories.
During the life of the Activity, we will hold events, road shows, conferences, and round tables for government officials, businessmen, youth, and women to spread the new positive vision and showcase positive MSME and business infrastructure results. We will support and help amplify voices of local champions, leaders and grassroots initiatives that are also working to build confidence in the future: events such as the DCCI German Partnership Days; Info Day for SMEs; Horizon 2020: Regional Young Female Entrepreneurship Competition; Inter-Ukrainian interregional study tours (for IT and Textile industries); and the Business4Women forum. Furthermore, we will create buzz by reaching out and connecting to the best and brightest in each sector such as the initial outreach already conducted to potential IT partners in western Ukraine. Over the life of the Activity we will carry out inward B2B invitations, meetings, and targeted messaging at trade fairs.
The Communications team will take special attention to showcase positive role models such as progressive businesses, IDPs, and youth-led MSMEs that have successfully established new businesses.
Furthermore, we will:
o Launch Girls in Tech – within 5 months we can create Girls in Tech chapters in Luhansk and Donetsk Oblasts. This will be an excellent “amplifier” (very high social media leverage) which will help eastern Ukraine get noticed in Silicon Valley. o Create buzz and confidence that the industrial sector can rise again. The Communications team plans to collaborate with the Ukrainian Crisis Media Center (UCMC), a local nongovernmental organization that created an exhibition called “International investments in Ukraine at the end of the 19th and beginning of 20th Century.” The project was done in cooperation with UCBI, and now ERA has a chance to build on its legacy. The campaign will educate Ukrainians, particularly youth, as well as potential trade partners in the West, about the region’s prominent contribution to technical progress worldwide. We will focus on each city and community we work with, demonstrating interesting facts about successful or prominent innovations they have achieved. For example, the chemical plant in Rubizhne was producing “indigo” paint for Levi’s Strauss Corporation; the Glass factory in Sievierodonetsk – special glass lenses for spaceships critical to landing, and the recent production of prosthetic limbs with the 3-D printer in Kramatorsk. We will promote these innovations through media and public events, including youth festivals, road shows and publications in social and traditional media as well as historical lectures in educational hubs and innovative education centers, opened/supported by DRC, UCBI, and local NGOs as well as universities and festivals with participation of well-known lecturers. All of this will help raise public interest, especially among youth, inspire pride and be motivational as a story of the innovative and competitive identity of the people of the region.
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CROSS-CUTTING ISSUES
COMMUNICATIONS
The communications component plays a critical role in the integration and coordination of all the Activity interventions over the second half of Year 1 and will contribute to the most important result: a path forward to a viable economic future for eastern Ukraine as an integrated part of the Ukrainian economy, one which is understood and supported by the population of the region, and one that energizes people into entrepreneurial action. By orienting activities under Objective 3 around current and potential markets for growth sectors, ERA will promote diversification that will lead to a more resilient economy and create opportunities for innovation and transformative ideas. The initial set of Objective 3 outreach activities will be based on the outputs and outcomes of the initial Objective 1 and 2 interventions, as well as on the results of the Joint Planning Conference with OTI to build upon the legacy of the UCBI II Project in the east.
For effective planning and coordination, ERA will develop a Public Outreach Strategy and Action Plan with a needs assessment of key stakeholders, opportunities for cooperation, and resources available. It will propose public awareness activities, as well as tools, methods, and instruments to employ. It will describe targeted audiences, key messages and slogans, as well as major information channels. The strategy will establish targets and means of verification.
Initial Outreach Steps: Establish a Strategic Communication Working Group to coordinate outreach efforts with the Activity’s Objective leaders, experts, sub-contractors, and national and international stakeholders in eastern Ukraine. Develop a Public Outreach Strategy and Action Plan. Develop and distribute relevant materials to increase visibility of the Activity. Identify champions of change (based on Objective 1 and 2 interventions) and work with local and national media, stakeholders, and partners to help us amplify Activity messaging. Support and conduct public events in partner cities and communities. Train local community leaders and journalists to improve the quality of publications on relevant topics, decrease misinformation, and broaden the audience of the Activity. Select a public relations/media agency to provide assistance with publicizing ERA activities and success stories (based on Objective 1 and 2 interventions) in local and national media, plus development of relevant information materials for the outreach campaign (outdoor posters, video PSAs, brochures).
Coordination: To provide comprehensive coordination of Activity Objectives, the Communications Director will lead the Strategic Communications Working Group, which will be comprised of Objective leads and experts; communications representatives from USAID, Donetsk Oblast State Administration, Luhansk Oblast State Administration, and Donetsk Chamber of Commerce and Industry; community leaders and active local civil society organizations; nongovernmental groups working with media such as UCMC and Internews; and representatives of other donor-funded projects. The group will meet quarterly, or as needed, to discuss the outreach strategy implementation status and adjust it accordingly.
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In accordance with recommendations from USAID resulting from the Joint Planning Conference, UCBI II will propose and organize a series of introductory roundtable meetings for the Activity with a number of its partners. UCBI II will share a cataloged database of relevant program information and past research.
Interventions: The outreach efforts will be supported by interventions at the community, municipal, and national levels. The Activity will organize public events (roundtables, trainings, exhibitions, press conferences, study tours, roadshows) for decision makers, community leaders, small businesses, entrepreneurs, internally displaced people, vulnerable groups, and media. Through these events, we will disseminate information about opportunities the Activity offers to people in the eastern region to support professional and business development. Activity experts and partners will participate in talk shows, interviews, roundtables, and press briefings to advocate and promote themes of the campaign. We will also disseminate information about our interventions and business opportunities, including grants, through a variety of media resources such as regional traditional outlets, online resources www.prostir.ua, and social media networks.
The Activity will support the community, city, and regional administrations, employment centers, and learning hubs (those established by the state as well as those with the support of UCBI II, DRC, and other donor organizations) with training events and materials. This support will ensure that they can serve as consulting centers regarding new opportunities and cooperation possibilities that the Activity brings to the region.
Outreach materials : In collaboration with the competitively selected public relations and media agency, we will develop messages and video public service announcements, videos for social media networks, and other materials based on outreach sources and expert opinions. All our outreach materials will include the CXID communications campaign identity developed by USAID. We will promote personal success stories of those individuals and business leaders who are making positive changes in the region. The Activity will build on the historical background of the eastern region in heavy manufacturing to promote the current potential of eastern Ukraine to become a leader in innovative manufacturing technologies and offer a vibrant small business sector—creating opportunities for eastern Ukrainian enterprises to compete in European and global markets.
Messaging and distribution channels: The Activity will share its messages through billboards, videos, brochures, posters, and advertisements on TV and in social media networks. Messages will be available through the websites of USAID, Activity partners, and stakeholders, including Donetsk and Luhansk Oblast administrations, municipalities and consolidated communities, educational institutions, professional and business associations, social protection offices, information corners in employment centers, learning hubs and resource centers, and local nongovernmental organizations, UCMC; Internews; donor and other projects’ platforms; and public events. The Activity will use social networks and innovative distribution channels to ensure that our message reaches a broad audience.
Through online video and audio messages, TV and radio spots, talk shows, expert interviews, targeted advertising, print articles, roundtables, workshops, public events, and information booths, the campaign will reach its targeted audiences. The Activity will also work closely with employment centers and learning hubs to place information on materials available for target audiences. These multiple channels will ensure that all interested citizens learn about the range of available training opportunities, financial mechanisms, and success stories promoted by the Activity.
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Gender and inclusive development: The Activity will work with a variety of people, assuring inclusive development for all groups of the population. The Activity provides possibilities and opportunities for everyone to participate in seminars, workshops, and roundtables—regardless of age, sex assigned at birth, ethnic origin, health status, family structure, sexual orientation, education, employment, income, housing, food security, safety, or any other dimension of human diversity.
Furthermore, ERA will hire a Gender and Inclusion Specialist whose main job will be assessing whether women and vulnerable populations are participating as much as possible, and working with the rest of the team to increase participation (where needed). This person will also lead a gender assessment, create a gender inclusion strategy, and spearhead a similar analysis for other vulnerable populations.
ENVIRONMENTAL COMPLIANCE
Using the Activity’s Initial Environmental Examination (IEE) as a foundation, the Activity will continue to develop and begin implementation of environmental impact management or compliance interventions in February through September. The first major task will be to establish an environmental management system that will map out the overarching procedures for environmental management and compliance and monitoring and reporting requirements, as well as where documentation will be stored within the ERA’s internal systems. We expect this action to be taken in June and July and to be led by the Activity’s Environmental Compliance Officer.
The majority of our interventions received a categorical exclusion determination in the Activity’s IEE. These exclusions include tasks linked to education, technical assistance, training programs, workshops, meetings, analyses, studies, and research. No adverse environmental impacts are foreseen from these and no further environmental review is necessary. Several interventions received a “negative with conditions” determination and need additional environmental review and monitoring. These include interventions under Objective 1 linked to grants, support to businesses, workforce development, and rapid responses to the immediate needs of entrepreneurs and MSMEs. Other interventions under Objective 1, as well as 2 and 3, that address small-scale infrastructure rehabilitation or construction also received a “negative with conditions” determination.
Consequently, one focus of the Activity’s environmental compliance team during the next six to eight months will be on small-scale infrastructure rehabilitation and construction interventions. As soon as sites and specific activities are identified, an Environmental Review Checklists (ERC) and Environmental Mitigation and Monitoring Plans (EMMPs) will be drafted, including appropriate mitigation measures. The ERCs/EMMPs will subsequently be submitted to the USAID/Ukraine Mission Environmental Officer (MEO) for review. We expect that the ERCs/EMMPs for the two initial identified infrastructure interventions (pedestrian bridge repair in Siversk, Donetsk Oblast, and waste-sorting line construction in Lyman, Donetsk Oblast) will be prepared during March through May.
Other focal activities for the ERA environmental compliance team during February through September include:
Establishing a simple environmental screening tool to be applied to all grants. Closely evaluating all interventions linked to greenhouse and intensive vegetable production (especially with respect to chemical fertilizer and pesticide use).
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Screening any other Activity interventions that may have potential adverse impacts on water, land, air, and human health.
As noted in the previous implementation plan, the Activity team understands that any new proposed interventions not foreseen in the IEE must be reviewed and cleared by the Mission (and the IEE amended) prior to the commencement of those activities. This may include greenhouse and intensive vegetable production activities. The Activity team will take advantage of the USAID-Washington engineering team’s visit in June to revisit planned interventions with the MEO and discuss any that may not be covered by the IEE. The team will also discuss the nuances and preferences with respect to ERCs versus EMMPs. Also, as noted in the previous implementation plan, the ERA’s environmental compliance team will ensure that all our interventions comply with applicable host country laws and regulations and will ensure that climate resilience mitigation measures outlined in the IEE are incorporated into ERCs/EMMPs as applicable.
MANAGEMENT
Management plan
The Activity’s management approach supports both immediate-impact interventions and forward- looking initiatives geared toward diverse, inclusive, and resilient market system development using an adaptive, evidence-based methodology. To move from a relief-oriented, humanitarian response to a growth-oriented, sustainable development program, DAI’s methodology advances coordination, learning, adaptability, and flexibility. We will build on coordination efforts to date (described below) and continue collaborating with local stakeholders and counterparts to launch interventions that meet local needs. Through regular ‘pause and reflect’ sessions similar to those already held, we will continuously monitor progress against leading indicators, capture results, and share learning from our interventions to assess what works, what does not, and determine what’s next. Based on learning and evolving local behaviors, beliefs, and capacities, we will adapt activities—either replicating and scaling them up, closing them down, or shifting their focus.
This implementation methodology allows us to effectively manage our resources to meet USAID’s objectives, while simultaneously offering the flexibility to take advantage of new opportunities and respond to shifts in the status of the conflict in the east. Below, we describe our organizational structure, including the composition and role of the offices, and explain how this structure facilitates our adaptive systems approach.
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The above staffing structure is consistent with the resources needed to carry the work outlined for the second half of year I. Staff are based across four project offices—in Kyiv, Kramatorsk, Sievierodonetsk, and Mariupol—three of which are already operational. The Activity plans to launch operations in Mariupol by the end of the year. As initially detailed in DAI’s proposal, all technical staff are in the field to ensure proximity to perspective beneficiaries and close monitoring of interventions. Of the positions that remain to be filled, the Activity will prioritize recruitment and hiring of the following positions for implementation of workplan activities:
Objective 2: Agronomist, long-term IT Sector Specialist, Energy Specialist, Access to Finance Specialist. Objective 3: Strategic Planning Expert, Media Specialist.
Recruitment is underway for these positions, several of which will be finalized during the first month of the workplan period.
Supporting DAI’s management approach are robust, field-tested management practices, tools, and systems that facilitate flexible, adaptive implementation and enable Activity staff to remote-manage interventions should, for example, the security situation in eastern Ukraine deteriorate. These tools, systems, and practices include:
Technical and Administrative Management Information System (TAMIS) : A web- enabled, integrated project management database. Strong home office management support: DAI’s home office provides backstopping support from contracts, project management, and recruitment specialists, and also has a full- time security team that provides advisory services and developed the Activity’s security plan. Field Accounting System (FAS): An end-to-end accounting system, FAS tracks every transaction, whether a wire payment to a vendor, a local payroll direct deposit, or a petty cash purchase.
During the week of February 25, the home office contracts team will hold a field procurement and grants training in time for the field team to begin rolling out technical procurements and grants. Once the workplan is approved, the TAMIS administrator will travel to Ukraine and work with the staff to further customize the system in response to the workplan. A trip is tentatively scheduled for the first two weeks of March. We anticipate receiving all remaining IT equipment by the end of March (per agreed to delivery schedule). Once a server has been obtained, a home office IT short-term technical assistant will be scheduled to connect all equipment to the server (tentatively scheduled for early April). The assigned IT specialist will also be responsible for training the local IT systems administrator. Following the server setup, a FAS specialist will travel to Ukraine to establish the field accounting system (transitioning off the temporary excel based system) and train accounting staff.
Summary of upcoming management activities:
Hire staff for the Sievierodonetsk office so it is fully operational. Establish operations in Mariupol. Recruit additional technical staff for roll-out of quick-impact interventions. Conduct TAMIS customization, IT and FAS STTA, field procurement and grants training, ethics training.
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RISKS AND ASSUMPTIONS AFFECTING IMPLEMENTATION
Please refer to Annex A Workplan Summary of Interventions for detailed assumptions, risks, and mitigation efforts. At the Activity level, the primary assumption for implementation is that the security context for the region does not change significantly from the status quo that came about after the signing of the Minsk II agreements in March 2015.
This assumption has already been challenged by the naval obstruction of the Azov Sea ports of Mariupol and Berdniansk by Russia, which tightened in December 2018 to a near-blockade. The ramming and seizure of Ukrainian naval ships in the Kerch Strait led to the imposition of martial law for 30 days, but it was not extended. These alarming events have changed the economic landscape, but not sufficiently to require a shift in interventions beyond strengthening our commitment to support the economy of Mariupol among the other regions of focus. The blockade has hit large corporations like Metinvest and grain exporters the hardest, as well as MSMEs oriented toward servicing the port. However, initial consultations with mid-sized manufacturers in the Azov region suggest that the blockade’s effects are limited for firms not affiliated with the large corporations that dominate the port.
Declaration of martial law had a negative impact on the business climate. Some manufacturers in the Luhansk Oblast informed Activity staff that suppliers had cancelled shipments to them over security concerns. Certainly, the policy did not improve perceptions among banks and other finance providers about the stabilization of the region. However, the short duration of martial law and apparent de- escalation in early 2019 are hopefully reassuring.
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COORDINATION PLAN
Coordination is a central tenet of the Activity. We have already begun to work hard to coordinate, cooperate, and partner with other donor projects, the private sector, local administrations, the Government of Ukraine, NGOs, philanthropic organizations, and market participants to leverage other resources, avoid duplication, learn together about what works and what does not, and build the greatest impact possible. Together we test promising approaches, quickly analyze, adjust, and adapt, learning from each other’s results. Proactive coordination and cooperation are inculcated into the team’s goals and operating procedures, and they are included in the team’s job descriptions and their annual performance review criteria. The COP and DCOP are leading the way in forging productive working relationships. By proving that we are serious about coordination, we are building the trust of our partner stakeholders that, through collaboration, we are maximizing the results for the Donetsk and Luhansk Oblasts. This trust, in turn, causes our partners to want to openly share information and coordinate to their full potential.
As part of the Second Six-Month Workplan, the ERA staff will be coordinating with private sector representation such as the DCCI, business networks, local administrations, and civil society coalitions to ensure that interventions meet local market needs and are locally owned, thus ensuring long-term sustainability. The Activity has woven coordination in throughout its interventions. So that there is additional transparency how such coordination is being converted into concrete action and results, the Activity will report weekly, quarterly and annually (as part of its contractually required deliverables) on coordination.
Below are more details on four specific categories of coordination, each with their own strategies, for which we have been planning.
1. ACCELERATING DONOR FUNDING
The Activity may be able to have a transformational impact on the region by using its resources to help accelerate financing. One of the sectors/areas ERA will explore/support leveraging funding for is large- scale infrastructure. The main International Financial Institutions (IFIs) financing large-scale infrastructure projects in Ukraine are the United Nations Office for Project Services (UNOPS), KfW, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), the World Bank, and the European Investment Bank (EIB). UNOPS relies primarily on grants to support infrastructure repair and construction, while KfW, EBRD, IFC and EIB provide a combination of soft loans and advisory services for municipalities. KfW’s main strategy is to support energy efficiency in municipalities, including a EUR 24 million loan fund to increase energy efficiency in the field of urban mobility in two cities. One of the selected cities is expected to be in eastern Ukraine. EBRD provides loans to the State of Ukraine, to cities, and, starting in 2019, to oblasts, but not to consolidated communities. EIB is offering a EUR 200 million recovery program for five eastern oblasts focused on social needs in territories with a large number of IDPs, as well as a EUR 400 million infrastructure program with the Ministry of Infrastructure. The latter program is currently conducting a feasibility study for water waste management in Mariupol.
As the Objective 3 team helps build the capacity of communities and cities to create economic development strategies and prioritize needs, the Activity staff and consultants will look for opportunities
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to help build local capacity to accelerate the use of infrastructure funds. Through its work under Objective 3, the Activity will help municipalities and oblast administrations to strategize, prioritize, and plan infrastructure projects that would benefit from external funding. Through its Objective 1 Access to Finance work stream, the Activity will facilitate technical assistance for local authorities either by engaging business consultants or helping local authorities to tap into IFI-funded business advisory services to help accelerate the use of funds. Through its Objective 3 confidence-building media campaign, the Activity can also help local authorities to better package and market these projects as investment-ready opportunities for IFIs and other private sector players.
Many of the aforementioned IFIs already have well-funded technical assistance mechanisms to help host country public sector applicants with applications. The Activity will not duplicate such existing efforts. We will spend the first quarter of the workplan period understanding better the weaknesses in fund disbursements so as to focus our efforts on issues where we have the greatest chance of success. If the issues are quality of applications, we will, as mentioned, help link local government units in our area of operation with existing technical assistance. If the issue is a lack of applications aligned with donors/funders’ priorities, we will work with local government units to source better initial ideas. However, if the issue is one of creditworthiness, this is something that the Activity is not in a position to solve.
2. ACCELERATING DONOR FUNDING FOR MSMES
Through our Objective 2 access to finance support for MSMEs, we plan to help MSMEs accelerate the use of funding from the following donor-funded financing programs. More detail is presented under Objective 2. We have already changed our original plan to fund a credit facility for MSMEs with a local bank at the request of KfW, which will be funding a similar facility within the next few months. We will now focus on a facility with credit unions. Below is a list of IFI-funded MSME support programs with which we have already begun to research and coordinate.
TABLE 4: IFI-FUNDED MSME SUPPORT PROGRAMS
PROGRAM/ IMPLEMENTING PARTNER TOTAL REGION ELIGIBLE TERM AND FACILITY ORGANIZATIONS FINANCIAL FACILITY BENEFICIARIES CONDITIO NAME INSTITUTIONS AMOUNT NS
EU Support KfW/German TBD – 5-6 9.5 million Donetsk Registered SME s 50% rebate for the East Ukrainian Fund lending partners Euros over and of loan (leasing cos. & 4 years Luhansk principal banks) Oblasts Commerci al interest rate SME Finance KfW/EIB/EBRD ProCredit Bank 15.4 million National Individuals - Max EUR Facility Phase Ukrgasbank Euros entrepreneurs, 250 K II Kredobank MSME up to 500 2 years employees W/C 6 years for fixed assets
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Deep and EIB & EU’s Os hchadbank , Up to 50 National Sole proprietors 70% risk Comprehensi Neighborhood ProCredit, million with max of 250 sharing ve Free Trade Investment Facility Raiffeisen Bank Euros emp. guarantee Area (NIF) Aval, Annual sales Reduced (DCFTA) East Ukrgasbank less than EUR collateral Guarantee 50 M required Facility
EU4Business EBRD OTP Leasing 10 million National Registered SME subsidy of Euros 10% or max EUR 300 K per client for leasing. Impact Western NIS Os hchadbank 30 million National, 50% of UAH loans Investment Enterprise Fund Kredobank USD 50% in employees 10,000- Fund Eastern from 100,000 Ukraine disadvantaged USD up to groups 36 months 20% of profit into social investment EU4Business EBRD N/A 40 M EUR 15 business Registered SMEs Network of (28 M support directly and also Business advisory centers through BSPs Support support, 12 nationally, Centers direct serve the lending) east through a Kharkiv center
The main ways ERA will coordinate with other donors on MSMEs to unlock financing are: 1) The Activity will not give material assistance (equipment) to businesses that would otherwise be eligible for an existing lending program. 2) The Activity will help connect businesses with available lending facilities (see Objective 2— Access to Finance). 3) The Activity will help provide technical assistance to help the businesses with their applications (see Objective 2—Access to Finance).
3. COORDINATION, INFORMATION SHARING, AND PARTNERING WITH DONOR PROGRAMS
Our coordination with other programs will range from sharing information and avoiding duplication to actively planning for collaboration and building off of each other’s work. We have grouped these programs into three tiers based on the amount of Activity overlap, the degree of coordination required, and the potential for joint activity.
TIER 1: Programs with which the Activity overlaps geographically or substantively and is already (or is likely to be) engaging in coordinated joint programming. This tier includes programs that will no longer be operating in the region but whose activities we will continue and/or build on.
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TABLE 5: PROJECTS PRESENTING OPPORTUNITIES FOR JOINT PARTNERING
OVERLAP WITH DONOR ORGANIZATION/PROJECT COORDINATION/COLLABORATION ERA
USAID DGE (Democratic Governance DGE promotes The Activity will engage in the highest level of day -to -day East) better governance coordination and collaboration with DGE. The two and service provision programs will likely find common ground most frequently (including economic under all Objective 3 interventions. As a first step, ERA and infrastructure and DGE will jointly conduct a survey of consolidated services) in the same communities in our planned area of operations. In addition, two target oblasts as DGE will take part in ERA’s “Introduction Conference” for the ERA local governments to present opportunities for cooperation. The Activity will share information with DGE on needed improvements in governance, municipal services and business enabling legislation that surface in our interactions with cities and communities monthly (these reports will be provided to USAID as part of ERA’s monthly report). The Activity will also work with USAID to develop a shared branding approach to promote confidence in the future in the region. Because DGE was awarded later in 2018 than ERA, it is still at an earlier phase of start-up. Because of this, we anticipate that concrete DGE-led interventions that will involve ERA participation will be defined in the first quarter of the coming workplan period. USAID UC BI II While UCBI II is ERA will build off of the most successful and sustainable ending, it also has UCBI II activities such as: the FreeUA (Kramatorsk), Spalah had a mandate to (Mariupol), Top Place (Slavyansk) business development work on economic hubs/innovation centers; the Free People Employment resilience and Center business coaching; the Mariupol Association of building confidence Entrepreneurs; the Vchasno and Biznes Skhid media outlets; in the future of the 2019 SME accelerator training from Lviv Business Luhansk and School; and the La Cocina food industry incubator Donetsk Oblasts assessment for Sievierodonetsk. Additional details on each of these opportunities are provided below. ERA will also participate in a UCBI II “close-out” conference, tentatively scheduled for this coming spring, and afterwards will make a formal presentation to USAID on the specific UCBI II interventions that ERA intends to carry forward. USAID CEP (Competitive Economy CEP works CEP and ERA management meet on average twice per Program) nationally on making month and are already working together to jointly launch businesses more an innovative teaching incubator/accelerator/investment competitive, an model in Ukraine. overlapping mandate of ERA in Luhansk and Donetsk USAID ARDS ARDS supports ERA will work to deepen partnerships with vegetable and broad-based, fruit processors that are supported by ARDS. ERA will also resilient economic draw on and expand ARDS experience on study tours for growth through a private agricultural lyceums in central Ukraine and possibly more inclusive, use ARDS approach as a model. ERA and ARDS will competitive, and continue to discuss further support of land use mapping for better governed consolidated communities as work under ERA Objective 3 agriculture sector develops. USAID CAP CAP provides ERA will work to lever CAP’s experience and expertise as technical assistance we develop partnerships with credit unions in eastern to credit unions, Ukraine. Potentially we could perform joint diagnostics of particularly those potential partner credit unions and conduct joint working with workshops/forums on topics of common interest, such as agriculture valu e financial liter ary.
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chains
Building on the accomplishments of UCBI II is an integral part of the Activity. Especially valuable for our work at present are the following:
1. Mariupol IT Hub. The Activity will investigate how to utilize the Mariupol IT Hub renovated by UCBI II and the city government and presently provided to Spalah and Beetroot Academy for IT education courses. The facility will certainly prove suitable for Activity interventions to support the IT community and we will coordinate with Beetroot about how their courses fit into our IT workforce development strategy. The Activity will hold an IT workforce development roundtable at the Mariupol Hub in February as its first step in public discussion of that strategy.
2. Kitchen incubator assessment. UCBI contracted the San Francisco-based La Cocina kitchen incubator to assess the feasibility of such an institution in Sievierodonetsk. The La Cocina consultant spoke to a wide range of food industry entrepreneurs (restaurant owners, goat cheese producers, market bakers, etc.) and is producing a report with recommendations on supporting food products as an economic sector. The Activity will carefully assess these recommendations for use in Objective 1 grant provision and the possibility of an Objective 2 Food Products/Hospitality growth sector, which could include a kitchen incubator.
3. SME accelerator training from Lviv Business School. In January and February 2019 instructors from the Lviv Business School will hold “Business acceleration for small business” courses for entrepreneurs from Luhansk and Donetsk Oblasts. ERA will obtain the training curriculum and assess how it might be incorporated into Activity workforce development and access to finance training programs, and also the feasibility of partnering with Lviv Business School.
4. Innovation centers, coworking spaces and business hubs. UCBI II supported a variety of spaces intended to promote and facilitate entrepreneurship and innovation in Kramatorsk, Mariupol, Sievierodonetsk and other GCA cities. ERA will study the experience of these centers, incorporate successful elements into our SME support and workforce development programs, and will also assess the facilities used for future use by the Activity.
5. University Partnerships . The ERA team will work with Mariupol Priazovski State University building on the Pittsburgh leadership study tour and explore working with the Sikorsky start-up incubator in the Donbas Machine Building Academy in Kramatorsk, Dahl University in Sievierodonetsk and the Donetsk National Technical University building. In addition to building on the Sikorsky challenge, the ERA team is actively exploring other initiatives, including possible cooperation on IT and innovation for manufacturing workforce development.
TIER 2: Programs with which the Activity overlaps geographically and substantively, where no path for joint programming is foreseen in the current workplan period, yet with which intensive coordination is required to avoid overlap and to benefit from mutual lessons learned. This category is largely comprised of EU- and bilaterally funded programs implemented by various UN agencies.
TABLE 6: DONOR PROGRAMS REQUIRING INTENSIVE COORDINATION
DONOR ORGANIZATION/PROJECT OVERLAP WITH ERA COORDINATION/COLLABORATION MECHANISM UNDP/Strategic Planning for Offers same services to ERA ’s Objective 3 Manager will work with UNDP to Consolidated Community Consolidated ensure that the same services are not offered to the Communities same consolidated communities. (UNDP implemented) EU Support to the The program is ERA and UNDP meet regularly at the activity manager east of Ukraine – Recovery, implemented by four UN level to share information and ensure that the two Peacebuilding and Governance, 2018- agencies: UNDP, UN programs deconflict. In addition, the two entities agreed 2022” Women, UNFPA and to establish thematic working groups to share FAO, with a total budget implementation related information on common of USD 25 million and sectoral issues. aims to strengthen community security and social cohesion, support economic recovery of
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conflict -affec ted communities UNDP/Support to banks to offer Overlap conceptually Carefully compare target recipients to ensure ERA affordable credit with A2F programming, grant support does not disincentivize loan taking. our grant recipients could overlap with loan candidates UNDP/Support for vocational education Also plans to invest in Divvy up potential partners by economic sector or training and equipment geography to avoid overlap. If unavoidable, ensure for professional education services offer ed differ in form and result. FAO/Technical support for agricultural Possible overlap in value FAO intends to provide consulting and information value chains chains (i.e. honey) and services. ERA can serve same beneficiaries if consulting partners topics di ffer. EU/U -LEAD Offers same strategic ERA ’s Objective 3 Manager will work with U -LEAD to planning services to ensure that the same services are not offered to the Consolidated same consolidated communities. Communities (EU initiative) Mayors for Economi c Growth Strategic planning for city ERA ’s Objective 3 Manager will work with MEG to economic development in ensure that the same services are not offered to the Donetsk and Luhansk same cities. Oblasts EU4Youth /DRC An EU -funded two -year May overlap in terms of microgrants. DRC will monitor joint initiative of DRC to make sure that the same grantees are not funded by Georgia and DRC both programs. Ukraine, aimed at economic support to young people EU/ UNDP/ Support for displaced Overlap in sm all number The needs in this area are large enough for universities of possible partners and contributions from multiple donors, however there is in support for still a need to coordinate kinds of assistance offered and repairs/renovation ensure that this assistance is fairly distributed across institutions and oblasts. For LNAU ERA will provide technical assistance to support the creation of a feasibility and i mplementation plan.
TIER 3 : Programs that overlap substantively, but not materially, where intensive deconflicting is likely not necessary, but with which occasional coordination to share lessons learned would benefit both parties.
TABLE 7: PROGRAMS WITHOUT MATERIAL OVERLAP
DONOR COORDINATION/COLLABORATION OVERLAP WITH ERA OR GANIZATION/PROJECT MECHANISM USAID/DOBRE Working with 75 consolidated No overlap geographically , but large overlap communities on strategic/local substantively. Regular meetings with program economic development planning representatives will be an excellent source of in 7 oblasts, but not in our information and lessons learned. target oblasts. DRC / Livelihoods Assistance Program The program provides MSME May overlap in terms of microgrants, MSME support for eastern Ukraine funded by SDC and VET grants to IDPs and and VET grants. DRC can monitor to make sure and DFID conflict-affected populations in that the same grantees are not funded by both eastern Ukraine, as well as programs. support for employment centers, conflict affected communities in the buffer zone, does grass-roots advocacy for improvement of business climate of Ukraine and provides legal
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support to MSMEs People in Need (PIN) Grant support for small groups Coordination at the Objective manager level to of individuals/entrepreneurs for avoid overlap. infrastructure improvement in Donetsk only (at the Hromada level). French NGO Acted, recipients of 300 livelihoods grants for Coordination at the Objective manager level to Canadian funding for “Growth that women in frontline communities avoid overlap. Works for Everyone: Inclusive and (Popasna Raion ), business Shared Prosperity in Ukraine.” support centers with a focus on assisting female entrepreneurs. Donetsk Regional SME -support Grants for MSME development Coordination at the Objective manager level to program Ukrainian Donetsk Kurkul in Donetsk Oblast avoid overlap and look for opportunities for joint programming. GIZ/Support for vocational education Also p lans to support technical Compare approaches to make sure ERA does not education initiatives offer the same curriculum support. Canada/Agricultural cooperative Possible overlap in sectors (i.e. It is likely that the Canadian project will focus on support in Donetsk/Luhansk Oblasts vegetables) and partners grain and dairy, which are not ERA growth sectors. Terre des Hommes/Support for IT Targeted support to educational TdH’s intervention is modest in size . ERA will education capacity institutions for IT instruction obtain list of supported institutions to ensure the activity does not provide duplicative assistance. Norwegian Refugee Council/rural Grant support for beekeepers Compare present and potential beneficia ry lists, livelihoods support and vegetable growers avoid duplication unless joint funding is justified by need. Canada/Woman -focused economic Entrepreneur support centers Canadian funding for centers is modest recovery with female focus in Luhansk ($15,000/year per center) and likely does not cover all needs, thus, there may be opportunities for joint investments / interventions. International Red Cross/livelihood Grant support for MSMEs with Compare possible investments to avoid duplication. support for frontline communities focus on damaged businesses High risk tolerance of ICRC for investments near and agriculture in frontline the line of contact. communities Roma Women Fund “Chiricli” The fund, through its local NGO ERA will seek to build off the work of the Roma members, is supporting a target Women Fund and their local partners to make sure vulnerable population (Roma that Roma women in the target oblasts are women) that is of interest to integrated into the Activity interventions. Local ERA. member NGOs may also become assistance recipi ents under ERA Objective 1.
4. COORDINATION WITH THE GOVERNMENT OF UKRAINE In addition, the Activity will proactively coordinate with and, where possible, leverage funds from the relevant Ukrainian governmental entities: the Luhansk and Donetsk Oblast Administrations; the Luhansk and Donetsk Regional Development Agencies, the Luhansk and Donetsk Chambers of Commerce and Industry; the Ministry of Economic Development and Trade; the Ministry of Temporarily Occupied Territories and IDPs; the Ministry of Finance, and the State Finance Institution for Innovations (SFII).
GOU/PUBLIC ENTITY TOPICS FOR COORDINATION COORDINATION/ COLLABORATION MECHANISM Luhansk Oblast Administration Economic growth development Frequent meetings and communications priorities Donetsk Oblast Administration Economic growth development Frequent meetings and communications priorities Luhansk Regional Development Agency Organizational capacity building Have met with them and see some potential for organizational CB in next planning cycle; possible applications under APS Donetsk Regional Development Agency Not applicable at this time In reorganization phase and not
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available for cooperation at this time Luhansk O. Chamber of Commerce Organizational capacity building We have met with them, they are low and Industry capacity; opportunity for organizational capacity building in next planning cycle, possible applications under APS Donetsk O. Chamber of Commerce SME sector development priorities A strong potential partner , we have had and Industry many meetings expect to receive applications under APS
PERFORMANCE INDICATORS AND TARGETS
The Activity MEL Plan (AMELP) was submitted to USAID on December 11, 2018 and returned with feedback on January 5, 2019. The MEL team is currently working on revisions. The AMELP lays out the monitoring and evaluation approach, indicators, targets, methodology, and definitions.
MEL Workplan
Information on the MEL workplan for baseline studies, special studies, and MEL activities are listed in the AMELP that is currently under revision but has not yet been approved by USAID. We hope to get USAID approval on this revised AMELP in the first half of February.
The table below shows the Year One indicators and targets with comments. The table includes the sum of forecasts from the individual technical teams by objective.
When the AMELP was designed, workplan information, and projections of targets were incomplete. Based on the workplan and projected results for each intervention, as well as on feedback from USAID on the original AMELP, several targets will be revised upwards. The table below shows the original proposed Fiscal Year 1 targets in the December submission, as well as the revised workplan-based projections by indicator.
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TABLE 8: INDICATORS AND TARGETS YEAR 1
DEC 11 AMELP PROPOSED FY1 REVISED FY1 TARGET BASED ON INDICATOR TITLE ANALYSIS AND COMMENTS TARGET (UNDER REVISION) WORKPLAN PROJECTIONS PERFORMANCE INDICATORS Objective 1: Provide assistance to stabilize the economy of eastern Ukraine 1.1 Number of direct and indirect 0 0 Construction interventions will begin beneficiaries receiving improved in the fiscal year, but not be infrastructure services as a result of USAID completed by Sept 30 th . assistance 1.2 Number of individual beneficiaries from 300 1,200 These results mostly come from vulnerable and hard-to-reach populations in trainings under all three Objectives as the target regions well as from the Pathfinder Farmers Intervention under Objective 2. Objective 2: Support the sustainable development of micro, small, and medium enterprises Target will remain $100,000. This figure mostly comes from grant- related partnerships developed with MSMEs under Objectives 1 and 2. 2.1 Total amount of new investments 100,000 $25,000- 100,000 There will be a greater degree of secured by MSMEs supported by USAID investment in FY2, but for most beneficiaries a short timeframe will have elapsed since they became a beneficiary. 2. 2 Number of individuals with new or better employment as a result of USAID 200 375 We plan to adjust the target upwards. assistance While the technical staff predicts greater sales increases holistically due to the FY1 interventions, there will have been limited time between when MSMEs receive assistance and the end of the FY. For example, grants will 2.3 Average percent change in sales of begin to be awarded under many 3% 3% MSMEs receiving USAID-Activity assistance interventions between July and September due to the time for grant competition and then equipment procurement. While such interventions will lead to increases in sales over time, in many cases little time would have passed before the
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end of the FY. Meanwhile, f or those MSMEs who have received an individual training, timing will have been short to already see changes in sales. Objective 3: Build confidence in the future of the eastern Ukrainian economy 3.1 Number of contacts made through 20,000 20,000 informational and communications events 3.2 Percentage of ERA direct beneficiaries This indicator target will be revised who think their economic situation has 8% 40% upwards based upon the workplan improved substantially or somewhat over projections and USAID feedback. the past 12 months This indicator was updated basing on the most recent revision of AMELP. The team will measure perception 3.3 Percentage of population in targeted among wider population rather than communities that think industries and direct beneficiaries – residents of sectors other than the most traditional for 15% TBD targeted communities. During the first the region will be important to the local year the Activity will conduct baseline economy in five years survey of already targeted communities and will set targets for the coming years during the 2nd -year work planning session . Cross -cutting This indicator target will be revised CC.1 Number of people trained during the 400 1300 upwards based upon the workplan Activity projections and USAID feedback. The indicator target from the original AMELP submission will be revised upwards based upon the workplan projections of those utilizing new practices and skills. While uptake rates are projected to be greater over time, we expect as a general rule of thumb CC.2 Number of beneficiaries utilizing new that 50% of those trained will have had practices, techniques, or business 200 550 sufficient opportunity to put in management skills as a result of USAID practice new skills gained by the end assistance of FY1. This is due to the short time elapsed since they receive their first training. The exception is the peer farmers of the “pathfinders.” These peer farmers won’t yet have had a full farming season to be convinced to replicate the successful behaviors of
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the ir neighbors . Fur thermore, two Objective 2 interventions anticipated a slightly lower adoption rate of about 30% in Y1 . This indicator was changed from “custom context” to “cross-cutting” CC.3 Amount of GOU and other donor Targets will be set concurrently with N/A for the first year funds leveraged by the Activity the second year workplanning as there is not sufficient information at this time to set a reasonable target. This indicator was changed from “custom context” to “cross-cutting” A special study conducted together with local partners (such as the regional chambers of commerce, and/or a local economist) will analyze CC.4 Economic share of value chains and value chains and cross-cutting sectors cross-cutting sectors in eastern oblasts N/A for the first year supported by the Activity membership assisted by USAID at the beginning of the Activity and at the end of each fiscal year starting from fiscal year 2. Will necessitate field research and coordination with local government and business membership organizations to assess community by community.
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