USAID ECONOMIC RESILIENCE ACTIVITY: QUARTERLY PROGRESS REPORT APRIL 1 – JUNE 30, 2019 This publication was produced by the USAID Economic Resilience Activity under Contract No. 72012118C00004 at the request of the United States Agency for International Development (USAID). This document is made possible by the support of the American people through the USAID. Its contents are the sole responsibility of the author or authors and do not necessarily reflect the views of USAID or the United States Government. USAID ECONOMIC RESILIENCE ACTIVITY Quarterly Progress Report (Fiscal Year 2019 Quarter Three) Program Title: USAID Economic Resilience Activity Sponsoring USAID Office: USAID Ukraine Contract Number: 72012118C00004 Contractor: DAI Global, LLC Submission Date: July 31, 2019 Author: DAI Global, LLC ii | USAID ECONOMIC RESILIENCE ACTIVITY QUARTERLY REPORT FY 2019 QUARTER THREE USAID.GOV CONTENTS ACRONYMS AND ABBREVIATIONS ................................................................................................................... v I. INTRODUCTION .................................................................................................................................................. 7 II. CONTEXT UPDATE ............................................................................................................................................. 8 III. KEY NARRATIVE ACHIEVEMENTS .................................................................................................................. 9 IV. PROGRESS AGAINST TARGETS ..................................................................................................................... 14 V. PERFORMANCE MONITORING, EVALUATION AND LEARNING .................................................... 15 VI. LESSONS LEARNED ............................................................................................................................................ 16 VII. ENVIRONMENTAL MONITORING............................................................................................................ 16 VIII. PROGRESS ON LINKS TO OTHER ACTIVITIES, DONOR-FUNDED PROGRAMS, AND TO HOST GOVERNMENT ................................................................................................................................................. 18 IX. PROGRESS ON INCLUSIVE DEVELOPMENT .............................................................................................. 19 X. SUB-AWARD DETAILS ....................................................................................................................................... 20 XI. ACTIVITY ADMINISTRATION ..................................................................................................................... 22 iii | USAID ECONOMIC RESILIENCE ACTIVITY QUARTERLY REPORT FY 2019 QUARTER THREE USAID.GOV TABLE 1: Select FUTURE EVENTS ............................................................................................................................. 14 TABLE 2: RESULTS BY PERFORMANCE INDICATOR ....................................................................................... 15 iv | USAID ECONOMIC RESILIENCE ACTIVITY QUARTERLY REPORT FY 2019 QUARTER THREE USAID.GOV ACRONYMS AND ABBREVIATIONS AFB Award Fee Board AMEL Activity Monitoring, Evaluation, and Learning AMELP Activity Monitoring, Evaluation, and Learning Plan APS Annual Program Statement BEO Bureau Environment Officer CDM CDM Engineering Ukraine COP Chief of Party COR Contracting Officer’s Representative DAI DAI Global LLC DGE Democratic Governance East DRC Danish Refugee Council EBRD European Bank for Reconstruction and Development EE Energy Efficiency EIB European Investment Bank EU European Union EMMP Environmental Mitigation Measures Plan ERA Economic Resilience Activity ERC Environmental Review Checklist E3 Bureau for Economic Growth, Education and Environment FAA Fixed Amount Award GDIP General Directorate for Servicing Foreign Representative Offices GoU Government of Ukraine GUC Grants Under Contract HR Human Resources HO Home Office HVA High Value Agriculture ICT Information, Communication and Technology IDPs Internally-Displaced Persons IFC International Finance Corporation IM Innovative Manufacturing v | USAID ECONOMIC RESILIENCE ACTIVITY QUARTERLY REPORT FY 2019 QUARTER THREE USAID.GOV IT Information Technology KfW Kreditanstalt für Wiederaufbau ("Credit Institute for Reconstruction”) LGBTQI Lesbian, Gay, Bisexual, Transgender, Queer (or Questioning), and Intersex LNAU Luhansk National Agrarian University MEDT Ministry of Economic Development and Trade MEL Monitoring, Evaluation, and Learning MEO Mission Environmental Officer M&E Monitoring and Evaluation MoU Memorandum of Understanding NEFCO Nordic Environment Finance Corporation NGCAs Non-Government-Controlled Areas NGO Non-Governmental Organization NIP Neighborhood Investment Platform OTI Office of Transition Initiatives PPP Private and Public Partnerships REG Regional Economic Growth Project RFP Request for Proposal SDAA Senior Deputy Assistant Administrator SMEs Small and Medium Enterprises TVET Technical and Vocational Education Training SMM Social Media Marketing UCBI Ukraine’s Confidence Building Initiative ULA Ukrainian Leadership Academy USAID United States Agency for International Development VET Vocational Education Training WFD Work Force Development vi | USAID ECONOMIC RESILIENCE ACTIVITY QUARTERLY REPORT FY 2019 QUARTER THREE USAID.GOV I. INTRODUCTION DAI Global LLC (DAI) is pleased to submit this Quarterly Report for the USAID Economic Resilience Activity (ERA/Activity) covering the period of April 1 to June 30, 2019. The Activity aims to improve the overall economic resilience of eastern Ukraine in response to Russia’s aggression, which has left industry ransacked, communities divided physically and politically, and the social, financial, and physical assets that underlie resilience nearly nonexistent. The Activity will directly contribute to USAID/Ukraine’s Development Objective 2: Impacts of Russia’s Aggression Mitigated and Intermediate Results 2.1: Conditions Improved for Reintegration and 2.4 Common Civic Values Increasingly Embraced. BRIEF SUMMARY OF ACTIVITY Over the next five-year period, USAID ERA will help eastern Ukraine reorient its economy toward sustainable, diverse, inclusive growth by working through three interrelated objectives: Objective 1: Provide assistance to stabilize the economy of eastern Ukraine. This objective will build on previous work under Office of Transition Initiatives (OTI) programming and humanitarian assistance. USAID ERA will continue to support quick response, high-impact interventions that address the immediate needs of conflict-affected individuals, including internally-displaced persons (IDPs), returnees, women, youth, veterans, IDP host communities, and businesses (likely microenterprises with up to 10 employees and small enterprises with 10-50 employees). Objective 2: Support the sustainable development of small and medium-sized enterprises (SMEs). This objective will support medium-term results by starting with end-markets, improving SMEs’ ability to deliver in-demand goods and services, and building the surrounding market infrastructure— from information to finance to knowledge and skills—that enables longer-term growth. Objective 2 will focus primarily on SMEs with up to 250 employees, in select cases, will support innovative western- leaning companies with up to 1,200 employees that are near the line of contact, which provide much- needed employment in stressed areas. Objective 3: Build confidence in the future of the eastern Ukrainian economy. This objective will play a critical role in the integration and coordination of all USAID ERA interventions over the period of performance and culminates in the most important Activity result: a path forward to a viable economic future for eastern regions 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 interventions under Objective 3 around current and potential end markets for growth sectors that are a combination of traditional and new, USAID ERA will simultaneously promote the diversification that will lead to a more resilient economy and create opportunities for innovation and transformative ideas. The initial set of Objective 3 interventions will be based on the outputs and outcomes of the initial Objective 1 and 2 interventions as well as the Joint Planning Conference. 7 | USAID ECONOMIC RESILIENCE ACTIVITY FY 2018 QUARTERLY REPORT THREE USAID.GOV II. CONTEXT UPDATE CONFLICT WITH RUSSIA Between January and June of 2019, there were 58 instances of shelling or small arms reported on critical civilian infrastructure (i.e. water and sanitation systems). OSCE reports that during that timeframe, the number of civilian casualties reached 81 (10 deaths and 71 injuries). The situation deteriorated extensively towards the end of June, with an increase in the number of armed clashes causing harm to civilians and soldiers as well as an increase in the use and presence of landmines on the contact line. Despite overall increased aggression in June, the international community acknowledged the beginning of disengagement of forces and hardware on both sides of the contact line around Stanytsia Luhanska, Luhansk Oblast, based on the 2016 framework of the Trilateral Contact Group. ERA is continuously monitoring the situation and taking into consideration