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SME Project

The lessons learnt

There are the following lessons that have been learnt throughout implementation of the project:

  • One of the challenges faced by the project while developing LIPs was to ensure an utmost quality of business plans for every certain investment project given large numbers of investment projects in a LIP and the limited human resource capacity of permanent project staff. The solution that was found and hence applied in the oblasts was to cooperate with local business development centres.
  • The local governments as well as the representatives of leading business enterprises of the oblasts, went through all the stages of the capacity building process, and at the moment they constitute strong local investment promotion teams, which are well-prepared to negotiate with potential investors as equal partners.
  • The experience showed that one of the indirect results of the project activities was that trying to identify the potential municipal property, which could serve as a participatory collateral to the LIP, local governments started the process of the inventory stock-taking of the entire municipal property, and learned how to use effectively this property to generate additional community income through the investment activity.
  • The representatives of the local governments of oblasts had to go through a specialised training, part of which was dedicated to the strategic planning. So, what happened was that independently from any excess financial resources that were expected from investment projects, the improved strategic planning skills of the key decision makers at the local governments allowed them to economise up to 15% of local budget in a year 2000. Similar optimization effect was achieved in some other oblasts, having participated in the project, too.
  • The unique experience developed in the framework of the project implementation in the oblasts was the cooperation with the Ukrainian National Committee of Youth Organizations. This initiative laid the foundation for adoption by the Cabinet of Ministers of Ukraine of Resolution "On Approval of the National Programme of Support for Development of Youth Entrepreneurship for 2002-2005". As a result, 167 young entrepreneurs all over Ukraine have successfully applied for participation in the LIP with their investment proposals.
  • The role of local commercial banks was of an increased importance. Local commercial banks could serve as a kind of a catalyst between the potential investor, coming from the outside, and the local enterprises, because, on one hand, it is much easier for a local commercial bank to identify and understand the most reliable local enterprises, and on the other hand, bank could better deal with the participatory collateral, provided by the partners in the LIP.
  • One of the factors that increased the effectiveness of project implementation was that using the know-how of the project both the local government and the private sector strengthened their capacity for the management of investment activities in the Ukrainian legal environment.
  • One of the key success points of the project was that both the local government and the businesses started to contribute to the project from the very beginning, including covering a considerable part of the training costs (20-40%).