DESPRO has conducted a workshop on State Fund’s for Regional Development (SFRD) operation. It was attended by representatives of the Ministry of Economic Development and Trade of Ukraine, Ministry of Regional Development, Construction, Housing and Communal Services, Secretariat of Verkhovna Rada of Ukraine Committee on Budget as well as representatives of international projects and donor organizations.

Volodymyr Yevdokymov, head of the Department for state support of regional and local development of the Ministry of Economy, emphasized the transparency of SFRD funds allocation. Still, he expressed concern about Fund’s organization, for the absence of single state organ, responsible for Fund management results in a number of confusions and impedes the projects’ progress for which the Fund was created.   He said that Ministry of Economic Development formulates policy and provides the regulatory framework. Ministry of Finances is the primary manager of funds, while Ministry of Regional Development provides technical assistance and expertise regarding mandatory documents for construction projects.

Swiss expert Dieter Zurher told the audience about international experience of similar funds operation in Albania, Switzerland and Poland. He outlined weak and strong points of funds in the above countries. “It is extremely important to have a clear Fund goal and clear evaluation criteria that can help during the projects’ selection process. Besides, it is important to have balance between infrastructure projects and development projects as well as real competition between them”, - said the expert.

 

DESPRO expert Serhiy Marchenko told about SFRD operation in Ukraine. He said that in 2012 – 2013 689 infrastructure projects were supported. Most of them were focused on construction and repair. According to him, such projects are more familiar and it is easier to design and implement them. However, there is no capacity and need to implement projects for regional development on local level.

 

Experts recognized good SFRD potential as for financing the development projects in the regions of Ukraine. In order to reduce “the friction force” and increase Fund’s “value added”, DESPRO experts developed a set of recommendation s for SFRD, i.e.:

 

• SFRD should contribute to addressing broader development objectives. It should solve not only the issues regarding to social and economic structure but engage investments for regional economic development (employment, business and innovations). Fund also badly needs motivated management/personnel.
• Single state unit should have a mandate for SFRD administration. It is also should be responsible for Fund’s monitoring and evaluation based on developed indicators as well as for reporting.
• Projects selection should become the primary Oblasts responsibility. Assessment/review should be ensured by independent experts.
• Regions’ priorities should go in line with social and economic and regional development.
• It is necessary to review the selection criteria of the projects, which can be implemented due to SFRD financial support (Resolution of the Cabinet of Ministers of Ukraine # 656 of 4 July 2012).
• Allocations should be based on effectiveness (for example, reduction of costs in case when “unnecessary investments” were made or objectives not achieved).
• Projects assessment should not be based on documents analyses only (verification on the sites based on risk analyses).
• Limit for SFRD budgets should be increased: 5 – 10 million UAH for regional projects (currently – 1 million UAH), 2 million UAH for rayon/municipal projects (currently – 0,2 million UAH). 
• Projects selection process should be strengthened and improved to finance the projects, which provide value added.
• Projects completion should be ensured.

 

DESPRO next step will be the submission of proposals regarding the improving of SFRD mechanism to the relevant executive bodies of Ukraine.