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POLICY BRIEF

SOURCES OF ADDITIONAL FUNDING FOR DEVELOPMENT OF AMALGAMATED COMMUNITIES (BY THE EXAMPLE OF ODESSA REGION) To receive income, the communities need to be additionally funded, so that they could implement economic projects. Of these, the most important are the projects, which will motivate “points of economic growth”, provide business development and creation of jobs.

OLEKSANDA KALASHNIKOVA, analyst in All-Ukrainian NGO «Association for community self-organization assistance»


SOURCES OF ADDITIONAL FUNDING FOR DEVELOPMENT OF AMALGAMATED COMMUNITIES (BY THE EXAMPLE OF ODESSA REGION) INCOMES OF AMALGAMATED COMMUNITIES OF ODESSA REGION INCOME OF A COMMUNITY

INTERBUDGETARY TRANSFERS

AMALGAMATED COMMUNITIES

BUDGET OF A COMMUNITY (MLN. UAH)

(MLN. UAH)

(MLN. UAH)

1

Baltska town community

104,502

56,436

48,066

2

Biliaivska town community

47,447

28,225

19,223

3

Velykomychailivska village community

36,781

15,530

21,261

4

Chervonoarmiiska village community

8,206

3,321

4,885

5

Marazliivska village community

19,774

8,572

11,201

6

Krasnosilska village community

36,331

21,675

14,66

7

Rozkvitivska village community

14,734

2,352

11,31

8

Tuzlivska village community

Not available

Not available

Not available

To receive income, the communities need to be additionally funded, so that they could implement economic projects. Of these, the most important are the projects, which will motivate “points of economic growth”, provide business development and creation of jobs. Additional Sources of Funding include the following: Infrastructural grants from the State budget, funding of Communities' projects at the expense of the State Fund for Regional Development (hereinafter referred to as SFDR), granting of internal and external investments for the communities' development, international technical assistance for implementing local projects (ITP).


THE MAIN ISSUES RELATED TO THE MOBILIZATION AND USE OF THESE FUNDS BY THE COMMUNITIES OF ODESSA REGION ARE AS FOLLOWS: ±

Ineffective policy of the communities' local authorities, regional Administration and Council related to the use of State assistance, attraction of investments, and participation in ITP projects

±

In 2016 there were no applications to SFDR from a half of the amalgamated territorial communities

±

It is required to approve Strategy of Regional Development of Odessa Region by 202_ and Plan of Measures aimed at delivering the Strategy in order to obtain financing of projects at the expense of SFDR. As of 1.04.2016 the Strategy of the Region was updated and approved, however, the Plan of Measures was not approved. This fact significantly influences the financing by SFDR the projects of the communities in the territory of Odessa Region

±

There are no Investment Promotion Programs in Odessa Region, as well as the amalgamated territorial communities with clear plan of actions for the foreseeable future

±

Infrastructure of the amalgamated communities of Odessa Region is not developed well (roads, water drain, internet connections etc.), having a negative impact on their investment attractiveness

±

Representatives of local authorities have no system knowledge in the field of project management and the quality of project proposals submitted by the communities to bids is low

±

Local authorities have not enough information on the projects of international technical support, being implemented in the Region.

±

Institutes of civil society, that are able to attract ITP projects into the amalgamated communities, are inert or, even more, are absent in the community

±

Existing projects, presented by the amalgamated communities to SFDR and to ITP projects, have no economic orientation. In other words, the majority of projects is aimed at the repair of public sector establishments, not at achieving economic potential of the communities, development of local economy


CONCLUSIONS AND RECOMMENDATIONS The process of territorial communities amalgamation is blocked at the level of the entire districts and isolated territorial communities. As a consequence, only the fourth of the communities of Odessa Region joined the Perspective Plan of the communities' territory formation. The first amalgamated communities of Odessa Region were formed in accordance with the Perspective Plan of the communities' territory formation of Odessa Region. According to the Method of formation of capable territorial communities, prepared by the Cabinet of Ministers of Ukraine, these communities are considered to be capable to render qualitative services and support own development. The amalgamated communities of the Region received ancillary powers and also additional resources to their implementation (due to the budgetary decentralization), and achieved on the balance medical and educational establishments, as well as government grants to their maintenance. However, the amalgamated communities of the Region still remain subsidized and not capable to make decisions on the development, using local income basis. In the same way as before, they exercise the majority of the delegated powers (except for the sphere of education and public health) with the use of basic donation. That is why there is a need to involve additional funds for the projects of economic development of a community, that will be able to achieve social and economic growth. Analysis of using additional sources for the development of the amalgamated territorial communities showed the low capability of such communities of the Region to use the resources. This problem is caused by the insufficient awareness of the Council of the amalgamated territorial communities on the possibilities to involve additional sources of financing, the absence of dynamic actions towards the implementation of projects using the funds of SFDR, the projects submitted to SFDR by the communities of the Region do not promote the activation of local economy, officials of the amalgamated territorial communities have no project management skills, inefficient policy of Odessa Regional State Administration related to the attractions of investments and ITP projects into the amalgamated territorial communities.


Having analyzed the problems of attraction of financial resources for the development of the amalgamated territorial communities in order to increase resource potential of the communities, we can give the recommendations as follows:

THE CABINET OF MINISTERS OF UKRAINE IS PROPOSED TO: The Ministry of Finances of Ukraine: foresee the financing project management start seminars for the amalgamated communities. The Ministry of Regional Development: support, using the funds of SFDR, first of all, those projects of the amalgamated territorial communities, which promote the development of local economy, formation of “points of economic growth”; in order to attract ITP projects, carry out project management training for the representatives of local authorities of the amalgamated territorial communities.

REGIONAL STATE ADMINISTRATION IS PROPOSED TO: ± ±

± ± ±

Approve the Plan of Measures to implement the Strategy of regional Development with inclusion of ITP projects therein Start work towards the attraction of investments into the amalgamated territorial communities, find out perspective investment proposals of the amalgamated communities and download them onto the Web investment portal of the Region Launch a Program to attract investment into the amalgamated territorial communities Notify the amalgamated communities of the Region of available ITP projects, aimed at the local development Update regularly information on Web site of Regional State Administration related to ITP projects in the Region, opportunities for the communities to take part in the investment forums

THE AMALGAMATED COMMUNITIES ARE PROPOSED TO: ±

Prepare project applications for financing from SFDR in accordance with the requirements of the Cabinet of Ministers of Ukraine, proving the effect, the project will have on the economy of the community

±

Start attraction of the international financial support projects into the communities, provide for a position of Project Manager in the Executive Body of Village Council


samoorg.com.ua

This analytical paper has been prepared under the Think tank support initiative performed by the International Fund "Renaissance" (IRF) in collaboration with the OSF Think Tank Fund (TTF), which receives support from the Swedish International Development Cooperation Agency (SIDA) The opinions and views expressed in this research represent the position of the author and do not necessarily reect the position of the Swedish government.

Đ?SSOCIATION FOR COMMUNITY SELF-ORGANIZATION ASSISTANCE All-Ukrainian NGO that promotes the development of civil society in Ukraine through the self-organization and the creation of an effective system of public participation in the local governance.

CONTACTS: 38, Marazlyivska str., Odessa, 65014, Ukraine tel./fax: +3 8 (048) 738 68 30 +3 8 (048) 700 76 75 +3 8 (097) 481 17 27 email: samoorg@ukr.net

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