GTIS Quarterly Progress Report: Assessment and Recommendations for an Oversight Function

As an investment promotion agent, KIA aims to bring private capital to supplement the city's limited budget. The agency has a staff of over 60 employees and has been given a more prominent role under the current mayor. KIA's vision is to be a "single window" for international and national investors, guiding them through the investment tendering process and providing approvals. The investment tendering process is currently the responsibility of various city entities, with KIA not having control over it. Despite some limited success, KIA is generating a limited amount of deal flow for public-private partnership (PPP)-type projects, which are its mandate. The agency faces several challenges, including unclear priorities, a crisis management modus operandi, and the inability to offer competitive salaries, making it difficult to retain and recruit staff. A consortium led by Deloitte and local partner Talent Advisors is working on a re-organization for KIA, developing terms of reference for staff, a better bonus system, and specific performance benchmarks for the Agency. KIA has developed a new Draft Regulation to oversee the investment tendering process, making it more transparent and reducing the time required to conclude a tender from 500 to 90 days. However, the 90-day target appears unrealistic, and the regulations do not always follow best international practices. The city government administration's Department of Economics and Investment (DEI) is responsible for the investment tendering process, as well as other city investment mechanisms. Auditing and financial oversight rest with the Financial Control and Internal Audit Department (DIFCA), although some city enterprises and agencies have their own auditing units. DIFCA was restructured in 2014 and appears dynamic, but it only focuses on large transactions and investments, leaving much of KIA-supported investments uncovered. The report recommends the establishment of an Oversight Unit either within KIA or within the Office of the Head of the KMDA (Mayor), depending on its scope. The Unit would consist of an Advisory Board and a technical/support staff led by an Executive Director, with a mandate to provide credibility to the investment process and oversee and ensure that all investment processes are designed, clear for all participants and potential investors, and implemented in accordance with established law and best international practices. The proposed Oversight Unit would be a reform champion, promoting transparency, accountability, and efficiency in the investment process. It would also help to address the challenges faced by KIA, including unclear priorities, a crisis management modus operandi, and the inability to offer competitive salaries. The Unit would be responsible for verifying that investors have met their obligations and ensuring that the investment process is designed and implemented in accordance with established law and best international practices. The establishment of the Oversight Unit would require a clear mandate, terms of reference, and operational budget. It would also require the support of the city government administration and the Mayor's Office. The Unit would need to be staffed with experienced professionals who have a deep understanding of the investment process and the regulatory framework. The Unit would also need to have a clear communication strategy to ensure that stakeholders are informed and engaged throughout the process. The proposed Oversight Unit would be a critical component of the investment process in Kyiv, promoting transparency, accountability, and efficiency. It would help to address the challenges faced by KIA and ensure that the investment process is designed and implemented in accordance with established law and best international practices.