USAID Economic Resilience Activity FY 2021 Quarterly Report One

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. The Activity will help eastern Ukraine reorient its economy toward sustainable, diverse, and inclusive growth by working through three interrelated objectives. Objective 1: Provide assistance to stabilize the economy of eastern Ukraine, will build on previous work under Office of Transition Initiatives (OTI) programming and U.S. Government humanitarian assistance. 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. Objective 2: Support the sustainable development of small and medium-sized enterprises (SMES), 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. Objective 3: Build confidence in the future of the eastern Ukrainian economy, will play a critical role in the integration and coordination of all ERA interventions and culminates in the most important result: a path forward to a viable economic future for the eastern region as an integrated part of the Ukrainian economy. The economic situation in eastern Ukraine at the end of 2020 remains depressed but indicates a gradual resumption of productive business activity due to the general adaptation of most economic actors to quarantine restrictions. The Cabinet of Ministers approved the Concept of Economic Development of Donetsk and Luhansk Oblasts as the basis for development of the economic development strategy for Government Controlled Area (GCA). Estimated war-damage reconstruction costs in the east are estimated to exceed $20 billion. The Concept aims to stimulate investment in priority manufacturing and business clusters and the introduction of tax incentives to direct a percentage of enterprise profits to reinvestment in their own growth and development. Quarantine restrictions in Ukraine and changes in the global situation affected different economic sectors in diverse ways. In Donetsk Oblast, the largest economic decline is in light industry, mining (including coal mining), mechanical engineering, and the chemical industry. At the same time, production of goods in the food industry and metallurgy increased 6.7% and 1.2% respectively. Luhansk Oblast also experienced a significant decline in the light industry, mining, and chemical industry sectors. This challenging economic situation is likely to persist in early 2021 due to the planned reintroduction of COVD-19 lockdown measures throughout Ukraine and abroad during the winter months. The USAID Economic Resilience Activity began Year 3 implementation with restructured operations and delivery mechanisms firmly in place to accommodate continued COVID-19 restrictions. ERA benefitted from the strong foundation established in previous years, which enabled the Activity to adapt to the changing economic context and continue to deliver high-impact interventions. The Activity's restructured operations and delivery mechanisms allowed for a more efficient and effective response to the needs of conflict-affected individuals and businesses in eastern Ukraine. The Activity's interventions under Objective 1 focused on providing assistance to stabilize the economy of eastern Ukraine. This included supporting quick-response, high-impact interventions that addressed the immediate needs of conflict-affected individuals, including IDPs, returnees, women, youth, veterans, IDP host communities, and businesses. The Activity also continued to support the development of small and medium-sized enterprises (SMES) under Objective 2, which aimed to improve SMEs' ability to deliver in-demand goods and services and build the surrounding market infrastructure. The Activity's interventions under Objective 3 focused on building confidence in the future of the eastern Ukrainian economy. This included promoting the diversification of the economy, creating opportunities for innovations and transformative ideas, and orienting interventions around current and potential end markets for growth sectors that are a combination of traditional and new. The Activity's restructured operations and delivery mechanisms allowed for a more efficient and effective response to the needs of conflict-affected individuals and businesses in eastern Ukraine. The Activity's performance monitoring, evaluation, and learning (PMEL) system allowed for the tracking of progress against targets and the identification of areas for improvement. The Activity's PMEL system included regular monitoring and evaluation of the Activity's interventions, as well as the collection and analysis of data on the impact of the Activity's interventions. The Activity's PMEL system also included regular pause and reflect sessions, which allowed for the reflection on the Activity's progress and the identification of areas for improvement. The Activity's financial information for the quarter included a cash flow report and financial projections. The Activity's financial information showed that the Activity was on track to meet its financial targets for the quarter. The Activity's financial projections indicated that the Activity would continue to meet its financial targets for the remainder of the year. The Activity's administration and sub-award details