Nurturing Business Development in Ukraine: Twelve Years of Work Brings Success

A glassblower working on a new piece Business development in Ukraine has been a USAID priority for well over a decade.  Several projects have supported small and medium enterprise (SME) development, the largest and most prominent being NEWBIZNET, which operated from 1994 to 2000, and BIZPRO, which worked from 2000 to 2006.  The two programs nurtured SMEs in Ukraine and helped them to develop and grow. Business skills development and legal/regulatory reform were at the core of the objectives pursued through NEWBIZNET and BIZPRO.  As enterprises transitioned, USAID responded as needed.  From 1994 through 2003, USAID focused on the basic skills required to operate in a market economy.  Beginning in 2004, more sophisticated assistance was provided to help Ukrainian enterprises compete in the global economy.   In 1994, NEWBIZNET began developing basic SME capacity by working with private business service providers (BSPs).  The goal was to strengthen existing service providers to help increase SME understanding of market principles and operations, and foster their use of modern, market-based business management principles.  The ultimate goal was for BSPs to be able to assist with business plans, marketing, operations and finance.  USAID provided BSPs with subsidies for key staff and facilities, long-term foreign advisors, and upgraded technology.  It also trained staff and provided informational support.   By 1999, the SME sector had become more sophisticated as high-level basic services were now available in the market.  BIZPRO decided to launch two pilot programs regarding the use of vouchers and work orders to reflect the transition taking place and the demand for services being created within the SME sector.   Whereas, earlier USAID’s BIZPRO project had ex-pended efforts to develop service providers for SMEs, through these two programs the project actually engaged them on a commercial basis to provide services to SMEs. USAID assistance in the area of business legal and regulatory reform began in 1994 the regions at the most basic level.  It started by establishing local support net-works, which were simply groups of businesses and organizations that had common goals and/or business interests.  These were typically trade organizations, industry sup-port organizations, chambers of commerce, and groups of linked businesses.  The goal was to engage them in activities that could improve the local enabling environment.   At this time, associations were very weak and not able fulfill their typical role in a market economy.  Therefore, BIZPRO focus-ed on improving their operations and helping them engage in advocacy on a limited basis.  It provided operational subsidies, training and advocacy support.  It also helped build a Business Association Network to improve cooperation and information exchange among associations.  The network grew from 60 initial members to over 600 members today.   In 1998, USAID began limited work at the national level with the newly created State Committee for Enterprise Development, which in spring 2000 was reorganized and renamed the State Committee for Regulatory Policy and Entrepreneurship (SCRPE).  BIZPRO provided computer equipment, training, study tours, business environment analyses, and national and regional conferences.  SCRPE remains alive today and in close cooperation with USAID’s BIZPRO program. Through BIZPRO, USAID also greatly expanded its work on legal and regulatory reform by intensifying work in the regions and using those lessons to help develop the Law on Regulatory Policy in the Sphere of Economic Activity. Efforts to create one-stop shops (OSSs) for business registration lead to work on permit issuing OSSs and USAID assistance to SCRPE and the Council of Entrepreneurs in the Cabinet of Ministers with the development of the Permit System Law. At the end of 2003, BIZPRO moved into yet another stage of business development when it designed a three-tier market development strategy aimed at business associations and SMEs and a comprehensive regulatory reform effort that was launched in January 2004.

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