Due to the war in Ukraine, business activity has dramatically decreased, especially in the frontline areas and municipalities on the border with the Russian Federation, where shelling is constant. A large number of people having potential opportunities and business ideas have moved to other oblasts, creating further development prospects for the host municipalities. This opinion is shared by Ihor Agibalov, Head of the U-LEAD with Europe Regional Office in Luhansk Oblast.
According to him, U-LEAD experts work to train municipalities on tools to motivate IDPs for starting up and developing their own business. It is important for both local self-government bodies and IDPs to get grant support for business start-up, and the potential for government and international donor funding forms a separate block that our experts are working on.
So, what are the benefits for municipalities in terms of facilitating IDPs to open their own businesses? What role do local self-government bodies play in the process of relocating businesses and starting up by IDPs?
And what is the state and international assistance in this area? The following is a direct speech:
Facilitating business relocation: what are the benefits for municipalities?
It is a known fact that the majority of small municipalities face problems with human resources and business development. For local authorities, IDPs mean an additional human and business resource on their territories. By providing assistance to IDPs, the municipality performs two useful tasks: supporting people in difficult circumstances during the war and solving its own staff shortage problems, while increasing budget revenues by promoting business initiatives.
The activities aimed to stimulate business among IDPs in the municipality contribute to its development. That is, helping IDPs to start their own business, the municipality empowers its economic environment, creates new jobs for the locals, and generates additional taxes.
Working on IDP business development in the municipality: where to start?
The first step for a host municipality willing to encourage IDPs to start up a business is to survey IDPs about their capabilities, previous experience, plans, and education. Platforms working with IDPs since the first days of the full-scale invasion can assist in surveys and establish communication with them: ASCs, volunteer organisations, humanitarian hubs and headquarters.
The second step is to inform people about niche and promising business areas in the territory of municipality. This can be achieved through meetings with IDPs interested in developing private businesses, as well as creating appropriate information materials for them.
The third step is that, the municipality can create support programmes for relocated businesses, make decisions on tax benefits for such businesses, property or land lease benefits, etc., based on the data on potential private entrepreneurs.
The fourth step is for the municipality to create a list of investment plots, proposals, and the municipal investment passport. Such tools can also motivate IDPs to open a business.
The fifth step for the municipality is to involve active IDPs into development of the municipal strategic documents. In the process of strategy development, IDPs, being one of the target groups, can share their experience and valuable projects to support business initiatives in other parts of the country, as well as their ideas for territorial developments. Such ideas can be implemented if they are appropriate to the regional characteristics of the municipality. It is also worth analysing the IDPs' vision of their own business and providing them with certain opportunities and solutions.
How to get funding for IDP businesses?
In terms of entrepreneurship development in municipalities within the context of martial law, both international and state grant opportunities, such as the eRobota programme, can be considered.
The first option for IDP business funding is that the municipality can provide targeted financial support for entrepreneurship from the local budget, envisaging it in the relevant development programmes.
The second option is that IDPs can use regional support programmes: state, oblast and district (if any). In this case, the municipality has to offer information to potential entrepreneurs, namely, to promote such programmes and to post their details on all information platforms available to the municipality. It is also required to provide advisory assistance and clarify the conditions for IDPs who decide to use such programmes.
The third option is the state support system through the eRobota service. Today, this is one of the most powerful government initiatives aimed at providing grants for business start-ups, horticulture and greenhouse development. You can apply for the programme through Diia, propose a business plan in any area and receive up to UAH 250,000. If you intend to start a horticulture or greenhouse business, you can expect state funding of up to UAH 450,000 and up to UAH 7 million, respectively. The fact that all this can be done online via the Diia portal is very convenient and up-to-date, as you can fill out an application and attach a business plan along with all other necessary documents.
The fourth option is to use foreign grant resources, which can also be of great help. Today, the support for Ukraine from international partners is significant, with many options and opportunities for IDPs. The local self-government bodies should assist in searching for such grants and, whenever possible, help in writing and submitting grant applications. Continuous monitoring and information about state and international business support instruments will facilitate investment in the municipality. Another important thing is to inform IDPs that it is not a loan and does not require repayment with interest.
What are the tools for communicating with IDPs to promote business initiatives?
The municipality may engage the ASC to communicate with IDPs on business initiatives and provide them with consultations on business opportunities.
Another option is to create a municipal coordination council for IDPs, dedicated to the work with them. The council might provide them with support, inform them about business opportunities and the benefits of entrepreneurship in the municipality. Moreover, in close cooperation with IDPs, the council can lobby for their business proposals at the level of local authorities.
The introduction of IDP training is also one of the communication tools to support business initiatives. This means organising thematic courses and training programmes that would provide all the necessary information on entrepreneurship development and available state or foreign grant opportunities.
The municipality could benefit from working with non-governmental organisations. NGOs that work with IDPs can help them develop business initiatives and link IDPs with local authorities. We are talking about lobbying for their concerns, ideas and projects, and looking for financing opportunities. The municipality has to agree on cooperation in the mentioned area with such organisations, motivate them to help, provide advisory support, and be open to dialogue with them.
So what are the benefits for local self-government bodies from facilitating the relocation of IDP businesses?
Creation of new jobs and tax revenues to local budgets, as well as maintaining and developing the local economic environment are the benefits that the municipality gets by facilitating IDP business initiatives. Besides, constant monitoring and informing IDPs about state and international business support tools will also contribute to the investment flow into the municipality.