Ukraine launched the state regional development policy based on European values, principles of democracy and national unity, the aim of which is to improve the economic and social quality of life to every citizen. State regional policy is defined by a system of interrelated documents, the most important of which is the National Strategy of Regional Development of Ukraine.
National Fund for Regional Development is a financial instrument for implementation of the National Strategy of Regional Development of Ukraine. The effectiveness of the Fund strongly affects the transparency and predictability of funding for regional development and possibility of forming and implementing a local development policy. This impact grows in the absence of the appropriate powers and financial resources at the local level, and in time of change – administrative-territorial and budget reforms.
Fund activity in 2015-2016 have already produced remarkable results, but it also revealed problems that have accumulated over the years, especially in the procedure of preparation and selection of projects for regional development.
During the study, prepared in the framework of the Think Tank Support Initiative, the following sources were used: analytical report “Regional development and state regional policy”, the results of the Fund activity and legal and regulatory acts from the years 2015-2016, which define the state and regional development policy. Some of the issues discussed in the study are shown in the examples of Lviv region, and the recommendations for changes are primarily addressed to the main policy setters of Lviv region – regional council and state administration. However, problems addressed in this study are applicable to all regions of Ukraine.
The following conclusions were drawn from the study:
- Low level of culture of strategic planning at the regional level, leads to a situation where it is impossible to objectively assess the potential of the territory and propose a realistic vision of development, and this in turn leads to the inability to prepare development projects.
- Low quality of implementation plans of regional development strategies (in case of the Lviv region – unavailability of them), leads to the fact that regional projects submitted for financing from the National Fund for Regional Development are poorly correlated with the strategic objectives of the region, and are aimed mainly at small-scale infrastructure repairs.
- Procedures for the selection of projects for funding from the National Fund for Regional Development, as well as the activities and the regional commissions, are still not sufficiently transparent.
- The scoring system and the current criteria for assessing applications do not provide high-quality evaluation of regional development projects.
According to the conclusions of the study, the following targeted recommendations for optimizing the procedures of preparation and selection of projects for funding from the National Fund for Regional Development for the years 2017-2018 are presented:
- The executives of Lviv regional state administration should change the composition of the regional commissions in accordance with the order №80 of the Ministry of Regional Development (dated 24 April, 2016).
- After Implementation Plan for Regional Development Strategy would be approved by the Lviv regional council, Lviv regional state administration should announce a call for local projects for the years 2017-2018. At the same time, state administration should organize trainings on project preparation and strategic planning for all stakeholders; and training on project assessment methodology for members of regional commission.
- Lviv regional council, together with experts from international programs and think tanks, should carry out monitoring and evaluation of activities/projects of regional development programs in terms of consistency with the priorities of the National Fund for Regional Development and projects for the years 2016-2018 from Implementation Plan for Regional Development Strategy. On that basis, they should prepare appropriate amendments to the regional programs for 2017.
- Lviv regional council, together with Lviv regional state administration, should, support creation of the Agency for regional development in the shortest terms, which will serve as a center for regional development and decentralization processes. Agency would become a center for preparing programs and projects of regional development agreed with the interests and resources of targeted state programs, local budgets and projects of international technical assistance.