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Small town - a magnet for investors. Strengthening the investment potential of Ukrainian small towns.

Just like the whole globalizing world, Ukraine is subject to the process of urbanization (according to the UN, two-thirds of the global population is going to live in cities by 2025). While the country’s and oblasts’ capital cities occupy a dominant position, 75% of the urban population live in small cities and towns. As of 2010, Ukraine had 366 small cities and towns (up to 50,000 residents), which were home to 6.4 million people, i.e. 14% of the country’s population.

Research by independent institutions and government agencies shows that the crisis and systemic changes experienced by Ukraine for more than a decade now have contributed to downgrading small urban centres. Some speculate that as many as 10% of Ukrainian cities could disappear altogether.

Major problems experienced by towns and cities:

•             reduction to a single function (a city is supported by one or two companies that more and more often also face bankruptcy),

•             low wages of residents,

•             lack of qualified professionals responsible for a city’s intellectual potential,

•             ageing society (young people leaving for economic reasons),

•             lack of development strategy and failure to find a place in the country’s economy,

•             crisis of infrastructure and public services,

•             unemployment,

•             lack of savings.

Amid the worsening situation of towns and cities, Ukraine’s government approved a 2011-15 development programme for Ukrainian small cities and towns (act of parliament of 29 November 2010). Its main objectives are to improve the legal and normative base by 2013, and to provide cities with financial incentives to develop, including by upgrading infrastructure and making them more attractive to investors. Given the economic difficulties experienced by Ukraine, towns and cities continue to have limited access to state budget funding. For this reason, additional investment resources play a key role at the moment.

The project “Small cities and towns as a magnet for investors – enhancing the investment potential of Ukraine’s small cities and towns” addresses the needs identified in analyses and documents, as well as the needs that have been reported to the Foundation by the Association of Small Cities of Ukraine, and by the cities that took part in the project in 2013. The project has focussed on preparing cities for promotional activities. It revealed that cities lack basic knowledge on how to draft investment proposals. Most of them have no strategic document in the form of an investment passport, no adequate infrastructure, and no system of incentives or benefits an investor can look forward to if he or she invests in a given place.

Small town - a magnet for investors. Strengthening the investment potential of Ukrainian small towns.

The project was supposed to foster the investment potential of 50 Ukrainian small cities and towns through:

- on-site and e-learning training for 80 local government officials from small cities and towns, and from departments responsible for the economic development of cities. The workshops focussed on how to draft specific investment proposals, create an investment passport, and prepare urban infrastructure for receiving investors;

- a brand book and rules of creating an investment passport in the form of an electronic document;

- study visits to Polish cities and investment support institutions;

- promotion of 10 Ukrainian cities by mounting an exhibition and presentation during international conferences, and promotion of 50 cities with the brochure Investment Map;

- an expert report about investment opportunities in Ukrainian small cities and towns, along with recommendations in the form of an electronic document.

Small town - a magnet for investors. Strengthening the investment potential of Ukrainian small towns.

The first part of the project – away and on-site training – gave around 90 participants an opportunity to learn more about strategies to promote the city and build its brand. At international conferences 30 cities were able to promote themselves and hold preliminary talks with potential investors.

The evaluation has confirmed a very high level of satisfaction among project participants, and shown their keenness to continue with the activities.

The next stage involved preparing small cities and towns for receiving foreign investment: drafting concrete investment proposals; creating investment passports in Ukrainian and English; conveying knowledge and good practices on infrastructure preparation; following-up on the international promotion of cities; and encouraging investment.

The training was attended by 90 people from 50 cities and 21 oblasts across Ukraine; 30 of them went on study visits to Poland. The brand book, the rules of creating an investment passport and the expert report together with the recommendations were emailed to 366 small cities and towns in Ukraine, and to organizations/institutions that help them develop and handle investment tasks.