1 Report on activities carried out during the reporting period 10
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4. Implementation issues
4.1 Implementation method
Centralised management + budgetary support
As mentioned earlier, SWAP is an important factor that will govern the success of any future interventions in the agriculture sector, such as this proposed project.
Ultimately, the goal of SWAP is that of transferring ownership and responsibilities from the EU to the government of Ukraine, by transferring the planning, management and financing responsibilities of agriculture and rural development programmes to the beneficiary. Technical and financial assistance from other donors and International Financial Institutions (IFIs), should be linked with the Operational Plans (OPs) and Medium-term Expenditure Frameworks (MTEFs) for each sector, in order to achieve greater integration effectiveness and impact.
When implemented, sector wide programmes such as SWAP typically have six key components:
1. A clear sector policy and strategy, to know what Government is aiming to achieve in the sector and how –distinguishing government’s regulatory role from its service delivery role, specifying the roles of non government agents and outlining any necessary institutional reforms.
2. A sectoral medium-term expenditure programme, based on a comprehensive action plan, to clarify what is the expected level of available internal and external resources and how these resources will be utilised in pursuit of the policy.
3. A performance monitoring system with performance indicators to measure progress towards the achievement of policy objectives and targeted results, distinguishing between male and female beneficiaries and different social groups, as appropriate (cross cutting issues).
4. A formalised process of donor co-ordination for maximum impact and effectiveness.
5. An agreed process for moving towards harmonised systems for reporting, budgeting, financial management and procurement.
6. A systematic mechanism of consultation with clients and beneficiaries of government services and with non-government providers of those services.
The above described concept and common goal of SWAP reflect the mutual concern of the EU and the Ukraine Government to improve the effectiveness and efficiency of Government and donor spending. For the Ukraine, the EU-Ukraine Action Plan and the National Indicative Programme (NIP) 2004-2006, together with the SWAP, would be the first instruments to address the overall policy framework in a manner that strengthens national ownership, promotes stakeholder participation and improves donor co-ordination.
As SWAP is a new approach for Ukraine, it will need to be adopted gradually and on a phased basis. It should be possible for Ukraine to meet the conditions that are required for a SWAP approach to become operational within four years, within the context of the strategic frameworks that are being used (EU-Ukraine Action Plan and the NIP). With considerable donor activity in Ukraine, there is also significant potential for increased donor co-ordination and impact.
A major implementation issue is that improvement must be achieved in policy formulation in the Ukraine through improved efficiencies within the various line Ministries, improved co-ordination among the Ministries, and improved administrative structures, which are fully adapted to the changing economic environment. This means that extensive training and technical assistance will have to be provided to Government administration staff in order to become proficient in management of development projects, the financial arrangements (both local and EU), as well as financial and technical monitoring. Using SWAP as an approach will ultimately provide essential inputs and efficiencies to policy-makers in the preparation of 3-year National Development Plans, including Operational Plans for each specific sector.
The EU-Ukraine Action Plan is considered an important step towards fulfilling the provisions in the Partnership and Co-Operation Agreement (PCA), and therefore a first step towards a SWAP for the Ukraine. The plan is however not explicit when it comes to agriculture and rural development. In contrast, the PCA is more explicit when it comes to co-operation in agricultural development, with a general focus on the modernisation and privatisation of the agricultural, agri-processing and service sectors. No mention is however made of rural development, except for ecological restoration and the protection of forests.
4.2 Modalities
Synergy with proposed other interventions
Food safety
Synergy with the key WB financed project “Agricultural competitiveness and food safety” project in this sphere is being achieved through direct communication with the WB programming team in the initial identification phase and will be ensured in the future by continued close cooperation during design and specification (including TORs development):
- WB assistance will be focused on equipment purchase and accreditation of selected laboratories at central and oblast level, and where equipment procurement is foreseen in this programme, it’s identification will be in line with the strategic upgrading framework forming the basis of the W B intervention;
- this Program will provide assistance (mainly training and information) for selected laboratories with the aim to develop their capacities to achieve a status of reference laboratories in accordance with EU criteria;
- this Program will provide assistance regarding drafting of legislative act/acts which should set harmonised with EU criteria for designation of reference laboratories;
- this Program will provide support in the drafting of the required strategic documents, legislation and implementing legislation which should create a foundation for rationalization of national laboratory network, its efficient and effective use.
Market infrastructure
In the field of agrarian market infrastructure, close working relationships have to be established by the forthcoming EU project with all relevant projects funded by various international donors (as described in section 1.3 above) to ensure synergy of actions and complementary effect from the implementation.
Thorough analysis of potential areas of synergy has to be done at the stage of project ToR preparation to determine the possibilities for future joint actions.
In particular, one of the activities planned for agrarian market infrastructure in the framework of the forthcoming EU-funded SWAP project, namely activity 3.2.4 “Support for the wholesale / assembly markets and accompanying market information network”, envisages further development of the Wholesale and assembly market "Master plans" produced within the EU financed project “Improvement of Logistic Services and Marketing Channels for SMEs in Agriculture” and is clearly built on the results achieved by this project . This is a direct continuation of the EU efforts in this field aimed to establish the most effective balance of state and private resources. The work undertaken already with the assistance of above mentioned EU project (recently completed) and currently underway by Ukrainian authorities on development and approval of legislation on wholesale markets will be also further continued thus ensuring synergy and continuity of actions of international and Ukrainian stakeholders.
Another relevant field, where synergy of actions will be ensured through the EU agricultural support programme in agriculture is support to the promotion of linkages between providers and users of financial/credit services in rural areas. In this field, experience of the past and on-going projects implemented by IFC (funded by CIDA and SIDA) in supply chain development project will be used to ensure that positive examples of strong linkages between providers (both banking and non-banking financial institutions) and users of financial services gain sustainable results and access to credits increases for small and medium sized agricultural producers in rural areas.
Experience in using various types of guarantee and collateral by the banks in the schemes for agricultural producers developed by Swiss by-lateral assistance projects will be also thoroughly considered and taken into account.
Rural development
In order to ensure optimum synergy with other programmes (including proposed inputs by the Canadian Government programme CIDA) the proposed intervention in this sphere has been targeted at the national level. This is to ensure that the national legal and institutional framework is in place to enable other donors to continue work at the local and regional level. It is specifically foreseen that positive experience and best practice from previous programmes and projects (especially DFID) will be gathered analysed and fed into the policy making process.
The following projects are planned by international donors in the field relevant to rural development, which form the basis for synergy with forthcoming EU SWAP project in agriculture:
CIDA: CIDA is currently reviewing its proposed activities in the sphere and clarification is expected in the coming months.
Within NAP 2006 there are two projects complementary to that in question, namely, “Regional Fund (Sustainable Local Development, phase III) with budget 15 MEURO and “Community-based approach to local development” with budget 12 MEURO. Both projects support local development and community-based initiatives.
Financing modalities.
1) Off-budget support to the Ministry for 2.2.3 Laboratory network upgrade
The EC provides funds foreseen for laboratory upgrade direct to the Ministry in a separate bank account system
This will allow the Ministry to optimise coordination with the proposed World Bank loan but will be earmarked to support the TA part of the creation of a system of reference labs.
A similar approach may be used for any procurement in the 1.2 of the SWAP capacity building component ( data base design and purchase) and in the 2.2.2 Supporting the development of the capacity to realize the system of traceability
2) Continued direct project approach in other components but with development of “basket funding” projects in the forthcoming programming phase as MAP increases capacity to coordinate.
3) Review the above approach after first phase of sector wide approach capacity development in view of moving towards further off budget support to the Ministry and sector budget support.