As part of the EU's €11 billion package supporting Ukraine, the European Commission has adopted a Special Measure for Private Sector Development and Approximation worth €70 million. This measure is a response to the urgent need to support the recovery and economic development in Ukraine. It will notably help SMEs across the regions of Ukraine, boosting jobs and growth. It will be complemented by a €40 million loan guarantee facility channelled through the Neighbourhood Investment Facility (NIF) which will also ease access to finance for Ukrainian businesses.
European Neighbourhood Policy and Enlargement Negotiations Commissioner, Johannes Hahn, said: "The development of small and medium enterprises (SME) has a crucial role to play in creating growth and job opportunities. By supporting an enabling environment to invest, by providing business development services at regional level and by addressing some of the obstacles to SME development such as access to finance, the EU is contributing to economic recovery, in particular in the regions most affected by the need to integrate internally displaced persons”.
Encouraging innovation and diversification in the private sector and promoting SMEs is a cornerstone for Ukrainian development and enhances the opportunities deriving from the Association Agreement signed in 2014 and the implementation of the Deep and Comprehensive Free Trade Agreement (DCFTA) starting from January 2016. The Business support centres set up under this new measure will also help entrepreneurs adapt to the new opportunities and challenges under the DCFTA.
These measures will be focussed in particular on the regions that have been most affected by the conflict.
Background
Of an €11 billion package to support Ukraine announced in 2014, around € 6 billion has already been mobilised in grants and loans from the European Commission, EIB and EBRD.
The €110 million benefitting SMEs and entrepreneurship in Ukraine includes two actions:
1. EU Support to Ukraine to re-launch the Economy-EU SURE
€95 million will be allocated for this action as follows: €55 million out of the €70 million from Special Measure for Private Sector Development and Approximation in addition to €40 million through the Neighbourhood Investment Facility.
The action supports national, regional and local authorities and other stakeholders to develop and implement effective economic development policies, including SMEs policy. One component will be the setting up of Business Support Centres to cover 15 regions, managed by the EBRD for the development of regional capacities and training in entrepreneurial skills in at least 15 regions of Ukraine, in association with local business associations, banks and local/regional authorities; particular emphasis will be put on the areas affected by the conflict to contribute to the recovery. Another component will be channelled through the Neighbourhood Investment Facility Programme for a project on access to finance for SMEs. This action will also facilitate Ukraine's participation in Horizon 2020.
2. Technical Cooperation Facility
€15 million will be allocated for this action out of the €70 million from the Special Measure for Private Sector Development and Approximation
The overall objective is to effectively raise Ukrainian public authorities' capacities in designing and implementing key reforms stemming from the Association Agreement, including the capacity to carry out legal approximation. Main priority areas of this action are governance reforms, economic governance and trade reforms, including statistics, technical barriers to trade and financial services, transport and energy. The programme will be implemented mainly through technical assistance and grants.
