Posts Tagged ‘SMEs’

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Germany’s KfW and Oschadbank Ukraine look to SME financing in 2017

December 24, 2016

State owned KfW Bank of Germany together with State owned Oschadbank Ukraine will apparently target the ever under financed SME market in Ukraine following the signing of a memorandum to do just that via a vehicle called the “German-Ukrainian Fund”.

The “German-Ukraine Fund” is not exactly new.  It has been around since 1998 when it was created by Presidential Decree 574/98.  It’s creation was with the very same intent as the memorandum signed on 24th December 2016, and its structure 31.3% National Bank of Ukraine, Ministry of Finance Ukraine 31.3% and KfW 37.4% appears to be unchanged.

Needless to say that since its creation in 1998, judging by the woeful state of financing for the Ukrainian SME market, the results have been less than spectacular over the past 18 years.

Traditionally Oschadbank is not a bank that has ever had anything to do with the financing of SMEs.  It certainly has experience of financing large scale projects (all plundered naturally), but would not be on any list associated with the financing of SMEs.

Indeed it would be fair to state that Oschadbank has absolutely no experience of SME financing – a banking sector that undoubtedly has its own very specific competencies requiring sector expertise.

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KfW Bank, aside from being able to borrow cheaply due to being 100% owned by the German State, is split into 3 major banking subsidiaries.  Of most relevance to Ukraine is KfW Entwicklungsbank which lends to governments, commercial banks and public enterprises that engage in the microfinancing of SMEs.

It would appear that whatever the EBRD has done behind the scenes to the internal workings of Oschadbank, part of any result is to open up the banking horizons of Oschadbank and attempt to focus them upon what is an SME economic engine historically ignored.  If nothing else it would diversify the loan portfolio of Oschadbank if a significant number of loans actually take place.

(A reader may suspect that both the EBRD and KfW  will have to lend a good deal of experience regarding microfinancing to Oschadbank for the foreseeable future – though that too may be no bad thing in the short-medium term as the internal Oschadbank management develops.)

All in all, some reasonably positive news to (almost) close the year 2016 – particularly for Ukrainian SMEs or SMEs coming to Ukraine.  If 2016 has been a difficult year for Ukraine, 2017 unfortunately does not seem likely to get any better – that the environment Ukraine finds itself within will get worse is more probable.

So it is with this sliver of hope for Ukrainian SMEs and SMEs entering Ukraine in 2017, that the blog wishes all those who celebrate Christmas on 25th December a thoroughly enjoyable day.

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Demographic voter bases (The Saakashvili target) – Ukraine

May 24, 2016

As stated in an entry some months ago when there was some doubt over the formation of a new Cabinet of Ministers materialising, Ms Tymoshenko and the political vehicle the serves her (Batkivshchyna) had already begun electioneering – with her trademark usual populist nonsense and Robert Mugabe-esque economics naturally to the fore.

That pre-election electioneering has not stopped – quite the opposite, it seems to be gathering momentum.

A reader may ponder just how such flapdoodle is financed – and will continue to be financed for months ahead – considering the amount of prime media time she is commanding (compared to others).

(A reader may also cynically ponder as to just why the media still bows to her ego and accepts her prerequisites that former investigative journalists turned MPs such as Sergei Leshchenko must have left any television studio prior to her arrival and subsequent populist monologue.)

Ms Tymoshenko is clearly aiming to gather in the pensioner vote (in the absence of the Communist Party and now defunct Party of Regions) and the agrarian vote too, in an effort to add them to her traditional and fairly solid 13% of the constituency.  (Somebody has to try and win over the old Communist voter base, so why not Ms Tymoshenko, and why not start now?)

Whilst President Poroshenko continues to broadcast the actions of Russia, as indeed he should for Russia will remain a significant threat (through its various measures) to Ukraine far, far into the future, the domestic constituency sees reform as the most necessary and top ranking issue facing Ukraine – and quite rightly.

The net result is that President Poroshenko, now perceived to control the Prime Minister and Prosecutor General (how long before the Interior Minister is replaced by a Poroshenko man?) is fully responsible for all progress and ills of the nation domestically (as well as internationally) despite constitutional responsibilities.  Thus only reforms will save President Poroshenko at the ballot box – regardless of how much he may prefer to orate of the dastardly and illegal deeds of The Kremlin.

Likewise only reforms will save his prodigy as Prime Minister and (latest) chosen man to head the PGO – and it is these people that face a far immediate and difficult political horizon when it comes to early national ballots and securing sections of the demographic voter base as a foundation.

It is perhaps interesting therefore to note the comments of Davit Sakvarelidze of 24th May in Kharkiv – for they indicate the voter base demographic that any new Saakashvili associated and/or led, party will be targeting – that of the Ukrainian SME.

It is not a demographic that will easily take to the populist nonsense of Ms Tymoshenko, nor will it feel represented by the remnants of Party Regions under the various flags these parliamentarians will be flying, for historically they are associated with big business and the oligarchy.

Samopomich still remains too provincial to capture the imagination of SMEs nationally, the Radicals have nothing to offer by way of competent policy, and thus far the Poroshenko (and to be annihilated at the next election) People’s Front coalition are perceived to have completely failed SMEs – even to the point of not providing the most basic of idiots guide to the newly opened EU market via the DCFTA..

SMEs therefore would appear to be fertile ground for a new party – and a new party supported by and/or led by Misha Saakashvili there will be in preparation for the inevitable early Verkhovna Rada elections.

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It seems hardly a difficult matter to create a party manifesto based upon repealing so much legislative and bureaucratic codswallop that currently suppresses and thwarts SMEs and entrepreneurs in Ukraine – even if that is all that is in a party manifesto.

Indeed any manifesto that promises nothing other than repealing current legislative nonsense may prove to be far more popular than the usual populist promises of quick (and unachievable) fixes based upon Zambian economic theory, or providing subsidies far beyond anything responsible governance would allow.

As is often the case with policy, legislation, and governance, less is more – so why not in a party manifesto?

The target for any new Saakashvili supported and/or led party would be (realistically) to achieve approximately 20% of the national vote – for no other party seems likely to reach 20% of the national vote.  That would leave them in a solid position for coalition building – or opposition.  (To be blunt it seems unlikely that any party will pass the 20% mark at the time of writing, and the last polls seen by the blog had a Misha Saakashvili anointed political entity currently only half way to that 20% nationally – prior to identifying a target demographic.)

The question to be asked therefore, now that the demographic of SMEs has been identified by Mr Sakvarelidze as the target for any Saakashvili blessed political entity, is how any such political party will frame what it will do for this vital section of the society/economy.

A humble suggestion would be to work on the “less is more” principle, publicly and repeatedly identifying what obstacles and legislation will be removed and repealed to ease the SME burden – that and to begin an education programme posthaste for SMEs regarding how to achieve market entrance to the EU as a preparatory electioneering act – which would be far more useful when it comes to potential voter traction than any voter listening to a prime time monologue delivered by Ms Tymoshenko.

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EU4Business Programme – Ukraine

May 20, 2016

In April 2014 an entry appeared highlighting the absence of preparation for the implementation of the as then unsigned (let alone ratified) Association Agreement/DCFTA between the EU and Ukraine as far as the Ukrainians were concerned.

A year later in February 2015, post-signing (and ratification) of the agreement, the issue was revisited noting the continuing lack of information to SMEs in particular when it came to compliance with EU standards and assistance with EU market entry.

Both entries contained the following – “For those that are looking westward and desire greater integration, it is surely time to show just how attainable that actually is – in practical and tangible everyday ways.

One example was that of trade and Ukrainian products that already meet EU standards.

Somewhere between 20 – 30% of Ukrainian products already meet, and another 10% or so with simple changes to things like packaging, would meet, EU standards (not to mention ISOs).

Thus EU standards are not only achievable but have already been achieved by certain producers big and small across several market sectors – and yet nobody has produced a consolidated list that publicises what has already been achieved and is easily identifiable to a Ukrainian public that also buys those products.

Why not?

Would it not show quite clearly that European integration is not a pipe dream, but is something not only achievable, it is actually underway in practical and tangible terms?

Is it not an easy public relations win, psychologically fortifying for the believers, irrefutable for the detractors, and also cheap to do?

Considering the tens of thousands of spam commercial comments this blog gets advertising all and sundry each and every year – why, in all the years it has been running, has there never once been a comment offering/advertising a method of attaining EU standards?

Is there a campaign or programme to help Ukrainian businesses over the compliance line? 

If it is policy to talk the talk in an effort to make Ukraine walk the walk – why is it that those that can be held up as examples of success with regard European integration/standardisation aren’t?

As of the time of writing, more than 2 years since the initial entry, and almost 6 months after the Association Agreement/DCFTA became operational, access to such information, actual assistance in compliance and market entry is still, to be entirely blunt, nothing short of woeful for Ukrainian SMEs.

Undoubtedly that information is “out there” for those Ukrainian SMEs prepared to spend a lot of effort finding it – and a lot of time then trying to understand it.  What does the “New European Approach” mean?  Is it a way of making EU regulation flexible toward innovation, and if so, how?.  How to create “conformity declarations”?  When to involve an EU “Notified Body”?  Where to find an EU “Notified Body” if and when they were required?  What exactly are“Assumptions of conformity” and liabilities if products fail?

Who has the primary responsibility in clarifying such issues (and many others) for the bewildered Ukrainian SME?  Does the Ukrainian government have primary responsibility?  Does the EU have at the very least a requirement of goodwill, if not some responsibility, to effectively communicate what needs to be done for those searching for, and reaching out for, that needed assistance for EU standards compliance and market entry assistance?

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Lo it has come to pass, almost 6 months since the DCFTA became operational, and more than 2 years since this blog raised such basic preparatory questions, that the Ukrainian Government, EU and EBRD signed an agreement whereby the EU and EBRD will provide approximately EUR 28 million for business advice, information, educational and other support to SMEs in Ukraine under EU4Business program.

“The purpose of EU4Business initiative, to support creating jobs in Ukrainian business by developing small and medium-sized enterprises, new skills, and support their plans for the biggest neighboring market exports, ie EU common market with over 500 million consumers.  We combine efforts with our long-term partner the EBRD in order to significantly increase our support for small business in Ukraine and to help various companies to use the opportunities that emerged as a result of the creation of the DCFTA with the EU. We are determined to help local companies to become the driving force of economic growth in the regions of Ukraine and to compete successfully in world markets.” – EU Ambassador Tombinsky 20th May 2016

Quite – but would it not have been more timely to have done this prior to 1st January when the agreement became operational?

How much further along the road of compliance, certification (where needed) and preparation for market entry would many Ukrainian SMEs be if such information and assistance had been accessible 2 years ago when such issues were first raised by the blog when it was absolutely clear that the AA/DCFTA would be signed posthaste by then President-in-waiting Poroshenko?

Perhaps there are good reasons for such a delay, though it is difficult to identify any insofar as access (and promotion) of information and assistance is concerned.  (Financing/loans etc may be slightly different.)

Opening 2 new EBRD offices in Odessa and Kharkiv to compliment those in Kyiv and Lviv is a very welcome step when it comes to disseminating much sought after information, guidance, and funding access, as are the 15 (presumably non-EBRD institution) business support centres across the nation also to be financed.  (Hopefully judicial reform and the prevalence of rule of law in particular with regard to property rights will occur before SMEs benefitting from the EU4Business programme become prey to “raiders” and other nefarious interests/activities.)

Nevertheless, a reader may ponder why there is still no prominent and/or promoted (to the point of annoying if necessary) on-line or TV campaign to disseminate even the most basic information with regard to how and where to find preparatory information/assistance before those looking to EU markets begin darkening the doors of the two new EBRD offices, – or 15 business support centres – with a business plan that is nothing short of being scribbled hurriedly on the back of a cigarette packet and/or having absolutely no idea of what they are to actually comply with (if anything) when turning up.

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Privatisation Ukraine – Caveat emptor? Probably not in this case

March 13, 2016

The National Bank of Ukraine has lent its influence toward the sale of shares in two State owned banks – “Oschadbank” and “Ukreximbank” – to external investors.

Osch-Exim

A case of caveat emptor (let the buyer beware) for these external investors (or external gamblers, given the continued failure to grasp the rule of law firmly in Ukraine)?

Probably not – at least not in this case.

The National Bank of Ukraine is putting its weight behind the sale of shares in these State owned banks to two investors able to withstand internal shenanigans and even influence Ukraine itself.  The external investors supported by the National Bank are the European Bank for Reconstruction & Development (EBRD) and the International Finance Corporation (IFC).

Not only would such share purchases provide additional confidence in these banks, but undoubtedly there would be a marked improvement in the quality or corporate governance within them.  Moreover, with Oschadbank being a high street name daily interacting with the domestic constituency, whilst Ukreximbank being an entity that concentrates upon facilitating foreign trade.

Ukrainian SME’s may beat a path the Oschadbank’s door, for the EBRD will be keen to lend sensibly to the entrepreneurial/SME class and reap the rewards (as banks do) of invigorating the economy on the bank’s terms.  Lines of credit/letters of credit may actually be forthcoming from Ukreximbank for those operating/trying to operate across national borders.

It seems simply far too sensible to actually happen.

If a morally upstanding, integrity ridden candidate emerges from the current (until 8th April) recruiting window, and is subsequently appointed to head the State Service of Intellectual Property another – although not headline grabbing – investor friendly step will have been taken.  It is no secret that intellectual property rights has been more than an irksome subject for several years within the US Embassy’s Economics Department, for it is an issue (of several naturally) that has prevented US investment despite the efforts of the US Embassy in Kyiv.

The aforementioned seems rather encouraging – until consideration is given to any degree of involvement from the feckless political class which remains intent upon trying to snatch failure from the jaws of victory.

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A strange week – a bit of policy and early elections

November 7, 2015

It has been a strange week for the author of this blog.  So unusually there will be a small mention of those personal events which will then lead to a bit of policy – as both are actually connected, albeit tenuously.

Firstly, “those people” behind two MPs (national not local administration) have sought council (such as it is) with your author over policy in preparation for early Verkhovna Rada elections which are heavily rumoured for the Spring 2016 (and thus before 1st July when the far more transparency promoting “On amendments to some legislative acts of Ukraine concerning prevention and counteraction to political corruption” take effect – one last national hurrah for the usual corrupt political practices perhaps, and hence the otherwise inexplicable delay in these amendments taking effect).  Yet it is far from a certainty that early Verkhovna Rada elections there will be.

Nevertheless, that both are lining up their political ducks for a slow burning campaign to begin immediately after the New Year would suggest they feel it likely enough to attempt to steal the march on others.

PigTo be entirely blunt, with regard to one of the MPs, although “his people” are all OK people, it would be like putting policy lipstick on a political personality pig.  Perhaps less so for the other individual, despite on occasion displaying some very boar-like tendencies.

The thing about policy is that there are really only three types – Effective, ineffective and counterproductive (regardless of the policy content).

Of course, policy has to be sold to the voting constituents as a policy belonging to “MP X” or “Party Y” if it is to become part of the foundation to any slow-burning and unofficial political campaigning before the official electoral starters gun is fired (and therefore has to be seen to be “standard politicking” thus remaining within the electoral rules – until, per tradition, everybody breaks them en masse and fragrantly once official campaigning starts).

In short, to lay claim to a policy and frame it under whatever personal branding now(ish) provides for the first framing of policy.  And he/she that frames first and frames well, normally wins the policy argument.

So what should an MP wanting local constituency support, but a parliamentary seat nationally (and therefore seen as too distant to change things locally) look for in a policy?  Perhaps one that if ineffectively implemented nationally, could still be effectively implemented locally – particularly so as “decentralisation” could provide for local successes in policy, despite general national failures.

There are perhaps many policy areas to choose from that could fit – and whilst they can be clearly ambitious, they should also be measurable and consideration given to time both in implementation, delivery, and when anticipated results are tangibly expected – how else to conduct a policy review otherwise?

If the politicians in question are already somewhat “tarnished”, or “underachieving” or otherwise “lacking credibility” after years of abusing both political system and the voting constituency (notwithstanding ignoring the rule of law when expedient), then a policy that covers the widest demographic helps improve electoral chances (depending upon their perceived level of democratic and political debauchery – some MPs are hopefully beyond helping when laid before the alter of public opinion).

Nevertheless, policy is policy regardless of the political mouthpiece.  Message and not messenger.  In a nation devoid of ideology within political parties there is perhaps no need for concern over ideological framing – especially so if the orator/promoter of policy has been in several political parties during a political career – as many have in Ukraine.

In such a mercantile city and oblast as Odessa, the regional economy would seem a reasonable policy topic that could either enhance national policy or be somewhat resilient to it.

Yet economics is not an exact science and also economics is a word that makes many people stop listening.  Therefore any such policy would have to be framed around the improvement in the quality of life.  Everybody wants an improvement in their quality of life.

How will the policy change lives?  There is a need to create jobs, generate business competitiveness, and advance sustainable development.  How will the policy overcome development obstacles in certain parts of Odessa Oblast, that are not faced by the others?

Should one of the aims to be increase Oblast cohesion, or leave every Mayor and regional Chairperson to do their own thing under “decentralisation”?  Any such policy should be about growth across all districts to improve opportunity and quality of life – not just about regional fiscal redistribution.

How to make the most of every Kopeek when every Kopeek is not only scarce but prone to be spent unwisely (if not stolen)?  How to formulate a policy that will encourage additional private domestic, and external investment?  Tangible results are expected from such a policy after all.

How effective (regardless of how prickly) will the interaction and common purpose be between MPs, Governer, Oblast Chairperson and City Mayors?

How to finance new initiatives?  When selling any such policy is it wise to talk in numbers?  If so which numbers?  Is it easier to sell reducing budget headers by 1.2% of the regional budget for X, 1.5% for Y and 1.3% from budget Z in order to create a “Seed Fund” for SMEs of 5% of the regional budget or as a UAH/$ figure?  Should any such Oblast fund then be allocated in the form of grants, or perhaps as low-cost loans given the inaccessibility of affordable banking?  Can it be leveraged with the EBRD, or WB etc?  Who should administer it?  What of transparency and the need for independence when issuing such loans or grants to SMEs?  What becomes of the grant and loan money for SMEs now?  Where does it go?  Dose anybody know?

Is it possible to incentivise a small community that gives a collective yawn when energy efficiency is mentioned, by stating if in 3 months “x amount” of energy be saved, equaling UAH/$ Y, such energy savings will deliver the much sought school crossing point?  In doing so how does that fit with any national energy efficiency policy?

How to increasingly simplify local processes and yet increase public accountability and public auditing?

What about the administrative capacity and quality?  In achieving results and value for money, good project management, financial management and public administration training are essential lest they become a policy bottleneck (or node for corruption).

(This same week your author was asked to consider joining “the Board” of a NGO – a NGO that deals with all within the paragraph immediately above.)

Having stated all the above to “the people” around these MPs, and asked the same questions as those above, it will be interesting to see whether council is sought over the possible answers (for these are not new issues and have therefore been addressed by others before) and a slow-burning “policy campaign” (and a “policy campaign” would be a first for politics in Odessa) will be unofficially launched immediately after the New Year – or not.

Cynically, one has to suspect that the delay until 1st July 2016 regarding the activation of the “On amendments to some legislative acts of Ukraine concerning prevention and counteraction to political corruption” is a very deliberate move to facilitate the same old dirty political machinery in any early Verkhovna Rada elections.  It may yet be that these 2 MPs will simply default to tried and tested odious and nefarious methods rather than try something new – like policy in their campaigning.  It is though perhaps a sign of political progress that policy is even being considered for an electoral campaign!

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Academic Acrimony – Ukraine

June 15, 2015

Aside from fairly frequent high-brow meetings with diplomats from those nations that are active (rather than simply in) Ukraine, this blog gets to meet visiting/researching academia, think tankers, NGOs and  journalists, somewhat ad hoc when they are passing through Odessa and make contact wanting a chat.

The dividing line these days between academia, think tanks and certain NGOs becomes ever increasing smudged and blurry.  Your author’s genuine academic heroes, such as Sir Lawrence Freedman, become more and more difficult to find in an environment where publish or perish of acquired knowledge (of which we are all capable) has replaced scholarly thinking and subsequent wisdom and sublime insight (of which we are not all capable).

One of the benefits of blogging about Ukrainian and regional policy (and politics) in English from the provinces such as Odessa, is that the “regional view” is read and actively sought out when the enlightened pass through.  Rightly, any excuse to get out of the “Kyiv bubble” is taken – if only the senior Ukrainian politicians did the same.

Over the past 48 hours, Professors from Moscow, Carnegie Moscow, Yale researchers and think tankers/NGOs from Kyiv have all, in various ways and to various degrees, emptied you author’s head over good food and in pleasant surroundings.

There is a certain amount of sympathy for researchers.  The boys and girls of the academic boiler room that make Doctors and Professors look good, but who are generally nothing more than a footnote on a published work and thus almost invisible when said Doctor’s or Professor’s published work is cited elsewhere.  That said, being an “intern” is even worse.

From here on in, The Chatham House Rule applies.

One of the issues that raised its head with some of the enlightened, amongst the numerous issues discussed and which may well be visited in later entries, was that of academic acrimony.

A current case in point – USAID has financed several Kyiv based NGOs that will remain nameless, to tackle the issue of SMEs, existing and future government policy, bureaucratic hurdles, (the complete lack of) DCFTA/EU regulation awareness, certification requirements and sources for certification etc., and delivering some long hanging policy fruit that can be dealt with swiftly, as well as a more strategic policy paper.

Rather than finance the 3 NGOs to work separately, USAID stated it would source a collaborative effort.  Thus former NGO and think tank/academic rivals become current NGO and think tank/academic partners – not necessarily to the benefit of the subject matter.  Funding trumps all history and current notions of competitiveness and adversary.

Part of academia is to put reasoned, thoughtful ideas and suggestion “out there” for peer review and comment – and if not unnecessarily heavily cloaked in discipline specific jargon, the hoi polloi will understand it too (God forbid).

(It has to be said academic writing is tedious.  Journalistic writing is generally dull.  Hopefully regular readers of this blog will class the writing here as “conversational”.  After all, are you not regularly offered dilemmas and questions to think about, rather than simply being given answers to prickly problems?)

Naturally for any given academic view, there is often an alternative academic view, and occasionally what has been put “out there” is taken to the next level by others.  On rare occasions, take the Keynes verses Hyatt discourse in The Times many moons ago, it can become somewhat publicly acrimonious.  Indeed contesting the content can be replaced with attacking the author.   It pays to separate message from messenger in most walks of life – and academia is no different.

Anyway, six months into the current USAID funded project – and having eventually reached consensus over the “what” of the study (and the “what” is always harder to define than the “who”, “when”, “where”, “why” and “how”) field work is underway in five randomly(ish) picked Oblasts.

For a few swift results as required by the USAID funder, that low hanging fruit will have to be very low hanging indeed – tick tock, tick tock, six months have passed already!

Yet for there to be a coherent consensus driven outcome, a coherent consensus driven input is required.  And there are issues already, despite so little having been done thus far.

At the end of December 2014, the Rada passed a law that stated business and SMEs were to use electronic tills that produce receipts for customers – Shock!  Horror!  An attempt to drag some of the grey economy into the white?

These tills cost approximately UAH 5000 each.  For many businesses and SMEs not a major outlay – for others problematic.

The Ukrainian Business Associations were rightly miffed that they were not consulted about this law before it was passed, even if the government policy of mandatory introduction was unlikely to change by any SME/Business Association input.

It was indeed bad form by the government not to consult, or at least be seen to consult, the business and SME organisations whether it had any intent to actually listen or not.

Indeed, there is not really that much objection to the introduction of the tills amongst the business and SME community – the contentious issue is who is to pay for these tills?

How dare the Rada pass an arbitrary law that costs SMEs and business money?  If they insist business and SMEs use such tills, then the government should pay for them.

That the government also has a mandatory requirement that all nationals have an internal passport that the individual pays for and that the government does not, is besides the point.  That every driver pays for their driving license because the government states you must have one to drive, again is besides the point.  Because the government has made it mandatory to have electronic receipt giving tills for customers (and tax officials) this is something the government should pay for – unlike internal passports or driving licenses it also insists upon, and people pay for.

Perhaps if the government pass a law that snow tyres must be on all vehicles when the snow is deeper than “x” and temperatures lower than “y” on the grounds of public safety/saving lives, the government should pay for snow tyres on every mechanically propelled motor vehicle that uses a public highway in Ukraine?

When these Ukrainian businesses and SMEs begin trading with the EU and have to meet the EU standards, perhaps the EU should pay for these businesses and SMEs to reach those standards to be able to trade within the EU?  If a new standard is introduced the EU should pay for Ukrainian businesses to reach it – even if they don’t pay for EU businesses to reach it?  EU standards are arbitrarily imposed and cost money to meet!

For any new SMEs starting up, this new law is simply part of the start-up costs and budgeted for accordingly.  For those existing this law is onerous and thus outrageous.

Whatever the case, the law is the law.  How effective it will be at dragging part of the grey economy into the white, or indeed reinforcing customer rights, remains to be seen.  After all, electronic till or not, it does not mean all transactions are going to go through the till.  Alternatively when the little corrupt tax inspector arrives and in their opinion not enough tax has been paid, evidence of sales and tax liability based on electronic till receipts and not the corrupt tax inspectors best guess and whim have some evidential value to the SME being squeezed.

Unsurprisingly (or perhaps not), there is now a fracture between the collaborating NGOs over whether the government or private business/SMEs should shoulder the costs of the arbitrary government decision.  Apparently it is an on-going argument over several months amongst what is supposedly an erudite and enlightened group of people tasked with far larger issues by USAID, relevant as this may be.

Seemingly the ability to agree to disagree and create a research/policy recommendation document that can contains either/or variations on such an issue and move on, is beyond contemplation.  Suggesting a compromise of business/SME’s paying and then getting a tax break to cover it over a period of “x” years is not an option for consideration.  Alternatively, suggesting that if government pay it is in the full knowledge that the government will either raise or introduce a tax to cover the costs – and undoubtedly that tax will remain long after those costs have been covered, is not how these things can be framed.  Heaven forbid that a deal is struck that SMEs and business pay for the tills yet other regulatory issues that have to be tackled by government are delayed long enough to recoup the UAH 5000 outlay before more inevitable changes occur – be those changes recommended by the collaborative USAID funded research or not.

There is often much to be gained by academic collaboration, and there can equally be much lost.  The wisdom is found in forming the right collaborative agencies – and that is rarely done when funding for all concerned parties overrides compatibility and/or maturity.  When that academic line becomes blurred in the muddier waters of think tanks, NGOs and funders desired outcomes, friction will occur.

If the collaboration is allowed to become fractious, competitive and positions entrenched, USAID would have been far wiser either finding more compatible partners, or funding 3 separate research programmes and drawing their conclusions from each upon their own merits

Hopefully the 3 NGOs will get a grip.  Six months to decide upon the “what”, to and then immediately get hung up on a single conflicted issue in such a broad and important research effort is not particularly promising when it is not especially difficult to arrive at several valid paths for consideration and sets of recommendations for each.  .

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