J.15 First Annual Report of the USAID Future Growth Initiative.pdf

USAID’s FUTURE GROWTH INITIATIVE

Annual Report Y1: October 1, 2019 – September 30, 2020

USAID’S FUTURE GROWTH INITIATIVE

Annual Report

Y1: October 1, 2019 – September 30, 2020

Submission Date: October 30, 2020

Contract Number: 72011519D00001-72011519F00008

Prepared for: Svetlana Golovatskaya, Project Management Specialist Economic Development Office, USAID/Central Asia tel: +7 (727) 250-7612 (ext-6305) e-mail: sgolovatskaya@usaid.gov

Submitted by: Katharine Cooley, Project Director USAID’s Future Growth Initiative e-mail: katharine.cooley@thepalladiumgroup.com about:blank about:blank mailto:sgolovatskaya@usaid.gov mailto:katharine.cooley@thepalladiumgroup.com

This report is made possible by the support of the American people through the United States Agency for International Development (USAID). The contents of this report are the sole responsibility of Palladium International, LLC and do not necessarily reflect the views of USAID or the United States Government.

TABLE OF CONTENTS

TABLE OF CONTENTS 3

ACRONYMS AND ABBREVIATIONS 4

PROJECT OVERVIEW 5

EXECUTIVE SUMMARY 1

Technical Activities 3

Component I & 2: Increase Competitiveness of Non-farm Enterprises, Support Development of Skilled Workforce 3

Anchor Firm and Alliance Pipeline Development 3

Investment Facilitation Pipeline 8

E-Commerce Acceleration 9

Startup Ecosystem 10

Component 3: Business Enabling Environment 11

Regionalization: Collaboration and Cooperation 13

AmCham Uzbekistan 14

Communications 14

PLANNED ACTIVITIES FOR NEXT QUARTER 14

ANNEXES 16

Annex I: Infographics 16

Annex II: PITT Year 1 17

Annex IV: Media Coverage 21

Annex V: Environmental Screening 26

Annex VI: FGI Financial Status Year 1 Q4 35

ACRONYMS AND ABBREVIATIONS

USAID US Agency for International Development

FGI Future Growth Initiative

AmCham American Chamber of Commerce

E4 Enterprises, Employment, and Enabling Environment

IDIQ Indefinite Deliverable, Indefinite Quantity

ICT Information & Communications Technologies

Palladium HQ Palladium Head Quarters

COP Chief of Party

DCOP Deputy Chief of Party

GEC Grant Evaluation Committee

MEL Monitoring, Evaluation, and Learning

MSA Market System Assessment

PEA Political and Economic Analysis

LOA Letter of Authorization

SOW Scope of Work

WFD Work Force Development

VAT Value Added Tax

JCA Jacobs, Cordova, and Associates

NGO Non-Government Organization

UN ESCAP United Nation Economic and Social Commission for Asia and the Pacific

MIFT Ministry of Investments and Foreign Trade (Uzbekistan)

MFA Ministry of Foreign Affairs

GDP Gross Domestic Product

ADB Asian Development Bank

EBRD European Bank for Reconstruction and Development

MDF Market Development Fund

KZ Kazakhstan

KG Kyrgyzstan

TM Turkmenistan

UZ Uzbekistan

TJ Tajikistan

PROJECT OVERVIEW

Program Name: USAID’s Future Growth Initiative

Activity Start Date and End Date:

10/01/2019-09/30/2024

Name of Prime Implementing Partner:

Palladium International LLC

Contract Number: 72011519D00001-72011519F00008

Name of Subcontractors/Subawardees

Eurasia Foundation; Jacobs, Cordova, and Associates Economist Intelligence Unit

Geographic Coverage (cities and or countries)

Kazakhstan, Kyrgyzstan, Uzbekistan, Turkmenistan, Tajikistan

Reporting Period: October 1, 2019 – September 30, 2020

Approval Date:

EXECUTIVE SUMMARY

This is the first annual report for USAID’s Future Growth Initiative (FGI) project, which covers the period from October 1, 2019 through September 30, 2020. This report provides an overview of activities and results achieved over the past year, including activities that have taken place in Quarter 4 of this year. During Year 1, FGI launched the anchor partnership model to increase competitiveness and jobs in the ICT, Tourism, Light Manufacturing, and Food and Beverage target sectors. FGI launched 16 anchor firm partnerships and alliances mainly through a co-creation grant process. These partnerships were strengthened and complemented by work with key stakeholders in government on policy reforms around simplifying procedures and processes and strengthening competitiveness in each of the target sectors. Rounding out these activities, FGI focused on expanding FGI activities across Central Asia, taking advantage of market and supply chain opportunities, achieving economies of scale for interventions and knowledge sharing around local and international best practices.

Components 1& 2 - FGI successfully designed and executed 38 online and offline webinars with close to 1,200 businesses, with women and youth entrepreneurs participating and benefiting from the trainings. Adapting to the new COVID -19 reality, FGI quickly transformed in -person to virtual training sessions. As early as March, the activity hosted nine online technology webinars with 400 participants, as part of Traction Camp’s accelerator-style masterclass to bring experience-based, peer-to-peer entrepreneurship and business growth knowledge to groups of startup entrepreneurs who have launched an early version of an innovative product, and are looking for growth, sales, fundraising, and scalability. Through these webinars, entrepreneurs interacted with international experts and other successful entrepreneurs from Europe and the United States, learning the latest practical tools to drive growth, sales, fundraising, traction, and scalability.

Component 3 - During the first year of operations, the FGI project addressed nine policy initiatives for improving business environments across the region, including green hospitality certification for guest houses, eTax reforms, venture capital and eCommerce legislation, and textile and light manufacturing tax improvements, to name a few. All of the policy initiatives were recommended and developed based on international and regional best practices. Moreover, the FGI project increased local knowledge and capacity-building of national business associations and conducted policy studies to help improve the business legislative environment in the region. In close cooperation with the Uzbekistan Venture Capital Association, FGI hosted virtual roundtables that

Key performance metrics brought together 60 representatives from ministries, government agencies, the private sector, and business associations designed to improve venture capital legislation.

Regionalization - To increase economic competitiveness and engage young entrepreneurs and women in ICT, FGI initiated support for startup ecosystems across Central Asia. In Turkmenistan, the first ever coordinated program to seed a startup ecosystem resulted in the development of a network of accelerators and incubators, and training programs for 120 entrepreneurs. In Uzbekistan, FGI initiated targeted trainings for women entrepreneurs and startups, including a comprehensive training program for business angel investors. In partnership with MOST, the first private business incubator in Central Asia, FGI launched a regional startup ecosystem initiative that will enhance knowledge and expertise within each country, sustain regional cooperation, and increase linkages with international startup hubs.

FGI worked with our partner, the Economist Intelligence Unit, to produce a comparative study “Looking Ahead: Economic Policy Options for COVID-19 and Beyond in Central Asia.” This comprehensive report outlines the types of government support SMEs received in 15 countries to address the challenges created by the COVID-19 crisis. The outcomes of the report will be featured in round table discussions with Central Asian governments as a mechanism to build public-private dialogue, and to consider which policies are appropriate to be replicated in the region. FGI also initiated a dialogue and established a partnership with the Regional AmCham Network in Central Asia , including AmCham Afghanistan. Discussions this past year focused on identifying business opportunities, and in the case of Uzbekistan efforts were made to improve the overall business environment.

Operations and Administration - In Y1, the COVID-19 pandemic posed the main operational and administrative challenge to implementation of program activities. Due to the pandemic, FGI shifted towards remote work and continued the operation and management of the FGI program online. The FGI Project team digitalized operations, moving to electronic document workflow between stakeholders, country offices, anchor firms, banks, and tax authorities. To effectively communicate with project staff and other stakeholders, FGI continues to have weekly calls and online meetings. The team’s flexibility and innovative solutions enabled project activities to function at a high level and only altered the approaches taken to implement the work plan. The entire grant application process, interviews with candidates, selection committee meetings, and procurements were conducted online during this past year with only minimal delays during the initial shut down periods as the project and stakeholders adapted to the new restraints.

TECHNICAL ACTIVITIES

Component I: Increase Competitiveness of Non -farm Enterprises & Component 2: Support Development of Skilled Workforce

Under Components 1 & 2, FGI initiated a series of business growth and workforce development anchor firm partnerships. Subsequent to the completion of the startup and sector assessment at the beginning of the project, FGI entered the partnership development phase of the program and quickly began to build up anchor firm partnerships to overcome constraints to growth while expanding the base of suppliers, distributors, and service providers. In addition to these alliances, FGI pursued complementary activities to support anchor firm alliances in investment promotion, e-commerce acceleration, and start-up ecosystems development.

Anchor Firm and Alliance Pipeline Development

In Y1, FGI launched the Market Development Fund (MDF), a cost-sharing mechanism that works with private sector businesses and organizations to address key constraints to growth and generates opportunities for SMEs to expand and develop their supply chains.

In year1, FGI launched 16 anchor firm and association alliances through the Anchor Firm Alliance Request for Applications (RFA) process. Environmental screenings were conducted on all applications and categorical exclusion were given to activities that are not expected to have direct, indirect or cumulative effects on the environment. These partnerships are presented in the table below.

ANCHOR FIRM Partnerships and Alliances

KAZAKHSTAN

Organization/secto r

Activities Expected outcomes

Business Incubator

MOST (IT)

MOST is implementing a “Central Asia: Region Full of Opportunities” project. Up until today, several online inception events, such as: a webinar entitled “Startup Incubator/Accelerator Sustainable Development " (August

19) and a panel session called "Post-quarantine Development of Venture Capital Investments in Central Asia" (August 21) were organized.

It is expected that 15 private sector lead firms and sector alliances will receive support and strengthen their capacity/improve their business because of this intervention. 45 professionals will be trained and subsequently will organize 2 to 5 training events. As a result, up to 500 people (with a focus on young and women entrepreneurs) will receive support for launching and developing their ICT business, strengthening competitiveness, and increasing sustainability and investment attractiveness.

KYRGYZSTAN

Aman Food Green (Food Processing)

Aman Food Green completed the first activity – training for beekeepers in September 2020. The company conducted trainings in four locations: Uzgen City, Alay District, Toktogul City, and Naryn City. In total, 97 beekeepers participated in the training.

Aman Food Green collected commercial offers from several business service providers and is evaluating offers to implement ISO 22000 and 9001 standards, and the strategic development plan around its raw material base. It is expected that the implementation of these activities will start in October 2020.

TAJIKISTAN

Alif Academy (IT)

Alif Academy began 3-month programming courses (online and offline) and basics programming courses for rural girls.

It is expected that 100 people will complete the trainings and 30-35 will be employed as a result of them.

Ilmhona (IT)

Ilmhona is developing 24 online and offline bootcamps trainings on software development and graphic design.

Four courses have thus far been completed (2 web intro, front-end programming, and graphic design) and 30 people graduated; 7 more courses are ongoing with 113 students participating.

Four hundred students will be trained and100 jobs will be created or improved.

Union of Private Sector Development (Textile)

3 trainings in Khujand, Dushanbe and Bokhtar will be conducted to improve the skills of SME leaders in the textile and clothing sector and in effective HR management and export-oriented production.

Training materials and attendees have been identified; consultants/trainers/selected. Due to COVID and upcoming presidential elections the trainings are postponed.

ACT DG

ACT will conduct 4 trainings to 48 representatives of SMEs on the Productivity, Quality, Competitiveness ('3G Tailor’) program to help clothing SME companies boost productivity and improve quality. Training will include mentorship services to facilitate the application of their learning in practice as well as improvement of production processes in line with 3G Tailoring.

Eight apparel companies will adopt3G Tailoring’s best practices; 48 individuals from apparel sector will complete 3G education programs.

TURKMENISTAN

Turkmen IT Park (IT)

Turkmen IT Park will provide 4 online ToT courses on cybersecurity.

Trainings will improve the quality of education trainings and standards. It is also expected that it will create new jobs for youth and entrepreneurs and improve SMEs’ efficiency and youth productivity.

Yupekchi (Food Processing)

The project seeks to improve the quality of beverage products (by implementing international quality management standards), and to export products to Kazakhstan and the Middle East. All activities were moved to 2021 due to the COVID-19 pandemic.

The activity will generate an increase in sales and create 75 new jobs (47 men and 28 women, including 21 young people).

Entrepreneur Ravshanov (IT)

The project is engaging in consultations with a market researcher to identify additional technical services for 1CT integration. Development of revised SoW is in process.

This activity will provide improved quality of software programs and programming skills through targeted trainings for the programmers, as well as provide support for the export of the “Hasabym” system developed by programmers.

Gonezlik (Food Processing)

Company started preparing the first activity (warehouse plan design), ready to start in November 2020.

This initiative will increase daily milk processing capacity from 2.5 tons to 5 tons, improving both quality and quantity while also producing a variety of cheese products. This will lead to an increase in sales and generate jobs for the rural population.

Halk Hazyna (Light Manufacturing)

Procurement process for hiring an international consultant for Extrusion and Thermoforming Process Training started. The first training out of three is expected to be launched in October 2020. The remaining two trainings are planned for December 2020 – January 2021.

This initiative will improve the quality of food packaging products by introduction of new high-quality sustainable products produced by modern technologies, thereby also creating new jobs and generating increased sales.

UZBEKISTAN

Association of Private Tourism

Agencies of Uzbekistan (Tourism)

APTA implemented community-based tourism in Uzbekistan by improving the professional competence of rural residents. On September 24, 2020, 8 CBT trainers participated in a financial management training session.

Ten partnerships with government structures will be developed that will benefit 10 SMEs, generating an increase in sales of at least 4% and creating 150 new jobs (70 men and 80 women, including 30 young people).

Moynoq Orzular Oroli (Tourism)

Moynoq Orzular Oroli implemented the creation and promotion of tourist information destination "MOYNOQ OAZIS" program. The program will host trainings for artisans to manufacture of souvenir products from local raw materials. In the process of developing trainings for owners of tourism destinations and hotels, guides, and Karakalpakstan museum and cultural center representatives.

Moynoq Orzular Oroli will initiate partnerships with tourist agencies from Uzbekistan and Central Asia and 2 partnerships from government structures, increasing sales by 30% and generating 30 new jobs (10 men and 20 women, including 20 young people).

Naril Textile Invest (Textile) Naril Textile Invest worked with a technical consultant to create a new enterprise that specializes in dyeing fabrics.

This led to a reduction of the company’s costs by 15%, generating an increase in sales of up to US$14 million and creating 105 new jobs (27 men and 78 women, including 84 young people).

IWPF Sharq Ayoli (E-commerce)

IWPF Sharq Ayoli implemented its “Women and the Digital Economy” project, hosting workshops for women entrepreneurs in the Tashkent region on e-commerce development. The event was attended by the government officials, including the governors of both cities and the Oliy Majlis senator.

Thirty jobs improved via e-commerce platforms (30 young people), 880 women participated in trainings, and 5 government officials will be part of the public-private partnership.

IT Park (IT) IT Park launched its “Strengthening Women's Entrepreneurship through ICT” project to increase involvement of women in the ICT ecosystem. To date, the second component (incubation/acceleration program) was launched. Sixty participants have been selected and classes are being conducted online. The work on the third component (holding of a school of business angels) has also started.

Sixty startups will benefit from this project, with sales expected to increase by 40% and 240 new jobs projected (70% for women);

410 people including 360 women will be trained on computer courses, 60 women’s startups will be supported under mentors’ assistance, and about 50 people will be trained to become the first independent actors in the ecosystem and potentially invest in start-ups from the second component.

On July 15, 2020 FGI announced an open call for a second round of anchor firm partnerships through an Annual Program Statement (APS) with rolling deadlines and larger ceiling value for co-investment to attract larger concepts for program support. After a 2-stage selection process the Grant Evaluation Committee approved the following 12 projects :

Kazakhstan Schuchinskiy gormolzavod (KazBeef) is a leading meat producer in Kazakhstan. To increase its sales, the company needs to acquire a global gap certification, which will allow it to sell its products in international markets.

Magnum C&C is a supermarket chain in Kazakhstan with stores all over the country. The company is in the process of developing an online delivery platform.

Kyrgyzstan BeSmart.kg provides its customers with coupons and discounts for the purchase of goods and services. BeSmart is one of the few companies that successfully implemented a project both in Kyrgyzstan and Kazakhstan. BeSmart is working to create a B2B2C platform (marketplace). The platform will enable users to order food products through a convenient mobile application, and delivery will be carried out within 30 minutes. BeSmart expects the prices of goods for consumers to be lower than at main retailers.

Baibol Group is a well-established tourism company. The main goal of the project is to create employment opportunities for self-employed artisans, rural communities, and SMEs by producing handicrafts. Another focus of the program is to provide them access to regional and foreign markets through Handmade.kg and other international trading platforms.

Namba Soft is a software company that develops end-to-end IT solutions, with a focus on customer-centric mobile and web solutions. Namba Soft has developed MVP version of the mobile app RUN Lite and already has 70 subscribers. The goal of the application is to provide small businesses with convenient and comprehensive automation, critical data, and analytical information about their business activities and show profits and loss data.

TRI T is the largest egg producer in Kyrgyzstan. The company specializes in the production of hatching eggs, raising day old and three-month-old chickens, as well as producing edible eggs and egg products. Tri T plans to implement a project to automate the accounting of a pedigree poultry plant in order to digitize and automate unloading key production data and orders.

Tajikistan NASMBT (Babilon T) is the National Association of Small and Medium Businesses (NASMB), which includes leading telecommunication companies Babilon-T and Babilon-M and the E-commerce Association of Tajikistan. NASMBT is focused on the development of the E-commerce ecosystem; training merchants; and linking merchants, e-marketplaces, and transportation companies to the e-commerce system through Babilon-T/Bailon-M networks. Through this project, they intent to connect 10,000 merchants, resulting in 300 new/improved jobs and $370,000 investments (over USD 800K of co-financing).

Javokhir Travel is a tourism company that is looking to develop four new products related to hiking tours. They are interested in promoting the products to international tour operators and providing trainings to local communities to help create 80 new or improved jobs.

Uzbekistan LeBazar is engaged in the delivery of goods from the supermarket chain Korzinka.uz in the city of Tashkent. The goal of the project is to improve the service, expand the range of non-food products, and increase the number of employees due to the launch of the delivery services in regions of the country. The main indicators of results will be the number of supermarkets connected to the system, the number of orders in these cities and sales growth (revenue), and the number of jobs generated (warehouses, couriers and delivery companies).

Mirzachul Teks is a textile company that is planning to construct a denim and yarn production plant in the Mirzachul district of the Jizzak region.

As a result of the project, 12 million m2 of fabric will be produced annually and 600 new jobs will be created. Currently, the company has invested more than 2.5 million USD in the project at its own expense.

Afrasiab Jeans Textile is the first denim fabric production company in Uzbekistan. The goal of the project is to introduce a unified system for enterprise management, which will optimize the work of the business in the field of resource planning and financial management, as well as bring production management quality to a new level.

Based on market research, the company decided to choose 1С ERP (Enterprise Resource Planning). According to the company’s analysis, the deployment of this ERP helps to control the quality of produced products and should have a positive impact in the following areas: production, procurement, marketing, sales, and human resources.

Khantex Group is one of the largest cotton and textile production clusters in Uzbekistan. The absence of an ERP system in the company led to a slowdown in management decision-making and operational control over the business. This has pushed the management to start the automation of business processes in the company by implementing SAP Business One.

The total budget of approved activities is $530.975,00. All APS projects were approved on the condition that further budget clarifications and an increase in the number of indicators. Pre-Award Risk Assessment and Environment Compliance Reviews have also been scheduled prior to award.

Signing of MoU: Sasha Sternik, Head of External Relations & Investments Team, IT-Park Uzbekistan; Saodat Tursunbaeva, Chairman of IWPF Sharq Ayoli

FGI also launched several additional partnerships and alliances outside of the APS program in Y1. These partnerships/alliances were distributed across all 5 countries and target sectors. Each alliance listed below has a clear set of activities, a workplan, and performance objectives that are linked to FGI’s overall performance indicators.

PARTNERSHIPS and ALLIANCES

Sector/Organization Planned Activities/Status

(Light Industry) Alliance of Light Industry Enterprises: Semiramida, LLP; Glassman, LLP; AGF Group, LLP; Azlegprom, LLP; Tegam, LLP; Clotwell, LLP; Semspetssnab, LLP; Global-Walkwear, LLP

FGI signed MoUs with all companies and acquired the services of a local consultant to research the most successful international strategies in light industry development with policy recommendations.

(ICT) KazAeroSpace is the leading IT company in Kazakhstan in aerial photography.

The company plans to attract investments through a public-private partnership. FGI is in the process of the project conceptualization.

KYRGYZSTAN

(Light Industry) Intertex - Technical assistance to optimize production and sales processes in garment factories.

The company in in the process of developing a concept paper.

(Light Industry) Legprom Association: Series of trainings on the transition from mass production to the “creative economy”.

It is expected that up to 70 medium and large companies will attend the training and participants will increase sales by up to 6%.

(ICT) High -Technology Park will organize a virtual international IT expo “ConnectKG”, which was initiated by the U.S. Embassy. The event will be in form of a virtual roadshow for Kyrgyz IT companies.

The two-day online event with B2B sessions will be held on November 12-13, 2020 and invite US and international companies to explore investment, export, and business partnership opportunities.

HTP expects to have a total of 500 participants, who will attend presentations and network with exhibiting companies that will include over 40 Kyrgyz IT firms representing a range of sub-sectors such as: IT education and remote learning, health and sciences, digital tourism, e-commerce, FinTech, etc. ICT companies will present practical IT solutions to prospective global business partners and investors.

(ICT) High -Technology Park of the Kyrgyz Republic (HTP) in partnership with Codify Lab LLC initiated project training courses on the transition from regular business to “digital business” and from local business to international markets, which is oriented toward HTP residents and other established IT companies. An MoU has already been signed with Codify Lab.

Up to 20 ICT companies will be trained on greater productivity and higher quality of work that will meet international standards.

The activity was supposed to start in October 2020 and continue for 8 months, but due to COVID-19, the HTP, which leads the project, decided to postpone the training for an indefinite period.

(Food & Beverage) Barkad LLC is attracting investment through the bond market and further promotion of information about the bon market among companies and business associations.

It is expected that the project will create150 jobs and will have a positive impact on the food and raw material value chains; it will also improve the quality and safety of fresh and processed. The project started in June 2020 and is expected to end in October 2020. As of now the project has received approval from the State Financial Supervision Authority to proceed with issuing the bonds.

(Food & Beverage) Atalyk Group – Atalyk Group is the largest agro-industrial holdings in Kyrgyzstan. The main areas of production activities are: seed growing, livestock breeding, viticulture, productio of grape wines, growing oilseeds, production of vegetable oil and m growing malting barley, production of malt and beer, as well as fore economic activity: supplies from agri-machinery, equipment, and food ingredients.

The Project team has met with the company management and discussed the potential for cooperation in various projects, namely: the introduction of the corporate governance, creation of anchor firms partnership with Adal Azyk (Toyboss TM), investment facilitation, promotion of sales through online stores, and support in export promotion in Kazakhstan.

(Food & Beverage) Adal Azyk (Toyboss trademark) – one of largest processed meat (sausages) producers in the region. In order to successfully develop export potential and enter the Kazakh market, the company plans to conduct a market research in the Dzhambyl and Almaty regions to determine the optimal market entry strategy.

FGI developed a concept paper to introduce corporate governance to increase the investment potential and efficient company management.

TAJIKISTAN

(Light Industry) Vahdat Textile Company is Tajik a textile company that produces socks.

The company plans to hire a Turkish specialist to supervise production as well as to help introduce BSCI and EcoTech Standard and set up a laboratory for product analysis. Expected results include nvestments and co-financing equaling USD 300K,300 improved jobs and 300 new jobs.

(Light Industry) PE Rakhimov is sportswear (kimono) producer. The company needs a consultant to develop a new line of production, who will work on mixed yarn quality.

Expected results include 200 new jobs and around 600,000 USD in investment.

TURKMENISTAN

(ICT) Imdat Elektronika : co-creation underway to develop the company’s exports of software development services.

Concept Paper and budget based on co-funding of expenses is underway. Expected results include increased export of services.

(Food & Beverage) Ter Onum: The hiring of an international market research consultant is underway and near to completion. FGI will also procure a RBC Global Dried Fruit and Vegetable Market analysis report for Ter Onum to help them to understand the global market for dried fruit and vegetable products. Results expected are increased exports and jobs created.

The STTA will work with Ter Onum during October and November.

The company will work on international market research and promotion with an international expert and is about to launch ISO 22000 implementation process, based on the negotiations currently underway. In November, FGI will also procure a RBC Global Dried Fruit and Vegetable Market analysis report for Ter Onum to help them to better understand the global market for dried fruit and vegetable products.

UZBEKISTAN

(Light Industry) Sulton Tex Group PE is one of the biggest private textile mills operating in Uzbekistan. The goal of the partnership is to help with the automation of business processes through implementation of SAP ERP.

Implementation of the digitalization and optimization of the business process will give the opportunity to increase production capacity by 100%. Once SAP ERP is implemented it will allow the company to work in 3 shifts, hiring an additional 150 workers. MoU was postponed for the next year.

Investment Facilitation Pipeline FGI pursues complementary activities that support anchor firm alliances, business growth broadly, and the overall competitiveness of the business ecosystem in Central Asia. FGI is focused on promoting investment linkages between investors (domestic, regional, and international) and Central Asian firms with the aim to expand product offerings in target sectors. FGI is in the process of building an ambitious and healthy pipeline of investments in the whole region with a focus on anchor partners and alliances supported by FGI and other prospective clients that have a dynamic market presence and product line. FGI employs the following multi-stream approach to identify investment prospects:

Stream 1 - Facilitation of Investment Support: FGI provides matchmaking services between prospective anchor firms needing investment and potential investors. For example, over the past several months, FGI introduced Sulton -Textile Group in Uzbekistan to DFC and the IsDB. The project engaged the DFC about potential investments in Pokiza Meat Plant in Tajikistan and also introduced Kazbeef to the IFC in Kazakhstan. Moreover, FGI signed an MoU with Senti Brokerage and Barkad in Kyrgyzstan to facilitate the issuance of bonds in the securities market to help Barkad expand its operations. This project is expected to increase the financial stability of the company, mobilize an influx of investments and generate new employment opportunities.

Stream 2 - Access to Finance: FGI builds relationships with local financial institutions (FIs) -commercial banks and microfinance institutions (MFIs) - to build capacity of local entities and attract new sources of financing to the region. FGI targets investors working in Central Asia to understand their terms and requirements. FGI has already conducted investor sessions with IsDB, IFC and AV-Frontiers and plans several more with Triodos Bank, Alterfin and Incofin based in Netherlands. FGI serves as a bridge between investors and financial institutions to attract investment. Moreover, FGI’s DCOP has had discussions with leading FIs in the region (Kompanion in Kyrgyzstan, KMF and Arnur Credit in Kazakhstan, Humo in Tajikistan) to identify their advisory needs in order to facilitate investments in the region. In Turkmenistan, the company Ter Onum is scheduled to get ~$1.5m in lending from EBRD and Halk Hazyna expects to secure additional funding from EBRD.

Stream 3 -Investment Promotion: All three FGI components will work in close collaboration to create a favorable regulatory environment in the region. For example, FGI participated in a round table discussion with public authorities on the development of venture funds legislation. In cooperation with the ALIE (an alliance of 6 textile companies, KZ), FGI will work to develop recommendations to facilitate access to affordable finance for SMEs working in the light industry.

E-Commerce Acceleration FGI supports anchor firms to upgrade their e-commerce systems and capacity, strengthen linkages with international ecommerce platforms and leaders, integrate products into established ecommerce platforms, and improve the enabling environment for e-commerce. In Y1, FGI mobilized a leading international expert on the development of e-commerce platforms to provide recommendations for deepening regional ecommerce through working with local anchor firms, global companies, and local e-commerce ecosystem players. FGI invested in a mapping exercise to understand the status of e-commerce penetration across the region and the potential for e-commerce to generate economic expansion. The exercise revealed that there is a high level of variability between Central Asian firms and their awareness, utilization, and development of e-commerce tools and platforms. All firms expressed an interest in expanding online activity to tap international market demand. This interest has only increased as COVID-19 transforms how markets with more consumers going online to conduct transactions.

FGI helped Magnum , a leading supermarket chain in Kazakhstan , to put together a strategy that will to develop online grocery deliveries to households. In Tajikistan, FGI helped the

National Association of Small and Medium Businesses (NASMB ) in alliance with leading telecommunication companies Babilon-T and Babilon -M and E -commerce Association of Tajikistan initiate the development of an e-commerce ecosystem. The project plans to connect more than 10,000 merchants (sellers of goods and services) by introducing a Babilon QR code system developed on the basis of a single QR code that will provide services that will promote their products. The project will also facilitate opening internet stores by all targeted merchants. The activity will also work to connect transport/ logistics companies to the system and provide services for the supply of goods purchased.

In Turkmenistan, FGI initiated a horizontal alliance with the Turkmen e-commerce platforms on demand generation among the public for online shopping. The idea is for several e-commerce platforms that trade in Fast-Moving Consumer Goods (FMCG) to partner with each other and jointly contract a promotion agency to launch an e-commerce promotion media campaign. The campaign would promote the ease, comfort, low cost, and reliability of online shopping via web platforms or mobile apps. Each participating e-commerce platform would co-fund the initiative, which is expected to result in increased online sales and new e-commerce jobs for all stakeholders.

In Uzbekistan FGI supported the International Women's Public Fund “Sharq Ayoli” initiative in organizing workshops for women entrepreneurs in the Tashkent region on e-commerce development. Over 80 women entrepreneurs participated in the training on September 15, 2020.

Startup Ecosystem In Y1, FGI supported the development of the Central Asia startup ecosystem by identifying companies and linking them to international accelerator and funding programs. FGI also advanced individual country mentor and angel investment networks and VC funds. Recently, Business Incubator MOST in Kazakhstan launched the “Central Asia: Region Full of Opportunities” program. Through this initiative, FGI initiated a program to support young entrepreneurs and SMEs with the goal to remove barriers, strengthen competitiveness, spur economic activity, and create new jobs. The program also includes a train-the-trainer component to support local entrepreneurship and matches youth and women entrepreneurs with local and international experts. The regional start-up ecosystem, which will enhance the competitiveness of the region and engage the next generation of youth, women, and young entrepreneurs, will respond to local demand for innovative business ideas and concepts that have been developed and tested across other regions in the world.

FGI

provided technical assistance for the development of women's startup projects at different stages through incubation and acceleration programs developed by the IT Park in Uzbekistan. The Tumaris Tech project, which supports women's entrepreneurship in the field of innovative technologies, selected 20 startups to support out of 203 applications. The project is expected to create at least 45 startups in two waves of incubation and acceleration programs, which will be held online.

To increase the competitiveness of Turkmenistan’s economy, FGI and the Enriching Youth for Tomorrow program, together with the Union of Economists of Turkmenistan , developed a USAID -supported program for entrepreneurs to strengthen the country’s start -up ecosystem. The program provides business consulting, training, and staff recruitment through local companies as part of a start-up accelerator program in Turkmenistan. It will help 120 entrepreneurs develop their innovative business ideas and products. Upon completion of the program, twelve start-up teams with the highest market potential will compete for a top prize at a Demo Day in October 2020.

“Mentors shared their own experience and explained what tool and methods are necessary to build a new business. It was very helpful to participate in these online conferences and receive expert

In Tajikistan, FGI worked closely with the Business Incubator MOST on strengthening the capacities of local accelerators. Two FGI partners Alif and Ilmhona organized a series of technical software development trainings, including soft skills development trainings on job search, resume writing, and freelance work. The project helped trainees to find jobs or to start working as freelancers.

Component 3: Business Enabling Environment

In Y1, FGI’s Business Enabling Environment initiatives were designed to address challenges identified in the Political Economy Analyses (PEAs), constraints faced by Anchor and Association based alliances, as well as the recent EIU comparative analysis of COVID-19 policy responses. FGI worked with key stakeholders on reforms through the introduction of best international practices of commercial legislation such as digitalization, e-commerce, simplifying procedures and processes, strengthening competitiveness, implementation of international standards and certifications, and attracting investments.

The global COVID-19 pandemic caused the FGI to speed up the process of involvement in the business improvement environment. It is therefore incumbent upon governments in Central Asia to reduce business uncertainty and leverage existing comparative advantages to develop capacities in high-potential sectors, such as ICT, agriculture, textiles, renewables, and others. FGI works directly with business associations in ICT, textile, food, and tourism industries; some of the policy reforms are sector-specific while others are cross-cutting.

In Y1, FGI addressed nine policy initiatives for improving the regional business environment with the involvement of all 5 Central Asian countries. The Project developed all the initiatives with international and regional best practices in mind.

FGI enhanced the enabling environment for Light industry in Kazakhstan in close cooperation with the Light Industry Association to expand economic opportunities through tax reforms for textile companies.

In Uzbekistan , FGI supported the Venture Capital Association to create an internationally competitive policy environment for the development of venture capital and startup investment ecosystems. FGI and the Uzbekistan

On June 2, 2020 nine stakeholders of the program Startup Ecosystem Creation through Pilot Accelerators” signed the MoU.

Recommendations developed by FG will be integrated into the strategy for light industry development to be submitted to the Ministries of Industrial and Innovative D l t d th N ti l

Venture Capital Association (UZVCA) conducted an online roundtable discussion with government officials from different ministries, representatives from the private sector, and international experts on the formation and development of venture capital in Uzbekistan. As a result of the round table discussions, UZVCA provided joint recommendations to state bodies.

In partnership with the Association of Private Tourist Agencies (APTA) , FGI promoted best practices in standards and classification of guest houses, green certification, and tourism insurance. FGI developed reports on best practices from USA, Europe, and Kazakhstan, and provided the findings to the APTA for further dissemination with state agencies. With support from FGI, APTA launched the “Development of CBT Tourism in Uzbekistan by Improving the Professional Competencies of Rural Residents” project that will include the implementation of EU classification of guest houses in Bukhara, Jizzak, and Samarkand regions. FGI also helped APTA with the implementation of ISO 14001 and CSR of guest houses. APTA, in close cooperation with EU project grants, worked on the implementation/installation of ecofriendly equipment. The guest house hosts will be trained and apply for ISO 14001 certification. Moreover, FGI developed recommendations on tourism insurance based on international best practices, including the establishment of National Fund on insurance. Upon the request of the International Women’s Public Fund Sharq Ayoli , FGI developed recommendations on how to improve e-commerce legislation based on international, and regional best practices.

In Tajikistan, FGI received an official request from Advisory Council on Improving the Investment Climate under the President of Tajikistan to provide analysis of the light industry and food processing sectors with a focus on identifying barriers and recommendations for legislative improvements. The final draft of the report was sent to the Secretariat for review and comments. As a result, the Secretariat approached the FGI team with clarifying questions.

FGI provided technical assistance on E-Tax reporting best practices to the Union of Economists of Turkmenistan through its subcontractor Jacobs, Cordova, & Associates. The report outlined Kazakhstan’s experience implementing e-tax reporting as one of the best regional experiences for simplification of tax procedures and efficiency. The report found that the time for initial registration in Kazakhstan’s e-tax system takes about 2 hours and subsequent data entry takes about 5-10 minutes for each type of tax. UE proposed the recommendations regarding e-tax system implementation to the Ministry of Finance of Turkmenistan. As a result, the Union approached the Ministry of Finance about potentially reforming the e-tax system using Kazakhstan’s experience as a guide.

Recommendations in round table discussions were submitted to th Ministry of Innovation in Uzbekistan, resulting in potential amendments in the draft law on venture capital and start up

With FGI’s assistance, the Ministry o Finance and Economy of Turkmenistan announced the development of a new e-tax system which will dramatically simplify tax

Regionalization: Collaboration and Cooperation

FGI is working towards increasing the competitiveness of all five Central Asian economies, through enhancing regional cooperation and partnerships. FGI promotes regionalization through various e-commerce initiatives, including business environment reform such as the development of venture capital legislation, e-tax legislation, and investment facilitation platforms, including anchor firms investment pipelines and learning and dissemination of best practices through the FGI program itself such as the startup investment ecosystems.

In Y1, FGI initiated a regional startup ecosystem with a train-the-trainer component that will support Central Asian entrepreneurship, pairing them with local and international experts and best world practices. This activity will increase expertise within each country and enhance regional cooperation. FGI also supported the E-Commerce Association of Kyrgyzstan to develop online courses for SMEs and entrepreneurs. FGI offered the Association to use E-Commerce Institute off the shelf courses, as well as to scale the program to other Central Asia countries. FGI initiated and developed numerous bilateral and regional activities, including cooperation with the AmCham Uzbekistan and Termes Free Economic Zone in Uzbekistan on trainings for women entrepreneurs from Afghanistan in Termes Training Center .

FGI, in collaboration with Economist Intelligence Unit (EIU), released a comparative study Looking Ahead: Economic Policy Options for COVID-19 and Beyond in Central Asia on the impact and policy response to the challenges posed by the COVID-19 pandemic. The report provides a comprehensive overview of the global pandemic’s impact on the economies of 15 countries and includes a detailed analysis of governments’ responses in the United States Canada, South Korea, Japan, and India. The report then compares these responses with countries such as Pakistan, Afghanistan, Poland, Ukraine, Georgia, and the Central Asian countries. The report also presents a set of economic measures for a long-term recovery and best international practices for sectors such as tourism, light manufacturing, and food processing, among others. The effectiveness of interventions, gap analyses, good practices, and recommendations will be the main focus of the upcoming economic policy roundtables to be hosted by FGI throughout Central Asia. Through this activity, FGI is strengthening public-private dialogue and sharing global best practices via recommendations and policies that will help mitigate COVID-19 effects and implement a quicker economic recovery for the Central Asian region.

AmCham Uzbekistan

FGI contracted a dedicated Senior Business Advisor to support the activities of the American Chamber of Commerce (AmCham) in Uzbekistan. Major activities and accomplishments over the past year include:

● Initiated the design and drafted the new AmCham Strategy 2020 – 2025. FGI put together a strategy Roadmap and a new org chart to facilitate further deliberations and broad membership collaboration. The new strategy will be prepared and finally approved by the Board of Directors over the course of the next year.

https://catradeforum.org/wp-content/uploads/2020/10/USAIDs-FGI-EIU_COVID-19-Policy-Responses-in-CA-report_eng.pdf

● Provided input to a research paper on Uzbek government’s COVID-19 mitigation actions, fiscal policy, and tax relief measures introduced to SMEs during the quarantine period.

● Initiated the EURASIA Union survey among all AmCham members and requested additional FGI anchor firms to respond to the analysis. The results of the survey will be published and discussed in a regional AmCham conference in late 2020.

● The Senior Advisor continued to directly facilitate the work of two AmCham Committees

- Tourism & Hospitality and the Digital Transformation groups.

● Supported AmCham Afghanistan through joint training, exchange programs, and membership or sector committee cooperation.

● Participated in more than fifteen ministerial level webinars and public - private roundtable discussions with the participation of key government stakeholders and broad AmCham membership representation.

Communications

Communications activities in Year 1 were focused on developing effective scalable communications materials and models to promote the project to target audiences and the general public, disseminating information about project outcomes and impact to all stakeholder groups.

During the first year of operations, FGI increased its visibility in Central Asia and beyond with 45 mentions in the leading regional print, broadcast, and online media outlets. Major Communications activities in Y1 include:

● Supported project technical activities.

● Hosted trainings on branding for MDF and APS grantees.

● Launched pool of regional and local translators.

● Created promotional communication tools as OIs, bi -weekly reports, and impact statements.

● Created communications tools (fac tsheets, brochures, flyers) to promote project activities in each of 5 countries and Central Asia as a whole.

● Regular update of online platform for promoting FGI’s activities (Facebook: 684 subscribers, 616 likes)

See ANNEX III for a complete list of media coverage of…