Recovery Roadmap for Regions
Issues and Solutions for Recovery on the Example of Three Regions: Zhytomyr, Zaporizhzhia, and Kharkiv
Issues and Solutions for Recovery on the Example of Three Regions: Zhytomyr, Zaporizhzhia, and Kharkiv
The Anti-Corruption Headquarters, with the support of the International Renaissance Foundation is implementing the project: "Recovery Roadmap for Regions in Ukraine: Finding Solutions on the Example of Three Regions."
The project aims to shed light on the pressing issues of regional recovery, using the examples of three regions (Zhytomyr, Kharkiv, and Zaporizhzhia), propose solutions to these problems, monitor the restoration of infrastructure by regional military administrations and local self-government bodies, identify challenges in recovery on the ground, and present it in the form of a Recovery Roadmap for Regions in Ukraine (hereinafter referred to as the Roadmap).
The Recovery Roadmap for Regions of Ukraine is a publicly accessible document that contains descriptions of recovery problems and proposed solutions to these problems. With this Roadmap, we aim to publicly demonstrate the main obstacles to Ukraine's recovery and, ultimately, create a clear action plan for government agencies and local self-government bodies.
As part of the project, discussions have already been held with non-governmental organizations, regional government administrations, local self-government bodies, and other residents who have shared the main challenges and solutions for recovery in the regions.
Demolition of damaged houses on expensive land with questionable legal grounds.
Lack of standardized and systematized information on investment attraction.
Shortage of qualified specialists in the field of recovery.
Transparency, accountability, standardization, and digitization of the recovery process.
Prioritization of recovery.
Price inflation and abuse during reconstruction tenders.
Significant reduction in recovery funding for 2024.
In Ukraine, there is a general shortage of skilled workforce. In September 2023, one of the most well-known online job search platforms in Ukraine, Work.ua, documented a record number of job vacancies since the start of the full-scale invasion, with 105,809 job offers.
The Institute of Analytics and Advocacy notes that the shortage of qualified workers is particularly noticeable in industries that require specialized education and experience, such as medicine and education. The head of the component "Integrity Cities. EU Anti-Corruption Initiative" points out that territorial communities need to attract competent project managers.
The search for workers, especially qualified specialists in construction, is accompanied by significant difficulties. After the end of the war, it is anticipated that there will be a substantial increase in construction activity, further worsening the problem of labor shortages. According to a study by the audit company EY, the destruction of real estate due to the war surpasses all the new residential supply that has been put into operation over the last seven years.
Support and reintegration of displaced individuals and veterans, including retraining, skills enhancement, and job and housing placement; implementation of financial incentives and grants for education; investment in the development of local talent pools, including expanding educational programs and supporting young professionals.; establishing cooperation with other countries for specialist exchange and internships; creating favorable conditions for business and innovation, including streamlining bureaucratic procedures and providing financial support for startups and entrepreneurs.
In the city centers of Kharkiv and Kyiv, there are damaged buildings due to rocket attacks. According to information from the Kharkiv Anti-Corruption Center, the city council decided to demolish them as a priority because it presents an opportunity for certain well-known developers to acquire valuable parcels of land. Affected residents of these buildings report that the survey results on individual items are inaccurate; some of these buildings could be restored, and they were not informed about the decision to demolish them.
Parents of students at Zhytomyr Lyceum No. 25 disagree with the authorities' decision to dismantle the Lyceum building in the city center and have filed a lawsuit. Thanks to publicity, the city mayor promised that work would only commence after the approval of the educational institution's restoration project.
It is essential to upload information in the Unified State Electronic System in the Construction Sector and the Registry of Damaged and Destroyed Property and to report on the initiation and results of damage assessment and inspection reports. Make the Registry of Damaged and Destroyed Property with inspection reports public. Publicly announce decisions regarding the demolition and restoration of residential buildings.
The military administrations and local self-government bodies in Zhytomyr, Kharkiv, and Zaporizhzhia sign Memorandums with organizations and businesses to attract international aid and investments. However, information about the amount of investments attracted, the funds, and the recipients of this assistance is inadequately accounted for and is not publicly available. According to CIPE, the Ukrainian and foreign private sectors will play a significant role in post-war recovery and investment attraction, which is crucial for Ukraine's survival and development.
Utilize the DREAM ecosystem to disclose information about projects, with the consent of investors, including details about investors, investment amounts, and the allocation of funds for recovery investments. Involve businesses at both central and regional levels in the development of recovery strategies and plans. Create conditions to engage businesses in procurement and recovery efforts.
According to reports from the Kharkiv Anti-Corruption Center, a common characteristic of deals within the Department of Capital Construction of the Kharkiv Regional State Administration is significant overpricing in cost estimates. This applies to nearly all contracts. For example, metal-plastic door frames are planned to be installed for 11,850 hryvnias per square meter. The market price for such a door frame is 8,000 hryvnias per square meter. Overpriced construction mixes from Ceresit can also be noted. For instance, the contractor plans to purchase CR66 mix for 151 hryvnias per kilogram, while the manufacturer's website lists the mix at 86.5 hryvnias, which is almost half the price. A similar situation arises with the purchase of CT29 putty: they plan to pay 30 hryvnias per kilogram, whereas the manufacturer's website states 14 hryvnias per kilogram. They also spend nearly one million hryvnias on self-leveling CN69 mix, even though the manufacturer's website lists it at 15.2 hryvnias per kilogram, while the contractor plans to buy it for 26.7 hryvnias per kilogram.
The municipal institution Vyshevytskyi Lyceum in the Zhytomyr region did not disclose the contract signed in December 2022 for the shelter's repair. With a payment of around 970,000 hryvnias, the cost of the work included construction materials received for free from the rural council for the construction of fortifications. Even materials from a dismantled garage were included in the reports. In the Novohuyvynska United Territorial Community in the Zhytomyr region, where more than 7 million hryvnias were spent on shelter repairs in educational institutions, the walls have cracks, cement dust is present, and there is no ventilation.
Public disclosure of all estimates, including project cost documentation, in a machine-readable format. Improvement of the state audit service and law enforcement agencies' functioning. Mandatory use of the DREAM system and the employment of effective procurement methods.
As of today, the allocation of funds from the Interagency Working Group for reviewing consolidated proposals from applicants and preparing recommendations for the Cabinet of Ministers of Ukraine regarding the allocation of funds from the Fund for the Elimination of Consequences of Armed Aggression (hereinafter referred to as the Fund) involves the participation of multiple ministries. The Fund commenced its operations without proper prioritization of funding directions, effectively operating in a manual mode. This presents a significant risk of inefficient budget spending.
One problem that could exacerbate the existing one is the government's desire to centralize the administration and distribution of personal income tax (PIT) revenue from local communities. Consequently, this issue is likely to worsen.
On October 20, 2023, the Ministry of Infrastructure approved methodological recommendations for prioritizing projects aimed at eliminating the consequences of armed aggression by the Russian Federation against Ukraine. However, these recommendations are not mandatory.
Adhere to principles of transparency in the allocation of funds from the Fund for the Elimination of Consequences of Armed Aggression. Make prioritization of recovery and other programs mandatory.
Today, there is no fundamental law on recovery that would provide a foundational regulation of the concepts of "recovery" and "restoration," the interaction of key stakeholders in the state dedicated to recovery, and the regulation of digital systems related to recovery. Information about damaged and destroyed objects, the amount of payments, and recipients of recovery funds under the eRecovery procedure is still not publicly accessible.
Enact a law on the principles of Ukraine's recovery, standardize the DREAM system, and open the Registry of Damaged and Destroyed Property. Conduct internal audits.
The Verkhovna Rada approved the draft budget for 2024 in the first reading. It includes a threefold reduction in the budget for the Ministry for Communities, Territories and Infrastructure Development of Ukraine and the State Agency for Reconstruction and Development of Infrastructure of Ukraine. According to the budget proposal for 2024, expenditures are reduced from 119 billion hryvnias to 39 billion hryvnias. This indicates limited potential for the restoration of infrastructure, road infrastructure renewal, and providing housing for those affected by Russian shelling.
Seek alternative sources of financing, attract donor funds, and actively confiscate frozen Russian assets. Enact a bill on the foundations of Ukraine's recovery, which includes the establishment of a National Recovery Fund and the implementation of the DREAM digital management system for recovery.