Results of clusters and business associations survey: roles and their perception by key stakeholders
From mid-April to early May, UСA conducted another survey of its own clusters and business associations (hereinafter “BA”). The objectives of the survey were related to clarification of own assessments of the most important roles and activities performed by BA in the country’s economy, and perception of these roles by key stakeholders. The number of respondents is 34 organizations – mainly managers or members of boards of BA. In the preparation of the questionnaire, UCA was assisted by the NGO “Economists’ Club”, some of whose experts are members of the UCA community and its analytical center.
The survey results can be viewed here:
Main results and conclusions
The results of the survey can be formulated in the following 10 points:
- The three most important types of activities (roles) implemented by BA: 1) Development of reconstruction and restoration projects of Ukraine; 2) Assistance to own members of SMEs; 3) Assistance to the Armed Forces. In general, this correlates with the thesis of the white paper “5 Roles of Clusters in Wartime”, which UСA published in October 2022.
- BAs recognize some support from external stakeholders in the areas of training, support for innovative activities, and advocacy-lobbying. On the other hand, the needs for financial support for the management of IT, export-internationalization and provision of equipment or software are unsatisfied or partially satisfied by all respondents.
- Consolidation of SMEs in BA is critically important for the tasks of GR, fight against unfair competition, personnel training and export promotion.
- The factors that most influence the effectiveness and success of the BA are the following: 1) Trust of BA participants in each other; 2) Leadership of managers; 3) The level of services provided; 4) Regular communication between BA participants. It can be assumed here that the last three factors are the main reason for the first factor (trust), the lack of which usually prevents the rapid launch of new BA and cluster initiatives.
- Small and medium-sized enterprises (SMEs) that are members of active BA cope with the following challenges better than those that are inactive or not joined in BA: 1) Entering foreign markets; 2) Grant funding; 3) New opportunities for development.
- External support of BA is critical or very important for the following tasks: 1) Export-internationalization of BA and SMEs; 2) Advocacy and lobbying; 3) Innovative activity; 4) Implementation of development projects.
- BA have the least support from the central and regional authorities, slightly more – from international donors. Only 2 respondents out of 34 noted that they are fully recognized and supported by international donors. Most of the answers refer to the option “recognized but not supported”, and for all 4 categories of stakeholders: local authorities, regional authorities, government, international organizations and donors.
- More than 90% of respondents indicate that the level of donor support is unsatisfactory or partially satisfactory. 45% of the interviewed BA did not receive any help, and most of those who received met their needs by less than 10%.
- 4 main reasons why donors are so weak in financing BA: misunderstanding of the role of BO as centers of SME consolidation, development/implementation of anti-crisis programs; misunderstanding of the role of BA in the development of industry and regional ecosystems; the need to coordinate donor funding with the authorities leads to false priorities of donation; donors are poorly adapted to the war (their administration and reporting have hardly changed).
- The respondents agree that in order to change their attitude towards themselves, BA should communicate better about their roles, as well as consolidate in common positions. There is also the idea of direct communication with European stakeholders.
Main conclusions
The conclusions from these results are as follows:
- There is an obvious gap in how BA see and evaluate their roles, and how they are evaluated by government organizations, Local Self-Government Bodies (LSGB) and international organizations.
- The result of this underestimation is that the vast majority of BA are underfunded, both from the side of donors and from the side of possible support from the authorities and LSGB. The reasons for this are also obvious – according to the respondents, most external stakeholders simply do not understand the roles of BA, and therefore do not provide them with the necessary support.
- There is a sufficient consensus in which areas BA do not receive support: 1) Export-internationalization of BA and SMEs; 2) Advocacy and lobbying; 3) Support of innovative activities; 4) Implementation of development projects.
- One of the possible key reasons for these gaps is that donors are more oriented to the requests of the authorities than to the BA themselves, hence the difference in priorities on support vectors. Another reason is the inertia of donor processes. At the time of these results, it is already known about the significant strengthening of grant support of a number of donors in the above-mentioned directions of action.
One way or another, these results and conclusions need to be discussed, and UCA plans to hold their public discussion on June 13.
Comments of the UCA executive directorate
From the results of the survey, we can draw an unequivocal conclusion that the vast majority of clusters and business associations are dissatisfied with the level of donor support. This is logically explained by the results of 2022 – during the period of the greatest crisis, the BA received more promises than actual aid. Complaints and negative experiences of clusters are caused not only by the meager amounts of funding, but also by excessive bureaucracy without any added value (and this in the conditions of extremely limited resources of BA), the mentoring tone of individual donors (with questionable quality of their own rules and their own effectiveness), non-transparent communications, etc.
At the same time, these results should be approached very carefully and taking into account the dynamics of events. If we look at the facts, then from February 2023 the dynamics began to improve significantly. Already 11 UCA organizations have received funding from three different donors, some of them in the amount of more than UAH 10 million, and the record holder is the ASTAR agency, which entered the cluster development project with a budget of more than 900,000 euros. And this is a striking contrast with 2022. Of course, most clusters still do not have funding, but many facts indicate a sharp change in the situation compared to 2022.
On the other hand, changes at the level of government structures and local government are still not very noticeable. For example, in the context of USAID’s and GIZ’s statements about a significant increase in financing of export-internationalization programs, will the Cabinet of Ministers and relevant structures at least take on the task of coordinating it and assisting with the departure of delegations? Last year, such support was extremely weak, and, unlike donors, government structures do not promise anything this year. Are these structures, as well as LSGBs, ready to consolidate with BA, for example, in the projects of Restoration of regions and territories? After all, only at the level of the UCA, there are already over 50 such projects.
Actually, that is why the executive directorate suggests that BA better prepare for the public discussion on June 12. Both categories are our key partners, and it is necessary not only to make specific demands or proposals, but also to prove their adequacy (compliance) with the declared roles. For example, donors or government officials may have counter-questions about the existence and effectiveness of programs that are implemented or at least planned, where and how they are presented, where it is possible to look at their results, etc. And we know from experience that the argument “it is impossible without money” is not accepted. It is necessary to demonstrate at least some collective capacity and activity, to show how a cluster or business association really helps its own members, SMEs, how specific tasks and challenges are solved, what mechanisms for their collective solution have been worked out in the organization, and which can be considered systemic. The data of our survey gives a clear understanding that the leadership of BA managers, the level of services and internal communications are the three key factors of the effectiveness of BA.
So, an interesting discussion awaits us on June 12. The announcement will be released shortly. Regarding participation as speakers, contact info@clusters.org.ua.
Useful information (to understand the roles of clusters)