USAID Competitiveness Enhancement Project

The Moldova Competitiveness Project (MCP) exceeded expected targets and objectives. Despite Covid-19 pandemic during the last 1.5 years of implementation, the project managed to adapt and deliver its work. A final report (available on Chemonics home page https://www.chemonics.com/projects/boosting-business-moldova/) outlines details of the 6 year implementation. Some highlights are captured here: MCP helped advance the competitiveness of four heritage and emerging economic sectors wine growing, tourism, apparel and footwear manufacturing, and information technology clustered with engineering and creative services that collectively account for 12% of GDP and 35% of national exports and are a source of employment and income for nearly 320,000 Moldovans, playing a critical role in the prosperity of the country. Throughout the implementation (2015-2021), MCP facilitated critical trade and investment opportunities, while supporting industries to cope with the COVID-induced crisis that disrupted value chains globally and domestically. MCP assisting directly and indirectly a total of 988 SMEs during the six years of the project, supporting them to adopt new technologies aligned to Western quality standards, increase marketing and trade domestically and overseas, and make critical investments in equipment and skills. This number surpasses the life-of-project contractual indicator (700 target firms) by 41%, demonstrating an exceptionally robust Project outreach due to a strong focus on large scale industry-wide interventions, engaging industry organizations from business associations to the National Office of Wine and Vine and Moldova's first virtual IT Park. To enable Moldova to take advantage of EU DCFTA benefits, MCP increased product quality as the key to preparing Moldova's private sector to compete on EU and other high-value markets, continuing implementation of Protected Geographic Indication (PGI), sustainable viticulture/winemaking and traceability in the wine industry, productivity enhancement, automation technologies and social compliance standards for garment and footwear manufacturers, single tax mechanism and IT Parks that are attractive for technology investors, as well as Western hospitality standards and sustainable tourism products to drive demand in Moldova's rural tourism areas. MCP adapted its delivery model to support critical digital skills, business digitization, digital marketing and ecommerce as part of its COVID-19 rapid response initiatives. New investments generated by MCP-assisted firms add up to $287 million, which have been used for essential upgrades to production facilities, new equipment, and quality improvements. The Project's SME innovation fund leveraged critical investments in new technologies to improve quality in line with higher-value market requirements. For every $1invested by MCP in SME innovation grants, beneficiaries invest another $3.2, underscoring the commitment of the private sector, and the sustainability of these activities. In the apparel industry, MCP underpinned factory innovations in automation and premium finishes, such as computer-added design and manufacturing, to improve productivity and access upscale European fashion houses. In the wine sector, MCP focused on quality upgrades to improve grape processing, traceability and marketing, which are vital for sustainable and Western oriented businesses formerly geared to the Russia market. MCP's wine tourism and rural guesthouse prototypes generated a quality breakthrough in Moldova's tourism sector, fine-tuned to the tastes of the sought-after Western traveler, and positioning Moldova as a rising sustainable tourism destination. As a result of MCP-assisted trade initiatives during the six years of the project, domestic and export sales increased by $527M in wineries, apparel factories, software firms, tourism agencies and other MCP assisted companies. Most of these exports are to the EU, strengthening Moldova's trade ties with Europe and generating higher value-added. In partnership with ONVV and industry associations, MCP continued to effectively approach highly competitive markets, such as Romania, Poland and Asia-Pacific (China, Japan and South Korea) for Moldovan wines, EU for apparel and footwear, and Italy, Romania, UK, Poland and Scandinavia for tourism. MCP assistance to the Moldovan Government to institute the virtual IT Park and single 7% tax resulted in an impressive $ 24M sales in 2020 for its resident tech, creative and engineering firms, mainly exports to the EU and Americas. The COVID-19 pandemics and the resulting disruption of global value chains and trade negatively affected Moldova's economic sectors and caused reduction of business sales and exports, especially in the tourism, clothing manufacturing and wine sectors, where exports dropped by 75%, 11% and 12% respectively. Amid retail shutdown, travel restrictions and social distancing measures, MCP re-directed support to impactful digital promotion helping businesses reach online millions of consumers in target markets, as well as facilitated e-commerce with over 200 local businesses unlocking online sales. As such, MCP-supported businesses proved more resilient, avoiding bankruptcy, continuing operations and preserving jobs. MCP applied a market-based technical approach, as Moldovan firms were not previously able to tackle these markets on their own, lacking the necessary technology, product quality and marketing strategies. MCP masterfully powers industry brands - DININIMA (fashion), Wine of Moldova (wine), and Tree of Life (tourism) - as a collective effort between the Moldovan Government and private sector associations, to generate recognition for Moldova on international markets. For instance, MCP assistance under the Tree of Life national tourism brand helped Moldova market itself as an emerging sustainable travel destination, earning impressive ratings from influential international media such as Lonely Planet, The Daily Mail and The Winerist, which included Moldova in the Top Ten Travel Destinations for 2020. The Wine Routes of Moldova became the first Moldovan tourism route integrated into the European Cultural Routes certified by the Council of Europe. The DININIMA digital campaigns unlocked ecommerce and aligned Moldova's fashion with sustainability, green and eco trends. MCP's workforce development initiatives helped 71,900 youth and professionals improve job skills, contributing to the economic competitiveness and democratic aspirations of the country. MCP successfully focused on digital skills for youth, through its flagship Educational Robotics and Future Classroom programs and industry excellence centers, advancing forward-looking skills, technologies and youth entrepreneurship. To provide a quick solution for online learning during the lockdown period, MCP facilitated a country-level partnership between the Moldovan Ministry of Education and Google that enabled over 20,000 teachers get digital skills and free access to Google's education tools and technologies. In FY21, MCP supported the expansion of the National Center for Digital Innovation in Education Future Classroom with an additional floor to ensure training rooms for Moldovan teachers. In addition, MCP continued construction works at two new state-of-the-art innovations centers, Balti Regional Innovation Hub and Mediacor Digital Media Center. MCP facilitated 50 Public-Private Partnerships worth more than $58 million. Gender aspects: To support the economic empowerment of women, MCP assisted 342 women-owned SMEs, which make up 35 percent of all assisted firms. 173 firms were in light industry, where women are recognized economic leaders, followed by tourism (77), wine sector (50), and IT (42). Every second apparel company is owned or managed by a woman. MCP's assistance to improve productivity, implement social compliance standards and expand trade for apparel and footwear factories helps preserve jobs for the 26,500 women employed in this industry, increasing wages to meet basic living standards. MCP-assisted firms increased seamstresses' wages as high as $515 per month, compared to country average monthly income of $325. MCP's innovative initiatives in Science, Technology, Engineering, Arts and Math (STEAM) aim to raise digital skills among Moldovan young women, especially from underserved communities, to pursue education and careers in IT and engineering fields. In an industry traditionally dominated by men, MCP reduces the gender gap and promotes STEAM youth education through two flagship initiatives - Future Classroom and Educational Robotics that are spearheaded in 180 or 15% of the country's schools. More than 16,000 girls and young women (or 42% of all beneficiaries) benefited from these initiatives by accessing transformational technologies such as robotics, coding, virtual reality sets. The tourism sector is also important for women's employment and economic empowerment, especially in the rural areas. To date, 60% of the 34 rural guesthouses assisted by MCP are owned and managed by women, fostering rural employment opportunities and creating a sustainable industry attractive to international tourists. Environmental perspective: MCP monitored environmental compliance in accordance with environmental threshold determinations. Per the approved IEEs, none of the MCP interventions had significant effects on the environment (as defined in 216.2 (d)(1)). Gaguzia/Transnistria: USAID assistance is inclusive of Transnistria and Gagauzia, engaging prominent and emerging SMEs and promoting tourism in these regions. The assistance is provided at the firm-level and as part of industry organizations, namely the National Office for Wine and Vine and APIUS fashion business association. 51 wineries, tourism providers, garment and footwear factories benefited from assistance in production management and productivity enhancement, as well as participation in tradeshows, leading to growing exports in non-traditional markets such as Ukraine, Romania, Germany, and China. This is inclusive of ten leading garment and footwear factories in Transnistria and Gagauzia (over 2,000 jobs). Prominent wineries, like Vinuri de Comrat and Tomai Vinex in Gagauzia, and Kvint in Transnistria, are active members of MCP-supported PGI Associations and the National Office of Vine and Wine, adhering to quality standards, value-chain traceability, and international market requirements. MCP assisted integration of Gagauzia and Transnistria in Moldova's tourism product, building destination resilience through tourism and breaking international stereotypes regarding safety. These regions benefited from media exposure, being featured as part of MCP-assisted media trips. The wineries and guesthouses have been trained and guided under the ANTRIM COVID code of action and sanitary guide. The MCP-supported Gagauzian tourism sites are becoming the most popular tourism hotspots Gagauz Sofrasi, Karagani, Vina Comrata. Gagauzia is part of the tourism road signage effort, deployed by MCP in partnership with the Ministry of Economy, ONVV and MIA. Six clothing factories, wineries and guesthouses in Gagauzia and Transnistria are MCP grant beneficiaries. Karagani and IVC Inter wineries are being assisted to develop websites for their wines and tourism services, implementing direct booking plug-inns to facilitate ecommerce. Seven schools in Gagauzia and Transnistria are implementing educational robotics, with over 3,000 youth benefiting from robotics classes. Gagauzian teachers build critical digital skills to support school continuity as part of the national Digital Alphabetization program, launched by the Ministry of Education in partnership with Future Classroom Center, with support from MCP, Orange and Google.