According to an estimate from the World Bank, over $486 billion is needed to rebuild Ukraine, as a result of Russia’s invasion. While the damage Russia has inflicted is immense, Ukraine will emerge as a stronger and more prosperous country, as recognised by both the public and private sectors. 

During the June 2023 Ukraine Reconstruction Conference hosted in London, over 400 global companies pledged support for rebuilding the country. 

Similar conferences have taken place around the world in France, Italy, Switzerland, Germany, Poland and Japan. In addition, the European Union pledged €50 billion, the UK pledged $3 billion and the US pledged $1.3 billion. The international community is coming together to invest in rebuilding Ukraine. 

Investments in Ukraine 

Despite the ongoing conflict, private companies recognise Ukraine’s significant potential and are continuing to invest in the country. 

• Unilever announced an investment of €20 million for the construction of a new production facility near Kyiv. 
• Nestlé started the construction of a $42.7 million production facility in Western Ukraine. Boreal Light just completed Europe’s largest solar powered water desalination system in Mykolaiv, Ukraine in October 2023. 
• The Kingspan Group announced that it will invest over $280 million to produce ‘advanced insulation materials and solutions for centralised heating’. 
• Just this month, Kubota and Yanmar Holdings pledged support for rebuilding Ukraine’s agricultural sector by supplying farming equipment. 
• The Australian mining billionaire, Andrew Forrest, personally committed $740 million through his family investment firm to a fund for rebuilding Ukraine. 

These investments are just the tip of the iceberg. BlackRock and JP Morgan Chase are working closely with the Ukrainian government to attract investment in the country. Chicago Atlantic, Horizon Capital, Carlsberg Group, Madoqua Ventures, Bayer AG, ArcelorMittal, Onur Group and Philip Morris International are among the many firms investing in Ukraine, alongside additional pledges from various governments. 

The US, UK and EU are all preparing to invest billions into rebuilding Ukraine. There is an estimated $350 billion worth of Russian assets currently frozen by G7 countries that may be used to fund Ukraine’s reconstruction. While Russia has inflicted serious damage on Ukraine, the international community is committed to rebuilding a strong, economically prosperous country. 

Foreign investment in Ukraine and corruption concerns 

The biggest concerns surrounding foreign investment in Ukraine have long been the corruption and the lack of transparency in the country. However, the Ukrainian government has been working to assure investors that their investments will be protected. 

In 2014, the Business Ombudsman Council (BOC) was established. BOC is an independent advisory body of the Cabinet of Ministers of Ukraine tasked with investigating any alleged wrongdoing by state entities. 

In 2020, Ukraine’s unicameral parliament, the Verkhovna Rada, established the Temporary Special Parliamentary Commission for the Protection of Investors’ Rights to resolve investor cases. Outside government, the Office of the National Investment Council of Ukraine is a non-governmental organisation responsible for facilitating dialogue between investors, state authorities, regulators and international financial institutions. 

In November 2023, the Digital Restoration Ecosystem for Accountable Management, or DREAM, Support Office began operating with the help of the United Nations Development Program in Ukraine (UNDP) to provide transparency in funding the reconstruction of Ukraine.

Additionally, ProZorro, a system that publishes public tenders to avoid contracts being awarded through shady deals, continues to broaden businesses’ participation in government procurement while remaining a successful tool against corruption. 

Ukraine’s Deputy Minister for the Economy, Oleksandr Gryban, also announced that President Zelensky was ‘very determined’ to transition to a cashless economy in a bid to stamp out corruption. While a cashless economy would not eliminate corruption, it would make it easier to police. 

All of this is part of a plan to not only attract foreign investment, but to also satisfy the criteria for EU accession. One of the essential conditions for becoming an EU member state, or Copenhagen Criteria, is the requirement of ‘a functioning market economy and the capacity to cope with competition and market forces in the EU’. As European integration is at the core of Ukraine’s post-war agenda, the Ukrainian government is already setting the foundation for this to happen. 

Similarly, public support for European integration has risen since Russia launched its assault. In December 2021, before the invasion, 67% of Ukrainians said they would vote ‘yes’ on a referendum for accession. This figure now stands at 87%. This will drive Ukraine to implement the necessary reforms to eliminate corruption and pave the way for EU entry. 

Incentives for investment in Ukraine 

To minimise the risks associated with investing in Ukraine, G7 countries and the European Commission backed a ‘war-risk insurance’ framework to minimise financial losses faced by investors. The European Bank of Reconstruction and Development (EBRD) is also expected to make a fund for insurance on property and trade risks operational this year, (2024). 

In November 2023, the UK Government signed a Statement of Intent with the EBRD ‘for boosting the provision of insurance against war-related risks in Ukraine’. 

On top of protecting investors from war-related risks, the Ukrainian government is working to incentivise investment by limiting the tax burden. In September 2023, the Parliament of Ukraine amended the law ‘On State Support for Investment Projects with Significant Investments in Ukraine’ to loosen the requirements for investors. 

The law provides a range of benefits for companies investing at least €12 million including ‘exemption of an investor from corporate income tax for five years’. Other benefits include exemption from certain import duties and the right to ‘use (lease) a state- or communally owned land plot’. Similarly, Law no. 1293-IX, introduced in March 2021, provides tax and customs incentives for investors in Ukraine. 

Russia has caused devastating damage to Ukraine. Significant resources and time are needed to rebuild the country. However, efforts by both the Ukrainian government and the international community to tackle corruption and minimise war-related risks provide investors with the assurance that investments in Ukraine will be protected.

Despite the risks, the potential for the country to emerge stronger and more economically prosperous is being recognised by the private and public sectors both at home and internationally.