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In the international media, Ukraine’s recent history has been dominated by the conflict with Russia. Yet behind the headlines, Ukraine’s story is bursting with optimism.
At the World Economic Forum in Davos, the IMF head commented on her “constructive” meeting with Ukraine’s president and reiterated the IMF’s support for the country. Ukraine’s reform efforts secured a $3.6 billion IMF aid package last December, which replaced the $17.5 billion program due to expire next March.
On March 31, Ukrainians will cast their vote the first time since 2014. If no candidate receives a majority, a second round will be held in April. The race remains tight, but polls suggest that no Pro-Russian candidate is viable. The frontrunners are President Petro Poroshenko, who has prioritized applying for EU membership by 2024, former Prime Minister Yulia Tymoshenko, also determined to see Ukraine become part of the EU and NATO, and the actor Volodymyr Zelenskiy, who supported the Maidan revolution.
Although Ukraine remains one of Europe’s most energy-intensive nations, billions of euros are being invested in renewable energy and energy efficiency. As of December 2017, the share of renewables in Ukraine was estimated at six percent, but the country is making fast progress to achieving an 11 percent share by 2020. DTEK, a national leader in the energy sector, has plans to invest more than €1 billion in the country’s renewable capacity over the next two years, and other companies, both local and international, are following suit. Institutions such as the European Bank for Reconstruction and Development (EBRD) have committed to major loans to wind and solar power in Ukraine, while the EU, the IFC and Germany have pledged €53 million to boost energy efficiency.
For a start-up to reach the $1 billion valuation mark – the much-coveted unicorn status – is only slightly more common than the mystical creature itself. In total, Europe has around 35 unicorns, and two of its latest additions have Ukrainian origins. Both code collaboration platform GitLab and blockchain company Bitfury hit the $1 billion mark in 2018. Andrey Kolodyuk, one of Ukraine’s top investors, predicts that this is just the beginning and within two years, Ukraine will become one of Europe’s top-three venture capital hubs.
At the World Economic Forum in Davos, the EBRD chief applauded the “courage” of the Ukraine administration’s reforms, and announced that the bank arranged a €150 million loan for the construction of the country’s largest wind farm. “I would hope that this might inspire potential investors to consider similar opportunities in the future. If you do, we will be at your side,” he told the Davos audience. With more than €12 billion invested in Ukraine, the EBRD is Ukraine’s single largest investor.
The CEO of Invest Europe, the association for private and venture capitalists in Europe, is optimistic about the upcoming years in emerging markets, and Ukraine specifically. Speaking at Davos, he outlined how even the most conservative investors are shifting their attention toward opportunities in countries such as Ukraine. “If there’s zero interest on a US treasury bond, you simply can’t afford to go for the ultra-cautious investments that one may have in the past,” Collins explained.
The Canadian-born head of Ukraine’s largest private equity fund, Horizon Capital, is confident in Ukraine’s post-2014 progress and its potential to continue with its transformation. “I think that Ukraine, more than anything, has a perception problem… Ukraine is carrying out reforms in the post-Maidan period quicker than they were done in Poland, Georgia or other countries,” said Koszarny. Her optimism is backed by several indexes that have quantified Ukraine’s progress over the last years. Not only has Ukraine risen 51 spots in the World Bank’s Ease of Doing Business rankings since 2012, but it has also moved up the Global Innovation Index to number 41 from 63, now outperforming countries like Russia and India. Speaking at Davos, Koszarny noted that investors who go to Ukraine are “absolutely amazed” when they see the country for themselves. “I haven’t had an investor who has come to Ukraine, seen the reality on the ground, and not invested.”
