Ukraine minister Oleksandr Gryban on how private investment can help rebuild the country
Midway through last year, Ukrainian president Volodomyr Zelenskyy tabled a proposal to his finance lieutenants. Government support, both domestic and international, was flowing into the economy but the
scale of economic damage wrought by Russia’s invasion needed a bigger remedy. The country needed an initiative to trigger the interest of the private sector: Advantage Ukraine was born.
President Zelenksyy launched the campaign with a speech to the New York Stock Exchange in September, and the push has since been shepherded by deputy minister for the economy, Oleksandr Gryban, who has been lobbying investors across Europe, Asia and the US to get private capital flowing into Ukrainian projects.
The Advantage Ukraine platform, which aims to connect investors with potential opportunities, currently has some 60 investment projects with a total pipeline worth more than $9bn (£7.3bn).
“While the country is transforming, it is providing a huge amount of opportunities,” Gryban tells Morning Wire in an interview.
“We are well positioned to have skilled labour, big territories, a very developed electricity grid. We have Europe as a huge market, with whom we have trading preferences already, and we’re inevitably becoming members of the European Union – where these trading preferences can be preserved.”
The push to get private cash into the country delivered a major boost in November last year, as the world’s biggest asset manager, Blackrock, signed a separate deal to coordinate investors “in the reconstruction of [Ukraine]” and “channel “investment into the most relevant and impactful sectors of the Ukrainian economy” via a Ukraine Development Fund.
Blackrock has been providing “advisory support for designing an investment framework” with the aim of “creating opportunities for both public and private investors to participate in the future reconstruction and recovery of the Ukrainian economy.”
Zelenskyy says the reconstruction of Ukraine represents the “greatest opportunity in Europe since World War II” but Gryban admits that the direct appeal to investors via Advantage Ukraine has not been an entirely easy sell.
“We do track some interest. It’s not enormous, I’ll be honest with you,” he says. “We understand why the war does not really give, you know, extra benefits for investors.”
The Ukrainian government has worked with big multilateral organisations to try to offset some of those risks, however, rolling out tax tweaks and introducing tailored insurance facilities.
“There is a big investment guarantee from the World Bank that is ready to cover the war risks for international investors and now they’re looking for a way to do this for Ukrainian investors as well,” Gryban says.
We will need to set up the fire and then convert it into real deals
“Essentially you buy the insurance policy and if anything bad happens, you just get up to 90 per cent of your damages compensated.”
The assurances are yielding some results. Advantage Ukraine’s team, largely based in Kyiv and made up of former investment bankers, analysts and consultants, notched interest from about 500 potential investors in its first six months.
The opportunities presented by the campaign sit across the broad range of Ukraine’s historically dominant industries like agriculture and energy, as well as those it would like to dictate its future: tech, green energy, sustainable transport and green metallurgy.
Ukraine’s sheer size and space give it a unique position in many of those industries. Energy storage and the conversion of some of its agricultural land into space for green energy projects are particularly priorities, Gryban says, so too is utilising its critical minerals resources for the supply of materials toward a green energy transition.
One of Ukraine’s most emergent sectors – defence – has in some part been forced upon it. The country has already attracted investment and partnerships with firms like Lockheed Martin and French firm Thales, and it has launched an initiative called Brave One to quickly bring new defence ideas and start-ups to fruition.
Gryban and his team are looking to London specifically to help fund the tech sector too. A Ukrainian delegation led by Gryban will head to UK tech week next month to try to court venture capital firms and get cash flowing back to the country’s start-ups.
Even with that optimism for Ukraine’s industrial future, Gryban is realistic about the present.
Interest rates have been held at 25 per cent since June last year and the economy has been rocked by what he calls “galloping inflation”, creeping down to 17.9 per cent in April from 21.3 per cent in March.
Investors are understandably cautious about backing Ukrainian projects for the time being, he says, but Advantage Ukraine will keep campaigning regardless.
“[We knew] the interest would not be like a spark. If it was, then it would go away,”
he says.
“We really need to burn. We will need to set up the fire and see how we convert it into the real deals.”