Ukraine wants to attract US investment firms

Ukrainian SMEs need access to funds and technology, according to UkraineInvest, which shows that in the past year and a half since Russia launched its invasion of Ukraine, the government in Kiev has been pushing to stimulate the economy with the support of multinationals foreign and financial giants such as BlackRock Inc., notes MarketWatch, according to morningstar.com.

Companies that have announced investments in the war-torn country include Swiss food group Nestle, British consumer goods giant Unilever, Danish brewer Carlsberg and Irish construction materials company Kingspan.

Ukraine also worked with Blackrock for an investment fund needed to restore the country's economy, according to the cited source. The purpose of the fund is to attract private and public capital for large-scale business projects in Ukraine.

JP Morgan Chase & Co. of the US is also providing advice to Ukraine as the country rebuilds its economy.

In addition to these efforts, Ukraine is targeting US investment firms in an attempt to boost small and medium-sized businesses in the country and create jobs, according to Serghei Tsivkach, CEO of UkraineInvest, the Ukrainian government's investment promotion office. .

"We need to provide immediate support to Ukrainian SMEs," Tsivkach told MarketWatch, noting: "Companies are in a difficult situation in terms of access to funds and technology. They are the backbone of every economy, therefore also of the Ukrainian economy". Job creation is also a key aspect, according to Tsivkach, who recalls that Ukraine lost around 3.5 million jobs during the war.

As part of this effort, UkraineInvest is talking with a number of financial institutions in New York and Washington DC, according to Tsivkach, who points out: "They are on a smaller scale than BlackRock, obviously, but they are able to bring investments. Different investment mechanisms must be evaluated, including mixed financing and impact investments."

UkraineInvest defines an SME as a business with 50 to 250 employees. In Ukraine, they cover a wide range of industries, including FMCG (fast moving consumer goods), car construction, textiles, food, logistics, agricultural technology and agricultural processing, which transforms a raw agricultural product into another product.

"I think that one of the major roles of UkraineInvest is to support SMEs in Ukraine, by financing and looking for partners for these companies. We also need to help international SMEs to enter Ukraine", noted the CEO of UkraineInvest, stating: "We need to pay special attention to SMEs. They are different because they do not have large-scale legal teams to assess the entire region. They need to be fed with analytical data and support on the ground".

In his opinion, both multinationals and SMEs are the key to Ukraine's economic recovery. Tsivkach also said: "We need to have big companies, but we need many SMEs to flourish throughout the country and a distributed system of companies at the national level."

Ukraine's GDP fell by 30.4% in 2022, according to data from the Ministry of Economy in Kyiv.

Earlier this year, Ukraine's government, the World Bank, the European Commission and the United Nations reported that Ukraine's reconstruction and recovery would cost an estimated $411 billion, 2.6 times the country's GDP in 2022.

But, Tsivkach warns that the figure of 411 billion dollars could increase much more, stating: "According to our experts in Ukraine, the amount could reach a trillion dollars or even exceed this level, depending on when we will be able to we win and end this war".

The UkraineInvest entity was created by the Ukrainian government in 2016 to attract foreign direct investment and to support existing investors in expanding their businesses in the country. Tsivkach has been at the top of UkraineInvest since 2020.

• EBRD wants a capital increase to increase investments in Ukraine

The European Bank for Reconstruction and Development (EBRD) is working on a plan to increase its capital so that it can invest approximately 1.5 billion dollars a year in Ukraine, the president of the international financial institution, Odile Renaud-Basso, said on Monday, according to Bloomberg.

The EBRD has become an important financial supporter of the war-torn Ukrainian economy. In May, the London-based financial institution announced that it plans to ask shareholders for a capital increase worth three to five billion euros by the end of the year.

"We are now moving towards a finalization to convince them that it would be good to have a capital increase. From a financial point of view, it is a better option because for every euro of capital we can grant a financing of five euros", said Odile Renaud-Basso, notes Agerpres.

The prospect of increased EBRD investment is welcome news for Ukraine's economy amid concerns that support for Kiev's war effort is beginning to wane.

The American parliamentarians decided on Saturday to cancel an aid package worth six billion dollars for Kiev, in order to avoid the shutdown of the Federal Government. Also, Saturday's election in Slovakia was won by a former prime minister who promised to end military aid to Ukraine.

Since the beginning of this year, the EBRD has provided Ukraine with 1.2 billion euros in financing, and the bank says it will honor its commitment to provide at least three billion euros in financing in 2022-2023.

The EBRD is an international financial institution that promotes the development of the private sector and entrepreneurial initiatives in 36 countries on three continents. The bank's shareholders are composed of 71 countries, the EU and the EIB. EBRD investments aim to transform the economies of the operating regions, so that they become competitive, inclusive, well-governed, green, resilient and integrated.