Welcome to the sixth edition of our new Ukraine Business Roundup weekly newsletter. If you want to stay updated with the latest business and tech news from Ukraine, subscribe here.
Let’s Stop Talking About Foreign Businesses
You might be curious why so many of our newsletters start with me at the Kyiv Intercontinental Hotel. Besides its central location, it’s a favorite among Ukrainian elites and foreign guests. Last week, I was back at the hotel’s ornate basement conference rooms for the Kyiv International Economic Forum, accompanied by our reporter Dominic Culverwell.
The forum, spearheaded by Vasyl Khmelnytsky, one of Ukraine’s wealthiest businessmen, brought together government representatives, businesses, and civil society to discuss the future of Ukraine’s economy. During the event, Rostyslav Shurma, the deputy head of the president’s office responsible for business and economics, made a shocking statement about corruption. He claimed that in his personal experiment of asking foreign investors about encountering corruption in Ukraine, none of them have answered affirmatively.
Standing next to the owner of one of Ukraine’s largest manufacturing companies, I witnessed his disbelief and frustration at Shurma’s remarks. It’s disheartening to brush aside the issue of corruption and pretend it doesn’t exist. Acknowledging the problem is crucial for initiating real change. I couldn’t help but wonder what Shurma’s boss, the president, would have to say about his statement, considering that corruption is a major concern for Ukraine’s Western partners.
However, I found the comments of Konstiantyn Yefymenko, CEO of Biopharma, a Ukrainian biotech company, more compelling. Yefymenko voiced concerns that foreign investors might have, including the presence of multiple state agencies that harass businesses with fines and extortion, the unresolved issue of war insurance, and the current prohibition on dividend payments. He emphasized the need to focus on protecting Ukrainian assets from a flawed judicial system.
During a sidebar conversation at the forum, I learned that businesses in Ukraine are facing increasing pressure and harassment from state agencies and security services. This is a significant problem that needs attention. We will be publishing a story soon to shed light on how businesses are struggling to function under such circumstances. If you have experienced corruption while doing business in Ukraine and want to share your story, please reach out to us.
Report Card
The annual meetings of the International Monetary Fund (IMF) and World Bank took place in Marrakech, Morocco last week. Although I couldn’t attend in person, I watched the recording to bring you the highlights. Ukraine received high praise from these international financial institutions, which is good news.
During the roundtable discussion, World Bank Group President Ajay Banga stated that if the right conditions are created, the World Bank estimates that one-third of Ukraine’s future needs could be met through private-sector financing. Banga mentioned his positive conversation with Ukraine’s Finance Minister Serhiy Marchenko and their discussion on attracting more private investment by implementing clear and predictable policies in key sectors. The World Bank also expressed its intent to apply the lessons learned from the war in Ukraine to help other countries facing similar situations.
IMF Director Kristalina Georgieva, sitting next to Minister Marchenko, expressed her satisfaction with Ukraine’s progress in the face of Russian aggression. She highlighted revised growth estimates, ongoing structural reforms, single-digit inflation, and a strong central bank. Georgieva emphasized that the IMF’s investment in Ukraine is not charity but a long-term investment that will benefit the Ukrainian people and the regional economy. However, the IMF has identified that Ukraine’s needs for next year are approximately $3 billion higher than initially expected.
DTEK Goes Drilling
DTEK, Ukraine’s largest private energy company, announced its plans to complete drilling its first oil well in Ukraine’s Poltava Oblast by the end of this month. According to DTEK’s CEO Maksym Timchenko, this is the company’s first venture into oil production. The ongoing Russian invasion disrupted their previous plans, but the company sees this as an opportunity to develop the Ukrainian energy sector despite war conditions. They also highlighted that DTEK Oil & Gas was the only gas production company in Ukraine that maintained its pre-war gas production volumes in 2022.
Regarding refining oil, DTEK stated that they need to build up sufficient drilling capacity before commencing the process. However, the company plans to construct its own processing facilities to meet modern industrial safety and environmental standards, as existing capacities are outdated.
New Frontiers
President Volodymyr Zelensky announced the creation of a new grain corridor through Moldova and Romania during his official visit to Romania. This collaboration aims to enhance grain exports from Ukraine. Currently, nearly 60% of Ukrainian grain exports pass through Romania. The new grain corridor is expected to give a significant boost to Ukraine’s grain exports.
That’s all for this edition of the Ukraine Business Roundup. Stay tuned for more updates on Ukraine’s business and tech scene.
