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No matter how many promises we make or how often we refine our phrases, investors understand just one language—the language of facts. And if we are still not seeing long queues of people willing to invest their money in Ukraine’s economy, that’s because, so far, our facts look none too appealing.


Rhetoric won’t help. To be sure, the investor will hear our words and arguments, but he/she believes only in deeds. “Is it really worth investing in Ukraine?” “Should we channel our capital to other countries?” The answers to these questions are a combination of specific indicators. A combination of conditions and financial parameters, forming an offer investors will understand. An investment project entitled “Ukraine” if you like.

What is critical for an investor in this project? Above all, free movement of capital, then a high return on investment, managed risks, and the possibility of a quick and easy exit from the project. Without these, no investor is ready to invest in the country. To improve the situation, we must understand what our project means today.

Advantages of the “Ukraine” investment project

Ukraine is gradually recovering its investment attractiveness. Several facts confirm this. The first fact is the successful placement of Eurobonds and a recovery in GDP growth.
The successful experience in allocating Eurobonds for $3 billion confirms that investors are ready to accept the country’s risks, though still not yet in the form of direct investments. On the condition of annualized returns of 7.7%, such a large allocation is a huge achievement and a powerful, positive signal for big capital.

Also, we can definitely affirm today that Ukraine’s economy has bottomed out and started growing, even though we were hit badly enough by the last two crises. Cabinet Ministers, for example, predict 3 years of 11% growth in GDP. Private investors and businessmen are also very optimistic. Everyone I’ve communicated with on this issue expects the Ukrainian economy to grow by 2–6% over the next 3–5 years.

However, the question arises: what will the Ukrainian economy feel like in 20 years with such growth rates? How appealing will we be, compared to other countries such as our closest neighbours? Will we be able to catch up with them in development or should we move more aggressively? This, though, is a topic for a separate discussion. Still, the good thing for today is that the vector of our movement is correct.

The second fact is that we are obviously moving on reforms. Of course, everyone wants change to be faster, and that conflicts of interest do not interfere with making the legislative reforms necessary for investors (for example, to the laws on privatization and on concessions). It would be helpful to improve regulation in the legislative sphere relating to management of distressed bank debts. It is important that both banks and investors are protected from unnecessary risks. And, of course, land reform is urgently needed—this is one of the key conditions for attracting capital to develop the agricultural and related sectors.

How to improve the “Ukraine” investment project

Speaking of things I’d like to improve, I’m reminded of a joke. Why does the investor enter a room backwards? Because his eyes are on the exit. Usually, the investment horizon is from three to ten years. And when investing today, the investor wants to feel reassured that when the project is completed, he will be able to withdraw his capital freely from Ukraine. Therefore, for the stable attraction of external capital, it is necessary to guarantee an easy and fast way out for each investor.

Another critical indicator is lack of restrictions on capital movement. For investors, this is rather like a visa-free regime. Practically, each of them asks us a point-blank question: “Is there capital movement in Ukraine? If not, then, guys, let’s not waste our time. We’ll come when the country eases restrictions.”

It is also important to understand the cost of borrowing capital. Within the country, as you know, this is quite high. And it is not easy to attract foreign capital, especially when entering a project from scratch. In such a case, project financing will be effective, but in Ukraine, it is, in fact, absent. Foreign banks look without much interest at projects up to $20 million and, as a rule, they don’t make loans for such projects. Ukrainian banks themselves are not ready to provide project financing to domestic firms. And yet, this is one of the basic requirements for the development of medium-sized businesses, which are the backbone of a normal market economy.

Of course, it’s easier for Ukraine to concentrate on preparing five large projects worth a billion dollars or more. However, their preparation can take many years, during which one could implement hundreds of projects worth one, five, or ten million. Therefore, I’m afraid it will be hard for us to manage without project financing with the cost of capital up to 12% per annum.
In addition, investors need a long-term development strategy for Ukraine. Developing portfolio companies, an investor like me would like to see the prospect of market development. And to understand which sectors are the state’s priorities. Does the government plan to focus on specific sector projects, invest its own funds, and provide tax incentives for their development? In such cases, the investor sees opportunities and understands what he should do to make money. And, simultaneously, to have the opportunity of exiting the business when it reaches the required scale.

The strategic developments announced by the state at present, do not provide an understanding of the country’s development vector and have not been sufficiently elaborated for the investor. In fact, there is still no long-term development strategy for the country as such. There is no clearly chosen path; there are no realistic goals; no specific steps that will lead to them. But even when such a strategy appears, it is important to remember that it is critical to implement it, thus keeping our word. If we do not keep our promises, investors won’t believe us, and will simply withdraw their money from the country.

Steps forward

Remember: an investment project will not sell itself. It is necessary constantly to talk up its advantages, to convince, to provide examples. We need to explain to investors that investing, however cautiously, in Ukraine is necessary. That it is necessary to understand the country’s specifics: to take into account that it is still an emerging market, which, nevertheless, has a number of advantages.

Today, there are professional teams in Ukraine to help a foreign investor take these features into account. There are local partners to choose from, whose reputations can be checked, thus partially minimizing risk.

Investors are always looking for new projects. When the opportunities are good, why not take advantage of them? But for this, the business itself must take a step forward. How? It is necessary to work on a project’s quality, to conduct a proper dialogue with the people bringing in the capital, and to be really client-oriented.

Today, opportunities are emerging fairly frequently, so one should not miss them. When it rains, fetch a bucket, not a thimble. All those who are part of the investment community, who work for the state, and help to make Ukraine better should be able to place one small “bucket” of theirs and attract at least a portion of the capital on the global market. International investment will spur growth in the Ukrainian economy and strengthen its role on the world market, thus increasing the value of the investment project entitled “Ukraine.” We will all benefit from it.