Kyiv, Ukraine, October 26, 2023—Key reforms can help Ukraine generate up to $130 billion in private financing to help address reconstruction needs, according to a new IFC and IBRD report entitled Private Sector Opportunities for a Green and Resilient Reconstruction in Ukraine.
In March 2023, the Second Rapid Damage and Needs Assessment (RDNA2) identified $411 billion worth of investments required for Ukraine's reconstruction. This new report, developed in cooperation with Ukraine's government, assesses the potential for private financing to meet these needs under both a status quo scenario and a scenario with increased reforms, sectoral interventions and EU integration. In the latter scenario, the potential to raise private finance almost doubles.
Under the non-reform scenario, which envisions a continuation of pre-invasion economic dynamics, private investments are estimated to generate over $73 billion, or 18 percent of the reconstruction needs identified in RDNA2.
Under a scenario where the Ukrainian government accelerates economic reforms, addresses sectoral needs, and deepens EU integration, Ukraine could see nearly $130 billion in private sector investments flow into the country. This would cover about one third of needs identified in the RDNA2 and open an additional $282 billion in further private sector opportunities to boost Ukraine's development.
The report identifies the following reforms with the greatest potential to drive a sustainable and resilient recovery:
- Agriculture: Completing land and irrigation reforms and strengthening institutions, increasing access to affordable financing and enabling the adoption of climate-smart agriculture technologies could attract private investment worth $30 billion. These investments could cover the sector's reconstruction needs. Reforms in the food and beverage sector could generate an additional $16 billion of private investment.
- Transport and Logistics: Public investment and policy reforms could allow the private sector to cover nearly $7 billion of reconstruction needs, while unlocking $41 billion in additional private sector opportunities.
- Energy and Extractives: Policy reforms in these sectors could enable the private sector to invest $36 billion to meet RDNA2 needs and generate a further $132 billion in investment opportunities.
- Housing: By implementing policy reforms, providing financial support, and fostering collaboration with regional developers and financial institutions, investment by households can exceed $30 billion and generate an additional $60 billion beyond reconstruction needs.
The report emphasizes that these reforms, combined with sound macroeconomic management, conducive trade and investment policies, and risk mitigation instruments, are essential to stimulate private capital inflow.
"This report offers recommendations on the transformative reforms to unlock private sector investments in Ukraine's green and resilient reconstruction," said Alfonso Garcia Mora, IFC's Vice President Vice President for Europe, Latin America & Caribbean. "It comes at a crucial juncture as the government develops its Ukraine Plan, a strategy for reforms and investment, as part of its engagement with the European Union."
The full report can be accessed here.
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