We Build Ukraine: action plan for economic growth

After finishing our work in the government, my colleagues from the Ministry for Communities, Territories, and Infrastructure Development of Ukraine and I decided to remain as a team and continue to be as helpful as possible to our country. Experts in economic, financial, and various other fields have joined us. This is how "We Build Ukraine", an independent think tank, was created. Our organization will operate transparently and accountable as we did in the Ministry. The overall management and oversight of task implementation will be carried out by the Supervisory Board, which I chair. 

Before joining the government, most of us had already been heads and experts in reform offices and had led public and business initiatives. Change should always be implemented, regardless of position, and during our time in the government, we proved that the public sector can be different — profitable, non-corrupt, efficient, and capable of listening to business needs. We left behind state-owned enterprises with billions of hryvnias in their accounts — all of this during the war. I clearly remember how Ukrainian Railways came to a halt in the summer of 2021 due to a lack of fuel, and how some ports faced wage arrears. Much more has been accomplished in the sectors we worked on, but that is a topic for a separate column.

The main goal of our center is to develop a detailed strategic plan for the development of Ukraine's economy in the context of the war and post-war recovery.

Economic Recovery Strategy: A Joint Project with Boston Consulting Group

In the summer of 2023, our team worked on restarting maritime trade after Russia's withdrawal from the Grain Deal. At that time, together with the EY team, we calculated the potential GDP growth if we could export not only grain but also other non-military cargo (ore, metal, etc.) through Odesa ports. Less than six months after the launch of the Ukrainian Black Sea Corridor, we saw concrete results — taxes and fees paid to the budget were 15-20% higher than projected.

It became clear that infrastructure investment priorities should not only address humanitarian issues but should primarily contribute to economic recovery.

In the fall of 2023, Penny Pritzker, then the U.S. Special Representative for Economic Recovery, asked me: What's next (after the Black Sea Corridor)? Where should investments be directed, and in which sectors and regions, to make your country economically stronger? Even before Pritzker's question, we had already been working with the international consulting company Boston Consulting Group (BCG) on a comprehensive Economic Recovery Strategy for Ukraine. It was important for us to get an external, expert, and unbiased perspective based on verified data.

The consultants worked until August 2024 and, during this time, conducted an in-depth analysis of the Ukrainian economy based on large amounts of data and interviews with more than 100 government officials, Ukrainian and international business leaders, and specialized experts.

The final document contains a list of more than 350 prioritized initiatives to be implemented by both the state and the private sector, as well as specific strategies for economic recovery in different regions of the country.

The strategy identifies eight critical sectors of the economy that require reforms and public and private investment. According to BCG, the transformation of these sectors will have an impact on increasing the country's GDP. This prioritization is based on an assessment of the role of the sectors in the period before a full-scale war, starting in 2022. It takes into account the realities and opportunities of world markets and global competition.

The key sectors in focus are:

• Agriculture and the food industry
• Metals and mining
• IT
• Defense Production
• Construction
• Energy
• Green energy
• Automotive industry

Key Enablers of Economic Growth

While economic recovery is the strategy's priority, it is impossible without access to finance, labor, logistics, and telecom infrastructure.

One of the top priority factors for economic growth is business access to finance. Currently, Ukrainian entrepreneurs primarily rely on their own funds for development, as banks are not fully performing their essential market function - they are hardly lending to the real economy. 

Meanwhile, the government spends tens of billions of hryvnias supporting the banking sector, creating a vicious cycle. Banks earn interest from the government on domestic bonds, certificates of deposit, and compensation from preferential government programs like "Affordable Loans 5-7-9". Since 2022, the volume of concessional loans has increased significantly and now accounts for almost 40% of the banks' portfolios of performing loans. Preferential programs provide growth as the whole of the banks' net loan portfolio. The total amount of interest income banks are projected to receive from the state in 2024 could reach UAH 200 billion, which is UAH 20 billion more than in the previous year. Much of this money could be directed to the real sector.

Accordingly, we must launch adequate market mechanisms for business lending to revitalize the economy. 

Future economic growth depends on access to finance and other essential factors, so we will develop a detailed reform plan for each.

Implementation of the Strategy: Synergy of Business, Government, and International Partners

In this strategy, we are not inventing a new formula providing a prioritized list of steps and recommendations that will allow us to multiply Ukraine's GDP by 2040.

I am convinced that without a strong economy, we risk becoming part of someone else's economic strategy.

We are launching expert discussions, consulting with businesses, and working with partners and the government to transform the strategy into a detailed Action Plan.

Oleksandr Kubrakov, founder of the "We Build Ukraine Foundation"

Deputy Prime Minister for Restoration of Ukraine (2022-2024)