In 2023, Ukraine’s Investment Climate Won’t Improve Much Unless the Situation on the Frontline Changes

26/ 01/ 2023

Andriy Volkov, Investohills Group’s founder and managing partner, predicts that Ukraine’s investment climate won’t improve much in 2023 unless the situation on the frontline changes and the economy starts rebounding. According to the financier, foreign investors lack incentives to bring capital into a country at war. The risk of losing money is too high, with the paltry likelihood of the successful implementation of any project. “Over 2022, I met only a few foreign investors who showed interest in Ukrainian assets. Anyway, these were sheer speculators interested mostly in properties in Kyiv or Ukraine’s West and logistical facilities. Their potential investments totaled $10 million at the most,” Volkov says. According to him, one can hardly expect any investments during a prolonged war, with civil and industrial infrastructure attacked regularly. The most we can talk about are some projects in logistics, exports of Ukrainian foods or imports of goods into Ukraine near the border with European countries. However, Volkov believes that there is a sector in Ukraine that is more alive than dead. It is the IT. “Despite the war, Horizon Capital, an investment company, International Finance Corporation (IFC), and several other financial institutions set up a new investment fund of $200 million in 2022 to fund Ukrainian startups,” the businessman cites an example. He adds, however, that most Ukrainian IT companies have foreign clients, and any specialist in this field can work without being confined to a particular geography. Thus, many employers helped their employees to leave Ukraine. Some IT companies with domestic roots moved their offices to other countries. However, according to Volkov, the IT sector will likely be the only recipient of investments in 2023. However, the capital will flow into the country only as long as this sector is hardly affected by the war and the Ukrainian realities. “Potentially, investors are still interested in Ukraine. Many of them are willing to develop new projects here. But the war must come to an end with guaranteed peace. Only after that will the serious investment money be back to our country,” the financier says. According to the Ministry of Finance, Ukraine received foreign direct investments to the tune of $190 million over the three quarters of 2022. During the same period, capital to the tune of $159 million left the country. As a result, the net investment surplus came close to $31 million.

Andriy Volkov, Investohills Group’s founder and managing partner, predicts that Ukraine’s investment climate won’t improve much in 2023 unless the situation on the frontline changes and the economy starts rebounding.

According to the financier, foreign investors lack incentives to bring capital into a country at war. The risk of losing money is too high, with the paltry likelihood of the successful implementation of any project.

“Over 2022, I met only a few foreign investors who showed interest in Ukrainian assets. Anyway, these were sheer speculators interested mostly in properties in Kyiv or Ukraine’s West and logistical facilities. Their potential investments totaled $10 million at the most,” Volkov says.

According to him, one can hardly expect any investments during a prolonged war, with civil and industrial infrastructure attacked regularly. The most we can talk about are some projects in logistics, exports of Ukrainian foods or imports of goods into Ukraine near the border with European countries.

However, Volkov believes that there is a sector in Ukraine that is more alive than dead. It is the IT.

“Despite the war, Horizon Capital, an investment company, International Finance Corporation (IFC), and several other financial institutions set up a new investment fund of $200 million in 2022 to fund Ukrainian startups,” the businessman cites an example.

He adds, however, that most Ukrainian IT companies have foreign clients, and any specialist in this field can work without being confined to a particular geography. Thus, many employers helped their employees to leave Ukraine. Some IT companies with domestic roots moved their offices to other countries.

However, according to Volkov, the IT sector will likely be the only recipient of investments in 2023. However, the capital will flow into the country only as long as this sector is hardly affected by the war and the Ukrainian realities.

“Potentially, investors are still interested in Ukraine. Many of them are willing to develop new projects here. But the war must come to an end with guaranteed peace. Only after that will the serious investment money be back to our country,” the financier says.

According to the Ministry of Finance, Ukraine received foreign direct investments to the tune of $190 million over the three quarters of 2022. During the same period, capital to the tune of $159 million left the country. As a result, the net investment surplus came close to $31 million.