ith foreign ministers and multinational CEOs having gathered in London at the Ukraine Recovery Conference on June 21 and 22, there is a sense of optimism that Ukraine will prevail in its war against Russia—leaders are ready to think about reconstruction. The discussions were critical and the list of participants diverse. But one key voice was missing: that of Ukraine’s small and medium-size domestic businesses, which account for more than 97% of the country’s economy.
Ukraine’s Private Sector Deserves a Seat at the Table
Ukraine’s private sector has a crucial role to play in the country’s recovery and reconstruction. The sector will act, not only as economic engines and job creators, but also as subcontractors to the multinational companies ready to sign rebuilding deals in London. Small and medium-size enterprises (SMEs) are currently hard at work moving goods to support the war effort and their communities, keeping roads clear, training workers, and distributing aid to the populace. They are also providing insights to lawmakers on measures to squash wartime fraud and corrosive capital from authoritarian foreign investors.
SMEs are also central to the story, because they have produced many of the country’s leaders, and that start-up mentality may help explain the spirit of cooperation now propelling the country through crisis. President Volodymyr Zelensky went from a performer to an entrepreneur when he established Kvartal 95, a television production company, before entering politics. Oleksander Sova is a member of Parliament who founded Sova, a jewelry maker and retailer. He serves on the Committee on Finance, Taxation and Customs Policy, along with Yevhen Petruniak, who came to politics in 2019 after heading a law firm.
The Center for International Private Enterprise (CIPE) has been working with private sectors in countries the world over for the past 40 years, including partnering with business associations and chambers of commerce. Over that time, it has become clear that post-war reconstruction is more successful when a country’s domestic business community is treated as a genuine reconstruction partner. Domestic entrepreneurs and businesses have met the reconstruction challenge in Ukraine before, as well as other settings such as Bosnia and Herzegovina, Colombia, and Kosovo. Countries that disregarded the voice of business are more likely to suffer economic and democratic backsliding.
For Ukraine’s reconstruction, delivering billion-dollar infrastructure projects on time and within budget will require collaboration and cooperation between international actors and the domestic SMEs who will be needed to execute projects on the ground. These are the Ukrainian brick factories, construction firms, lumber mills, and other providers of skilled labor and talent. Reconstruction will be smoother if Ukrainian executives can share what they know early in the process, as they keep their businesses operational while also supporting the war and rebuilding efforts.
Creating Real Impact in London and Beyond
London conference participants should set an inclusive path for reconstruction. Failing to do so makes it more likely the process will become either cumbersome and slow or fail altogether, tempting Ukrainian stakeholders to revert to corrosive capital and other types of authoritarian investment alternatives that today the country seeks to break free from. Such investments typically shut out domestic SMEs and would surely hamstring any economic modernization program. Real commitment to Ukraine requires emphasizing and supporting a business reform process that is already underway, one that emphasizes transparency as well as a suite of anti-corruption reforms that build on the recent efforts that have boosted President Zelensky’s popularity. As reconstruction subcontractors, Ukrainian SMEs embracing these new processes will likely need help from international stakeholders in implementing the compliance practices multinational reconstruction firms require to ensure a well-governed rebuilding process free from corruption. This will also guarantee donors the most value for the billions of dollars they will be spending, while providing Ukrainians the best possible reconstruction to kick off a post-war recovery.
Having already proven their worth as economic actors and wartime helpers, SMEs are now also poised to champion these reforms and many have already begun to do so. Some are strong advocates for many of the new measures on the books, signaling their commitment to change that will propel the country forward. In fresh survey data of almost 300 SME executives, 68% said they are willing to report waste, fraud, and abuse by government, an impressive number in a country with a history of endemic corruption. Two-thirds of the SME leaders responded that a commitment to ethics and moral values is important to mitigate corruption risk. For donors and aid providers, these actions and responses are assurance that reliable partners are waiting and ready.
Readiness also means listening to tomorrow’s leaders and entrepreneurs, often by connecting with the country’s broad network of local business associations and chambers of commerce. Ukrainian SMEs have demonstrated they are ready to deliver broad-based economic and social gains when the war is over, if provided the right environment to achieve their full potential. A dynamic, inclusive, competitive, and engaged private sector will ensure the lives lost to Russian revanchism and aggression will not be in vain. We need to start planning now for a future where Ukraine can, not only win the war, but Ukraine’s private sector can win the peace.
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Helping Ukraine Rebuild, the Right Way
Image by Oleg Mityukhin from Pixabay
June 22, 2023
Government officials and c-suite executives met in London this week for the Ukraine Recovery Conference, where they looked beyond the conflict to think about reconstruction. Yet reconstruction needs active engagement with domestic business communities to be truly successful, writes CIPE's Eric Hontz
W
ith foreign ministers and multinational CEOs having gathered in London at the Ukraine Recovery Conference on June 21 and 22, there is a sense of optimism that Ukraine will prevail in its war against Russia—leaders are ready to think about reconstruction. The discussions were critical and the list of participants diverse. But one key voice was missing: that of Ukraine’s small and medium-size domestic businesses, which account for more than 97% of the country’s economy.
Ukraine’s Private Sector Deserves a Seat at the Table
Ukraine’s private sector has a crucial role to play in the country’s recovery and reconstruction. The sector will act, not only as economic engines and job creators, but also as subcontractors to the multinational companies ready to sign rebuilding deals in London. Small and medium-size enterprises (SMEs) are currently hard at work moving goods to support the war effort and their communities, keeping roads clear, training workers, and distributing aid to the populace. They are also providing insights to lawmakers on measures to squash wartime fraud and corrosive capital from authoritarian foreign investors.
SMEs are also central to the story, because they have produced many of the country’s leaders, and that start-up mentality may help explain the spirit of cooperation now propelling the country through crisis. President Volodymyr Zelensky went from a performer to an entrepreneur when he established Kvartal 95, a television production company, before entering politics. Oleksander Sova is a member of Parliament who founded Sova, a jewelry maker and retailer. He serves on the Committee on Finance, Taxation and Customs Policy, along with Yevhen Petruniak, who came to politics in 2019 after heading a law firm.
The Center for International Private Enterprise (CIPE) has been working with private sectors in countries the world over for the past 40 years, including partnering with business associations and chambers of commerce. Over that time, it has become clear that post-war reconstruction is more successful when a country’s domestic business community is treated as a genuine reconstruction partner. Domestic entrepreneurs and businesses have met the reconstruction challenge in Ukraine before, as well as other settings such as Bosnia and Herzegovina, Colombia, and Kosovo. Countries that disregarded the voice of business are more likely to suffer economic and democratic backsliding.
For Ukraine’s reconstruction, delivering billion-dollar infrastructure projects on time and within budget will require collaboration and cooperation between international actors and the domestic SMEs who will be needed to execute projects on the ground. These are the Ukrainian brick factories, construction firms, lumber mills, and other providers of skilled labor and talent. Reconstruction will be smoother if Ukrainian executives can share what they know early in the process, as they keep their businesses operational while also supporting the war and rebuilding efforts.
Creating Real Impact in London and Beyond
London conference participants should set an inclusive path for reconstruction. Failing to do so makes it more likely the process will become either cumbersome and slow or fail altogether, tempting Ukrainian stakeholders to revert to corrosive capital and other types of authoritarian investment alternatives that today the country seeks to break free from. Such investments typically shut out domestic SMEs and would surely hamstring any economic modernization program. Real commitment to Ukraine requires emphasizing and supporting a business reform process that is already underway, one that emphasizes transparency as well as a suite of anti-corruption reforms that build on the recent efforts that have boosted President Zelensky’s popularity. As reconstruction subcontractors, Ukrainian SMEs embracing these new processes will likely need help from international stakeholders in implementing the compliance practices multinational reconstruction firms require to ensure a well-governed rebuilding process free from corruption. This will also guarantee donors the most value for the billions of dollars they will be spending, while providing Ukrainians the best possible reconstruction to kick off a post-war recovery.
Having already proven their worth as economic actors and wartime helpers, SMEs are now also poised to champion these reforms and many have already begun to do so. Some are strong advocates for many of the new measures on the books, signaling their commitment to change that will propel the country forward. In fresh survey data of almost 300 SME executives, 68% said they are willing to report waste, fraud, and abuse by government, an impressive number in a country with a history of endemic corruption. Two-thirds of the SME leaders responded that a commitment to ethics and moral values is important to mitigate corruption risk. For donors and aid providers, these actions and responses are assurance that reliable partners are waiting and ready.
Readiness also means listening to tomorrow’s leaders and entrepreneurs, often by connecting with the country’s broad network of local business associations and chambers of commerce. Ukrainian SMEs have demonstrated they are ready to deliver broad-based economic and social gains when the war is over, if provided the right environment to achieve their full potential. A dynamic, inclusive, competitive, and engaged private sector will ensure the lives lost to Russian revanchism and aggression will not be in vain. We need to start planning now for a future where Ukraine can, not only win the war, but Ukraine’s private sector can win the peace.
