The World Bank Group’s new report “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.

Private sector investment can put Ukraine on a path towards recovery and a more resilient future.

The World Bank Group’s new report “Private Sector Opportunities for a Green and Resilient Reconstruction in Ukraine”, developed in cooperation with Ukraine’s government and presented in Kyiv on November 3, 2023, highlights this potential. 

“The report illustrates the immense potential for private sector investment to drive Ukraine’s reconstruction and pave the way for a more resilient future.  The report underscores the transformative power of aligning reforms and sector interventions. It’s not just about addressing Ukraine’s reconstruction needs, but about laying the foundation for a sustainable and prosperous future.” – Rana Karadsheh, Regional Director. Europe, International Finance Corporation (IFC)

This report assesses the potential for private financing to meet these needs under both a status quo scenario and a scenario with reforms and other sectoral interventions.

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 investment 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.

This report, which is a synthesis version of the broader assessment, includes an overview of the assumptions used for the projections under both scenarios and lists a table of critical reforms that could help unlock private sector financing. These reforms and interventions include:

a. Measures that increase opportunities for the private sector to manage or utilize state assets. These measures tend to be sector- specific, ranging from port and airport concessions to the mobilization of private capital and the eventual privatization of SOE.

b. Adjustment of controlled prices. For example, revising maximum and minimum price caps on the different wholesale market segments to ensure free price formation will further its process of integration in the EU electricity markets, demand reduction, investments and energy security.

c. Public investment. For example, public investment in irrigation and the demining of land will expand the scope for private agricultural investment.

d. Public sector capacity to address regulatory issues. State capacity is required to prepare assets for PPPs, enforce competition policy, and administer creditor rights. 

e. Pilot projects to explore private investment opportunities in state-dominated sectors. These sectors include water and sanitation, education, and health.

So, as the public sector’s capacity to invest directly in public infrastructure is limited, the government must expand service-delivery models that involve the private sector, such as PPPs, concessions, joint ventures, performance-based contracts, and commercial loans. At the same time, the extent of private sector investment will depend on the ability to address various risks, such as availability of third-party infrastructure, material loss and damages, demand and revenue risks, access to finance, etc.

READ THE REPORT for an in-depth look at the figures and vision for the country’s recovery: http://wrld.bg/hl7M50Q0Uu2