World-renown expert on Foreign Direct Investment Courtney Fingar gives her view on some of the challenges facing Ukraine and its tremendous reconstruction tasks.
Courtney Fingar needs no introduction in the world of Foreign Direct Investment, or FDI. As editor-in-chief at the Financial Times fDi Magazine, for 15 years, she oversaw its transition to the fDi Intelligence platform that it is today before striking out on her own FDI consultancy, Fingar Direct Investment.
Courtney is very familiar professionally with FSU states from the Baltics through Kazakhstan, including Ukraine, from her experience in dealing with investment promotion agencies in the region.
Ukraine is going to need massive support from its partners to rebuild. Is Ukraine equipped at all to handle the influx -are the people and institutions generally able to absorb this?
Certainly the needs, and challenges, around reconstruction are going to be massive and there will have to be a Marshall Plan of sorts. Reconstruction will be a complex and long-term process that requires concerted efforts from government, civil society, businesses, and the international community.
Rebuilding roads, bridges, schools, and hospitals is essential to restore normalcy and provide essential services to the population. Additionally, addressing the humanitarian fallout of the conflict, including the displacement of millions and the psychological trauma of survivors, is crucial for long-term stability.
Ukraine’s economy requires, and will continue to require, significant investment to revitalise key sectors and stimulate growth. The war-torn regions, once major industrial hubs for the country, need to be restored (if they remain Ukrainian territory). Agriculture, manufacturing, and energy sectors, among others, need modernisation and investment to realise their full potential or at least to get back where they were pre-war.
Brain drain will be a major issue: Ukraine has lost a huge chunk of its population and many of its emigres will not return. This will leave holes in the workforces and management capabilities of the both the public and private sector. That said, some of the best and brightest may return out of a feeling of patriotism and a desire to help the country in its hour of need. This is a common phenomenon in post-conflict societies.
Central to these admittedly Herculean tasks is the question you rightly pose of how to meet the needs while effectively managing the influx of aid money, which could be a potential boon for the country’s longer term development. Managing the inflow of money requires careful oversight to ensure it aligns with the country’s reconstruction priorities and does not exacerbate existing inequalities. There is a risk that investment may concentrate in affluent urban centres, or becomes heavily politicised with regions competing for funds.
There will inevitably be some risk of money disappearing into black holes, or a repeat of the shambolic situation suffered by Iraq during its post-war reconstruction era (which is many ways is still ongoing). However, the donors, multilateral institutions and key partners like the US, UK and EU will work hard to put controls and oversight mechanisms into place.
Ukraine was ostensibly on a reform path before the 2022 invasion. Is the rule of law and corruption as bad as the Russian narrative makes it out to be?
Enhancing governance, tackling corruption, and strengthening institutions are fundamental for creating an environment conducive to not only reconstruction but more fundamentally the long-term sustainability of the Ukrainian economy and stability of the country.
Safe to say we can disregard Russian political narratives on pretty much anything to do with Ukraine and it’s probably worth pointing out that Ukraine performs better than Russia in Transparency International’s Corruption Perceptions Index.
Of course, rule of law and corruption has long been a bugbear for Ukraine. But it’s important to highlight Ukraine HAD made progress in this realm. This data visualisation from The Economist illustrates it fairly well: https://impact.economist.com/projects/ukraine-reform-tracker/a-digital-data-story/
This is an area where the potential for EU membership is very powerful, as a driver for continued reforms and increased transparency.
You chaired the RE-Invest Summit at MIPIM in Cannes this year. Was Ukraine a general topic of discussion on the sidelines?
Ukraine came up only in the context of geopolitical instability that is heightening investor sensitivities to risk. Ukraine itself has not been, and certainly is not now, a major destination for institutional investment on a global scale, so is not much of a “lost” market as far as the top asset managers and capital owners go. However, reconstruction will bring some interest especially around real-asset investment, I suspect.
