KYIV RYSING – A Roadmap to Ukraine's Future

25.10.2022 16:03

Russia’s full-scale invasion of Ukraine is having an enormous impact on all fields of the young democracy. Violating the Geneva Conventions and all the existing norms of international law, Russian occupation forces daily commit war crimes and acts of terrorism for no reason.

These war crimes and acts of terrorism lead to the deaths of civilians, massive damage to the infrastructure, disruptions in national economic supply chains and commerce, and environmental pollution. Millions of people have left their homes, and hundreds of thousands have volunteered to defend the independence and territorial integrity of their motherland since February. As of September 2022, total direct losses from the Russian aggression in Ukraine amounted to 114.5 Bn USD (or 112% of Ukraine’s GDP in 2021).

Russia’s war in Ukraine, by extension, is creating parallel economic difficulties throughout the global economy. Growing inflation and rising interest rates of the World Bank caused by the Russian aggression, slowed down the global GDP growth projection for 2022 from 4.1% to 2.9%, which will affect people and businesses all around the world.

Given the scope and magnitude of the war’s devastation in Ukraine and the global community, the investment community needs to understand the impact of war on the Ukrainian economy and immediately begin planning for recovery. Kyiv Strategy Consulting LLC, one of the largest Kyiv-based management consulting companies, will be your entry point in Ukraine.

Under the leadership and guidance of its CEO Nicolai Kiskalt, the company conducted a comprehensive pro bono research project named KYIV RYSING. The exhaustive study was conducted over the last four months by more than 130 consultants and 60 subject matter experts and opinion leaders from Ukraine and abroad. An impressive array of specialists and experts provided valuable insights and shared their unique perspectives on the overall situation in Ukraine and its implications across a relevant subject domain or industry.

Nicolai Kiskalt, CEO of Kyiv Consulting

The study also leveraged the results of an online nationwide public survey and covered 1,000 Ukrainian respondents from all regions of Ukraine, reflecting the public opinion of ordinary Ukrainians aged 18 and above. Most Ukrainians believe Ukraine will become an attractive investment destination in the first 3 years after victory. However, more than 20% of respondents suggest that potential risks will remain high, suppressing investment flows to the country. The full research is available for free download at Kyiv Consulting.

KYIV RYSING estimates that to fully implement Kyiv Consulting’s post-war recovery plan and transformation initiatives throughout Ukraine, upwards of $750 Bn USD of financing from investment sources will be needed by 2032. Significantly, a large part is expected to be obtained from foreign partners. Given existing risks and ongoing uncertainty, this task will be daunting and difficult.

Nonetheless, as Ukraine valiantly reclaims its territory from Russian forces, the potential for the development of a highly favourable investment climate grows every day, helping to build confidence in the democracy’s future. Seeds, therefore, are being scattered to attract a significant portion of the planned funding. KYIV RYSING also envisions new foundations and underpinnings for Ukraine’s economy and economic development – including the opportunity to overcome structural problems and challenges that have limited growth over recent years.

Kiskalt sees a clear path forward for Ukraine even amidst the ongoing war, noting, “We will see a very diverse portfolio of interests related to Ukraine soon. North American interests as well as European interests will partially clash in Ukraine. There will be a lot of expectations after the war from both sides: from the Ukrainians on the West, but likewise from the West on the Ukrainians. In both directions, it will not be easy. Ukraine needs to change and will change. No successful transformation can happen without the skills of consultants.”

Kyiv Consulting’s dynamic CEO added, “To avoid the damage of transformation a strong team is needed which will guide the various stakeholders professionally through the transformation agenda. We have developed ‘R(Y)SE” as a uniquely tailored transformation consulting approach. Envisioned as a Ukrainian-centric plan, it is the necessary approach for Ukrainian decision-makers to secure the success of the upcoming transformation programme.”

Kiskalt is not alone in his admittedly ambitious but attainable vision for post-war Ukraine. Jorg Hossenfelder, CEO of Lünendonk & Hossenfelder, also assesses the need for professional consulting services will be in high demand soon and is confident business consulting in Ukraine will boom in the upcoming years as Ukrainians rebuild their country.

The current frontline regions of the war historically specialize in metallurgy, mining & quarrying, and agriculture. In 2020, there were ~73,000 enterprises employing almost 4 million people, and the oblasts generated 20% of Ukrainian GDP, with the Kharkiv region being the largest contributor – accounting for 6%. Partially occupied by Russian troops since the start of the full-scale war in February, these regions now suffer from intense military actions, foreclosing, for now, business activities, while decreasing the total output of the Ukrainian economy.

Nevertheless, Ukrainian enterprises are innovatively looking for new ways to operate in all regions throughout Ukraine. Igor Chykin, Director of Agribusiness for Kernel, noted, “Even though the most intensive military actions are localized in the regions, where Kernel has substantial farming operations, our team has launched a sowing and harvesting campaigns, doing everything possible to ensure food security to avoid humanitarian disaster for the whole world.”

Timur Bondaryev, Arzinger Law Office, Attorney-at-Law, Founding & Managing Partner, Ukraine, says that Ukrainian business is passing the most serious test for resilience which has ever been seen. It has therefore shaped the demand for legal services accordingly. Almost all major businesses were forced to go through corporate & financial restructuring, downsizing and adoption of new business models, as well as to revise their supply chains and customer & distribution channels, and look for new markets and business opportunities abroad.

As Ukraine continues to suffer from catastrophic damages and casualties inflicted by war, Ukrainian businesses remain resolute – and in defiance of Russia’s war of aggression. They continue to operate, foresee, and explore alternate opportunities. Moreover, businesses daily are demonstrating in Ukraine their will and ability to transform and adapt to new reality and challenges. Kiskalt’s team and KYIV RYSING capture that spirit and offer a compelling roadmap to Ukraine’s future and promising new flows of capital investment.