It is evident that Ukraine is coming of age as a modern European democracy and economy. This is evidenced in the steady turnaround of the economy and reforms post 2014. The freely contested and transparent elections of 2019 are further confirmation. They resulted in the election of a highly motivated new President and legislature with a clear mandate to implement their much more ambitious and rapid programme of wide-ranging reforms.
The new government has accelerated the economic reforms initiated by previous administration, drafting and passing legislation at high speed. Many of these reforms relate to Ukraine’s traditional “holy cows” such as liberalization of land ownership, liberalization of banking and currency regulations, opening the market for concessions and the privatization of a long list previously exempted businesses. These reforms consolidate the progress since 2014 Maidan revolution and lay the ground for improved GDP growth in 2020 and beyond.
But we do recognize that Ukraine continues to face some unique challenges: the hybrid war with Russia; the continued fight to establish an open economy; and eliminating the dominance of the oligarchs. Importantly, we must stay focused on eliminating the shadow economy whilst we create the optimum conditions to grow the white economy.
Added to this backdrop we have a new contest to contend with: the fight for Ukraine’s human capital.
In the recent years we have experienced a significant outflow of human capital to the EU. Ukraine faces regional, if not global, competition for its human capital. Where it started with specialist skills we now see this trend developing to intellectual capital.
The big question is how Ukraine can reverse this trend and avert an intellectual and skills diaspora. Starting with IT, many sectors have embraced workplace flexibility as their winning strategy – flexible working hours, part time working from home, relaxing or dropping the dress code. While in the future this flexibility may become routine, in today’s Ukraine this is not enough. To keep our countrymen and women from seeking opportunities beyond our borders we need do more than tinker with the system and go further than “cosmetic” changes,.
Fundamentally, to retain our talent, attract investors and encourage international businesses to choose Ukraine we need to create a modern business eco-system that is comparable and competitive with the rest of Europe.
A pivotal this eco-system is the 2014 Ukraine–European Union Association Agreement which is driving Ukraine’s transition into a functioning market economy through the progressive approximation of its legislation to that of the EU. Ukraine has also adopted International Financial Reporting Standards which are now not optional but compulsory for large companies. Increasingly, doing business in Ukraine is equivalent to doing business in the EU.
But whilst these standards provides business with the right infrastructure, the eco-system needs to comprise of a much wider range of skills and best international practice.
At EBS we are working with clients to create this eco-system for them. At the same time, by providing our services and advice we are part of it. For investors in Ukraine this starts with advice on start up, structuring and due diligence. We help our clients create a vision for the future and define a winning strategy. We identify how to improve efficiency and effectiveness and how to put the right structure in place. We work with them on recruiting, training and retaining the best teams. As Ukraine’s number one outsourcing provider in the area of Accounting, Payroll and HR administration we explore the role outsourcing could add value to their business. We create efficiency and a competitive edge through streamlining operations and implementing technologies. Whilst automation, robotics, technologies and IT is already routine for many businesses in Ukraine this is still work in progress.
Some Ukrainian business are already world class players and understand how to be competitive on the global stage. The privatization of many state businesses in the coming months will create the opportunity to implement this modern eco-system and see their transformation into employers of choice for Ukrainians.
Managing Partner, EBS