“Ukraine needs to be ready for a reduction in foreign aid. To do this, prepare programs for the reconstruction and support of strategic industries, because Western partners will not take care of the problems of competitors. Ruslan Shostak, co-owner of the Eva and Varus networks, tells how Ukrainian business can survive and even win under new risks ⚡️ Who, in your opinion, deserves the title of “Entrepreneur of the Year” […]”, — write: businessua.com.ua
Ukraine needs to be ready for a reduction in foreign aid. To do this, prepare programs for the reconstruction and support of strategic industries, because Western partners do not will take care of the problems of competitors. Ruslan Shostak, co-owner of the Eva and Varus chains, tells how Ukrainian business can survive and even win under new risks
⚡️ Who do you think deserves the title “Entrepreneur of the Year 2024”? Learn more about each of the candidates and vote at the link. Your vote will determine the winner of the “Audience Choice” category.
At this year’s Kyiv International Economic Forum, I was one of the speakers of the panel, the participants of which professionally discussed the future of Ukrainian business. The issue is extremely important, because the development of the state depends on its qualitative development. What industries should be made drivers of growth, how to support small and medium businesses and how to encourage the return of those who have gone abroad?
We have to worry about it now, without waiting for the end of the war.
Living in debt: why the Ukrainian economy is growing Ukraine’s economy has been growing for the past two years. But this is artificial growth, which is based on billions of aid infusions from our partners. When this funding runs out, we will be left with problems: a state budget deficit, a lack of human resources, and increased competition from Western companies.
State losses from the war already exceed $1 trillion, according to KSE estimates. Meanwhile, Ukraine’s GDP is growing. Next year, this indicator may be close get closer to an all-time high of $200 billion in 2021 and will exceed the pre-war level of 2013.
The trend should have been the opposite. For example, in Croatia, during the 1991-1995 war for independence with Yugoslavia, GDP fell from $26 billion to an all-time low of $11 billion. It took seven years of peaceful life for the country to restore its economy.
In Great Britain, GDP fell from £322 billion in 1941 to £300 billion in 1945. The British were able to regain their economic position in six peaceful years.
In the east, we see historical examples that have more in common with Ukraine. In Afghanistan, during the US and allied operations in 2001-2021, GDP increased from $3 billion to $14 billion. The reason is external financing. With its reduction after the withdrawal of US and Great Britain troops in 2014, the pace of Afghanistan’s economic development slowed down.
Iraq’s economy also grew during the 1980–1988 war with Iran due to foreign aid. The country started the military conflict with an annual income of $53 billion, and ended with $63 billion. The war cost about $1 billion a month. Funding came from Saudi Arabia and other Persian Gulf countries. Even the USA initially supported Saddam Hussein’s country with money and weapons.
Ukraine has also lived in debt throughout the war years. The Ukrainian economy depends on external financing for approximately 80%. Debts are growing: at the end of 2022, the foreign debt of Ukraine amounted to $71 billion, at the end of 2023 it was already $102 billion, and at the beginning of October 2024 it was more than $112 billion, according to the data of the Ministry of Finance.
Aid cuts are inevitable. What to do with it Is it about Western altruism when countries support the Ukrainian economy? I don’t think so. Partners’ money inevitably stimulates demand. As a result, foreign loans and grants are used to pay for goods and services from abroad.
In 2025, imports to Ukraine will grow by 3.7% and reach $97.9 billion, the government predicts. We export almost twice as much: the forecast for 2025 is $57.2 billion. The trade balance deficit will amount to more than $40 billion. Also a kind of record.
Access to foreign goods makes life of Ukrainians better. But where will the population get the funds when the war-weary West cuts or stops aid?
Ukraine needs to prepare programs for the reconstruction and support of strategic industries. After all, Western partners usually take care only of the development of small and medium-sized businesses.
The post-war experience of other countries suggests that Ukraine should independently take care of defining strategic industries for development. Why should Western partners join competitors of European and American companies?
An interesting example from the same Croatia. The World Bank prepared a project for socio-economic recovery of the country only eight years after the war. The document provided for grants for small and medium-sized businesses, financing projects, creating new jobs, demining projects and reducing the economic gap between different parts of the country.
The international anti-crisis program for Iraq ICRRP was adopted in 2014. It will finance projects in the field of small and medium-sized businesses only from 2022.
Among the interesting solutions that were implemented in the last century after the war in Great Britain was export promotion. The state transferred scarce resources primarily to companies that could ensure high rates of foreign trade. This helped to improve the financial condition of the country, which had lost 25% of its national wealth due to the war.
Standing now and after the war is a business decision Ukrainian business already needs to prepare for the arrival of Western competitors after the end of the war. What are the options? Die, sell, win.
To die is to not withstand the competition and make room for Western players.
Selling is not the worst option if you don’t feel the strength to fight, but it is attractive for Western players. You have a white history in Ukraine, a good reputation, established technological processes – all this can influence the formation of a good price for a well-built business.
Win – if your business is not only high-tech, modern and in demand in the market, but also works according to Western standards and does not differ too much from competitors from the USA or Europe. If the consumer likes this particular business. People’s love is not so easy to buy. It has to be conquered for years, to build a real Love Mark.
The economy of the state rests on the shoulders of the people It is up to the people to restore the economy of Ukraine. The issue of human capital is one of the most important for the reconstruction of countries in the period that comes after the end of military conflicts.
Ukraine needs a state program to return people. We are like you responsible business, ready to support it.
The British government decided to cover the post-war shortage of workers with the help of migrants. In the first wave, the country accepted almost 200,000 Italians and Poles. Since 1948, immigrants from the Caribbean and British colonies began to arrive.
Escaping the war, more than 6 million Ukrainians left Ukraine, according to UN data. The Ministry of Economy estimates the shortage of personnel in the labor market at 4.5 million people. How to return them? This is a complex problem that requires a multifaceted approach, there cannot be a simple solution. But the state needs to be ready for this and take real steps. Encourage the return of refugees, help people with professional reorientation. And have one more option in reserve – inviting labor migrants to Ukraine.
Business should not stand aside either. After all, there is no human resource – there is no business. The total staff of my companies is more than 20,000, about 12 million more are regular customers of Eva and Varus. That is, by and large, every Ukrainian family is related to my business. This is a huge responsibility. What do we do for people?
We are nearby, we are everywhere where people live. Our stores were the last to leave the occupied territories and the first to open their doors after the deoccupation.
Employees of our companies can undergo psychological rehabilitation, because their emotional health is a priority for us. During the war, every fifth employee applied for help.
Taking care of energy independence is no less important now: all our facilities are completely energy independent. We provide employees with consulting assistance on how to purchase generators on credit or on preferential terms, and to make their own homes autonomous.
Ukraine needs a conscious approach in three key tasks: formation of strategic directions of the economy, return of people and the future of medium and large businesses. This is a joint effort between the authorities and entrepreneurs, to which we are ready to join.
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