What, besides the war, deters foreign investors from Ukraine? Oleksandr Kravchenko

“What’s up with the economy?” is a weekly podcast by the Centre for Economic Strategy in collaboration with Hromadske Radio and supported by PrivatBank.

Hosts Anhelina Zavadetska and Maksym Samoiliuk speak with experts, entrepreneurs, analysts, and government officials about the current state of Ukraine’s economy.

We recorded this conversation in April 2026, when Oleksandr Kravchenko was still the Managing Partner of McKinsey Ukraine. Since then, on 16 July 2026, he has been appointed Ukraine’s Minister of Economy and Environment.

We are publishing the key takeaways from our conversation on what it will take to finance Ukraine’s recovery, attract private investment, and build a competitive post-war economy — issues that are now directly within Minister Kravchenko’s responsibility.

The price of Ukraine’s recovery — and whether it is realistic

Estimates of what Ukraine’s post-war recovery will cost tend to cluster around $700–800 billion — the figure attached to the government’s Prosperity Plan. But the more important question, Kravchenko argues, is not the size of that number; it is whether an amount on that scale can realistically be raised and spent at all.

The total amount of $800 billion itself is not arbitrary. Ukraine’s current GDP is over $200 billion; at 5% annual growth over the next decade, with the share of investment in GDP rising gradually toward 25% — a level still below Eastern European benchmarks, and well below China’s — the investment needed to sustain that growth, domestic and external, works out at roughly $700–800 billion. A different measure, the World Bank’s RDNA assessment, puts the cost at around $590 billion, but the two are answering different questions: the RDNA measures the price of repairing war damage, while the higher figure also covers the additional investment required for the economy to grow rather than simply to be rebuilt.

Which is why, in Kravchenko’s account, the exact total matters less than the pace. Arguing over whether the number of 400 – 800 billion is misses the real challenge — reaching, in the first post-war years, an annual flow of investment large enough to drive genuine growth. A range of about $40–60 billion a year would be adequate, and the groundwork for it, he notes, can begin during the war rather than after it.

Are there even enough projects to invest in? The bankability gap

Even if the money is found, Kravchenko cautions, a second constraint waits behind it: whether Ukraine has enough projects ready to receive it. Ideas, he says, have never been the problem.

“There have always been quite a lot of investment ideas in Ukraine. But are these ideas prepared to the stage of a bankable project? There really aren’t many of those.”

The reason, in his telling, is a market failure. Businesses facing high uncertainty and no clear financing path are reluctant to spend money in advance on the engineering studies and independent validation that turn an idea into something a lender can assess.

“Many businesses that face a high level of uncertainty and don’t clearly understand how they will finance a project don’t want to spend money now on preparing an engineering study or validating a business plan with independent partners. And it seems to me that this is precisely a market failure.”

The fix he points to is well established internationally: project preparation facilities, in which concessional or philanthropic capital co-finances the early groundwork so that projects can be readied even under high risk. The World Bank, he notes, has built such an instrument for public and infrastructure projects; Ukraine, in his view, needs more of them, particularly to support the private sector.

Where to focus — and why Ukraine can still compete for investors

Because the concessional capital behind these support instruments is limited, Kravchenko argues that wartime Ukraine needs a degree of industrial policy rather than leaving allocation entirely to the market. The priority, he says, should be sectors where Ukraine is competitive once war risk is normalised and the cost of capital is put on equal terms — and, given a limited domestic market, sectors that sell abroad.

“The focus should be on attracting investment primarily into export-oriented industries, because the internal market will, unfortunately, be limited.”

The specific areas he names as promising are energy; critical and strategic materials, including uranium and rare-earth elements; niche machine-building, particularly energy machine-building, for which there is high demand in Europe; and the defence industry that has grown during the war — sectors where there is international offtake and a willingness to sign long-term contracts. Competition for investors is constant, he acknowledges, and Ukraine will lose some of it, with the Middle East among the alternatives; but he sees durable advantages.

“We have a number of strategic advantages. We are close to Europe, we are geopolitically part of Europe. For many European companies, sourcing from Ukraine and sourcing from the Middle East are geopolitically different challenges.”

What, beyond the war, actually deters investors?

Pressed directly on what — apart from the war — holds investors back, Kravchenko lists a set of unresolved points: electricity price regulation, the state of the energy sector, and gas pricing. He is deliberately cautious about the common prescription of rapid liberalisation, recalling that when war came to Europe, the countries so often held up as free-market models all reached for regulation of their gas markets instead. Ukraine, he argues, operates not in a purely free economic space but in an economic-political one where such considerations matter. Still, the issue he hears most consistently from investors is a financial one.

“The cost of capital is probably one of the most crucial issues, at least what I hear from foreign investors considering opportunities here. Insurance and the cost of capital.”

The cost of electricity, he adds, has recently joined that list. Kravchenko also draws a distinction between companies already operating in Ukraine and those weighing a fresh greenfield entry: for the latter, the obstacle is often simply the difficulty of justifying Ukraine to a board or a risk-management function, which is why he returns to the idea of drawing in a few large anchor investors first.

“We need to literally drag some anchor large investors in by the hand. This is very important, because it will create the moment that gives more comfort to other businesses to continue expanding in Ukraine.”

As for the political will to carry out the reforms investors watch for, Kravchenko — while stressing he is no specialist in politics — places his confidence in EU accession as the anchor that keeps Ukraine on course, since membership cannot be reached without exactly the kind of reforms that also benefit business.

When this conversation was recorded, Kravchenko remarked that he was “not a specialist in politics.” At the time, his experience was rooted in the private sector, where he had spent years advising businesses and governments as the Managing Partner of McKinsey Ukraine. Since then, however, his appointment as Minister of Economy and Environment has placed him at the centre of the political process. The reforms he described as essential for attracting investment are now, to a significant extent, within his own remit — and turning them from analysis into policy will inevitably require navigating the realities of politics.