This op-ed was originally published in Fortune.
Since Russia launched its expanded assault on Ukraine two years ago, the United States has demonstrated sustained support for the Ukrainian people, working closely with allies to provide Ukraine with the resources and weapons it needs to succeed. We need to do everything we can to ensure these efforts continue, not just for Ukraine not to lose, but also for the Ukrainians to win, securing a future for their country that is free, democratic, and independent.
In addition to humanitarian aid and security assistance, there is another line of effort necessary for Ukraine’s success today and into the future. It may not often make headlines, but support for the country’s private sector is critical for Ukrainians holding the line against Russia’s aggression. A vibrant private sector in Ukraine will be just as vital to the country’s eventual recovery.
Access to private capital is the key to economic growth; it is the lifeblood of business. What is true in more peaceful times is especially true for a nation defending itself against a brutal invasion. These beliefs have guided the work of the organization I lead, the United States International Development Finance Corporation (DFC), and our enduring commitment to Ukraine.
We were in Ukraine well before the war, with more than $800 million in investments across a range of sectors. Since the full-scale invasion in 2022, DFC has surged its efforts to mobilize private capital and support Ukrainian businesses in agriculture, small business, energy, and health. DFC will be in Ukraine in the future, for as long as it takes.
DFC could not and did not wait for this conflict to end and for Ukraine’s reconstruction to begin. To ensure Ukrainians remain employed, and to keep the private sector paying taxes and producing essential goods and services, DFC has leveraged its full suite of tools, including lending, political risk insurance, technical assistance grants, and equity investments, to help keep economic activity going. Employing these tools and often working with our peer development finance institutions, we are moving the needle, working to make Ukraine’s economic decline shallower, and ultimately, the climb to recovery less steep.
A majority of Ukrainians work for small and medium-sized businesses, many of which have required access to financing to continue operating and contributing to the economy during a time of war. That is why one of DFC’s first and most important efforts was to work with USAID to provide loan guaranties to Ukrainian banks, helping them bolster lending to small businesses. In fact, our first loan guaranty program after the start of the war to a bank in Western Ukraine has been fully utilized and resulted in almost 500 new loans to Ukrainian businesses, totaling nearly $19 million.
These loans can make the difference for small businesses trying to grapple with the impact of a war-torn economy. We have since agreed on a new, larger program for the same bank, and approved two similar facilities at other banks, bringing DFC’s total loan guarantee portfolio in support of Ukrainian small businesses to over $100 million. There is more DFC can do here, and we will continue to search for additional ways in Ukraine to support the small and medium-sized enterprises that are the engines of every dynamic economy.
Even companies that have been able to adapt their operations to wartime conditions have found it difficult to insulate themselves completely from the chilling effects of Russia’s invasion. One example is a leading poultry and grain producer in Ukraine that has remained profitable through the war. Like many other large enterprises, it depended on international capital markets for access to financing. With debts reaching maturity and public markets closed to them as a result of the war, DFC stepped in to fill the gap, providing a $250 million loan, contributing to a total financing package of $480 million alongside our partners from the European Bank for Reconstruction and Development and the International Finance Corporation (IFC).
DFC has also committed $25 million to a hospital providing treatment, prosthetics, and physical therapy to those who have been wounded in Russia’s war. The aptly named “Superhumans Center” places a focus on preparing their patients to be able to contribute to society once more. We are supporting this medical center with political risk insurance (PRI) for its investors, a financial instrument that helps de-risk investments and build investor confidence where it is needed most. The United States has used PRI for decades to help support European and other economies, and we hope to expand our use of this authority in Ukraine in the coming months, particularly in insurance coverage for war risk damage.
The resilience of the Ukrainian economy has reflected the resilience of the Ukrainian people. Despite wartime migration and deliberate attacks on the country’s critical infrastructure, there are sectors of the economy, like technology, that are growing. Over the past two years, we have seen what the Ukrainian people can achieve when motivated to shape their own destiny and defend their own freedom. To make a future free from war and aggression a reality for the Ukrainian people, and to keep their economy moving today, Ukraine requires private capital. At DFC, we stand ready with a full suite of tools to help de-risk private investment, mobilize private capital, and support the power of a vibrant private sector in Ukraine.
Scott Nathan is the CEO of the United States International Development Finance Corporation, (DFC). He was appointed by the President and formally sworn in by the Vice President on Feb. 24, 2022, the day of Russia’s full-scale invasion of Ukraine. To learn more about DFC’s work in Ukraine, click here.
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The U.S. International Development Finance Corporation (DFC) partners with the private sector to finance solutions to the most critical challenges facing the developing world today. We invest across sectors including energy, healthcare, infrastructure, agriculture, and small business and financial services. DFC investments adhere to high standards and respect the environment, human rights, and worker rights.