Key message: IT sector and smart-city initiatives should lead the change in Ukrainian cities. But first, Ukraine needs to stop the overwhelming corruption to give hope to citizens now leaving the nation en masse.
Olivia Allison
partner at KPMG Ukraine
“We need to develop an honest conversation about how to develop better business practices in Ukraine.”
Sofia Belenkova
ex-head of Kharkiv IT cluster
“Ukraine is known as a bread basket of Europe. But today we must admit that we are a brain basket of the world.”
Ivan Svitek
CEO of Alfa Bank Ukraine
“The biggest issue in Ukraine today is emigration. Ukrainians leaving the country going to Poland, Slovakia, the Czech Republic. We lost eight million people in 20 years and this trend is continuing.”
Jaanika Merilo
deputy mayor of Dnipro
“We’re trying to bring the experience of Dnipro to the smaller cities in the Dnipro Oblast, making cities of 20 thousand people smart cities, implementing e-health and e-government. I’m trying to implement innovations and I know it can happen because I’ve seen it in Estonia and other places.”
Michel Terestchenko
mayor of Hlukhiv
“We want Ukraine to become a ‘tiger,’ but not just an economic ‘tiger,’ a social one too. Many Ukrainians left Ukraine to make other countries richer. That’s the challenge — how to make them return?”
In a country as big and as centralized as Ukraine, one question is always on the top of the agenda: How can the development of the regions be boosted?
The answer could lie in the development of smart cities, the IT sector, and the renewable energy sector, according to the panelists of the “How to Power Regional Development” panel of the Tiger Conference, an annual event organized by the Kyiv Post that took place on Dec. 11 at InterContinental Kyiv.
The panel featured a diverse line-up of speakers, including Deputy Mayor of Dnipro Jaanika Merilo, KPMG Ukraine risk partner Olivia Allison, Alfa Bank Ukraine CEO Ivan Svitek, and ex-head of the Kharkiv IT cluster Sofia Belenkova. Michel Terestchenko, the mayor of the city of Hlukhiv in Sumy Oblast and a 2019 presidential candidate, moderated the discussion.
While Ukraine, as Terestchenko pointed out, is “starting from a very low point” in terms of both regional development and the general state of economics and rule of law, the panelists offered many examples of positive change happening in various cities across Ukraine, both big and small.
One city’s example
Merilo, an Estonian-Ukrainian who for the past three years has been working in the administration of Dnipro, a city of 1 million people 500 kilometers south of Kyiv, listed the changes her team has brought: they implemented e-government and e-medicine services and got rid of many unnecessary licenses by opening and interconnecting existing registries.
According to Merilo, this is not just a way to improve the citizens’ lives — it actually helps fight corruption.
“For corruption, someone needs to give someone a bribe,” she said. “When you eliminate many licenses and move services online, there is no one to give a bribe to. We eliminate the officials, the government as much as possible.”
Another achievement was implementing e-medicine and allowing the people of Dnipro to book appointments in state hospitals — something that 50 percent of them are now using, according to Merilo. The most recent success was bringing electronic payment systems to public transport in Dnipro: now one can pay for bus tickets with a smartphone, using Apple Pay.
Now Merilo and her team are working to bring the experience of Dnipro to smaller cities in the Dnipro Oblast.
Merilo added she was a strong believer in e-government bring essential change and boosting development because she saw it work.
“I know it can happen because I saw it happening in Estonia and other places, and I believe we can do it,” she said.
Renewables are ‘cool’
Belenkova echoed Merilo’s words, evoking her experience in bringing innovations in another big industrial city, Kharkiv.
“Kharkiv now has the highest number of electric vehicles in Ukraine,” she said. “It may not even influence the local people that much, but it makes an impression on the guests of the city. They see it and they go ‘Wow!’”
Belenkova is a big believer in renewable energy as the way to power regional development. She said she knew many IT companies in Ukraine that run a parallel business in solar energy, for example. They mostly do it “for fun, but it brings money too.”
Allison of KPMG Ukraine weighed in on the importance of the renewables sector for the future of Ukraine’s regions — and Ukraine in general. It’s one of the hottest sectors for investors now, according to her. But there is even more to it — it’s great for the country’s image.
“This whole renewable energy thing makes Ukraine’s brand cooler,” Allison said. “It can sound silly, but when a company is carbon-neutral it really helps their image. The same with Ukraine. It is an especially important issue for young people.”
IT needs to lead
Allison, who works with investors entering and looking to enter Ukraine, says that the environment is very different when it comes to the popular IT sector compared to the traditional ones.
“Sometimes you feel like you’re working in two different Ukraines when you hear stories from IT and more traditional industries,” she said.
Merilo and Belenkova, who both work with IT sector, agreed.
Svitek of Alfa Bank Ukraine, a bank that has most of its clients outside Kyiv, added that the statistics show that 90 percent of the investments in Ukraine are coming from Ukrainians, and the flow of foreign investment is still far from large.
To that, Allison added that she sees many investments coming from the foreign businesses already working in Ukraine — they are willing to grow and expand their activities.
People leaving
But Ukraine’s biggest problem, and an especially important one for its regional development, is that people are leaving the country, according to Svitek.
“The biggest issue in Ukraine now is emigration,” he said. “We’ve lost more than 8 million people in 20 years, and this trend is continuing.”
Belenkova, who mainly works with IT businesses, agreed.
“Ukraine is known as a bread basket of Europe. But today we must admit that we are a brain basket for the world,” she said.
Still, she added, there are grounds for optimism — at least when it comes to the outflow of the high-educated white-collar workers like IT specialists. She referred to a study showing that after five years working abroad, more than 60 percent of Ukrainian IT workers decide to return to Ukraine, and often start their businesses here, investing the money they made abroad.
Merilo echoed her words, adding that the quality of life of IT employees in Ukraine is very high now thanks to good salaries and low cost of living.
“Now when someone is offered to go and work abroad in Europe, they often think ‘I have a good life here’,” she said.
But to make more Ukrainians consider returning from their jobs abroad to Ukraine, there needs to be a major change in the ways Ukraine is run, all panelists agreed. To make them believe they have a future in Ukraine, including in the smaller cities like Hlukhiv, they need to believe that corruption is decreasing and the rule of law exists.
