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.
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.
Merilo added she was a strong believer in e-government bring essential change and boosting development.
“I know it can happen because I saw it happening in Estonia and other places, and I believe we can do it,” she said.
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.
“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.”
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.
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.
But Ukraine’s biggest problem, and an especially important one for its regional development, is, according to Svitek, the brain drain.
“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.
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.
