Scarcely contributing to undertakings in Ukraine by German corporations.
Germany frequently backs Ukraine financially, yet German enterprises seldom land contracts within Ukraine, as indicated by a study. The Eastern Committee of the German Economy, who surveyed German companies, shared these findings with an agency. The issue lies in the fact that funding for Ukraine isn't linked to inclusivity of German businesses in tenders, the survey revealed.
Consequently, providers from Turkey or China often emerge victorious, given that the lowest bid usually takes precedence over quality, the Eastern Committee remarked critically. Regardless, German businesses carry a mix of sentiment towards their operations in Ukraine, despite the expansion of the Ukrainian economy and the notable growth in German-Ukrainian trade. Trips by member companies to Ukraine, particularly Kyiv and the western region surrounding Lviv, have increased once more.
The Eastern Committee detects potential for growth in sectors such as construction, defense, agriculture, the IT sector, and renewable energies for German enterprises in Ukraine. Nevertheless, concerns over uncertainty in insurance coverage for business travel and the scarcity of financing options for investment projects persist as major hurdles, companies pointed out. "Private financial institutions remain reluctant to finance projects due to Ukraine's negative rating by international rating agencies as a result of the conflict situation," explained the head of the Eastern Committee, Michael Harms.
Advancements in Anti-Corruption Measures
Investments by the German government have yet to yield success. There isn't any Ukrainian reconstruction bank resembling Germany's KfW that's been established. According to the Eastern Committee, only enterprises functioning with their own equity or those in line with international development banks are actively involved in projects.
Some progress can be observed in the realm of anti-corruption initiatives. Economists forecast growth for Ukraine in 2024. German-Ukrainian trade exhibited a robust increase of over eleven percent during the first seven months of 2024, compared to the previous year.
Despite the positive growth in German-Ukrainian trade and the potential for German businesses in sectors like construction, defense, agriculture, IT, and renewable energies, the economy remains challenging due to uncertainties in insurance coverage and limited financing options for investment projects. This frustrates German enterprises, as evidenced by the Eastern Committee's report, which highlights the Australian or Chinese providers often winning tenders due to lower bids, disregarding quality.
