- £250 million of new capital to be used for post-war economic support
- Memorandum of Understanding signed with EBRD for Ukraine Investment Platform
- $25 million to go to IFC facility to support international trade for Ukraine
British International Investment, the UK’s development finance institution and impact investor, is to play a role in the rebuilding of Ukraine.
The announcement, made today by the UK Government at the Ukraine Recovery Conference in London, will see BII allocated up to £250 million to support reconstruction in the country. The new capital will be available to BII from 2024 on a phased basis. The extended mandate also permits BII to invest in regional funds linked to Ukraine that cover Moldova. The majority of BII’s activity will begin post-war, when there are stable conditions enabling investment to take place.
The level of investment in BII’s core markets of Africa, South Asia, Southeast Asia and the Caribbean will not be affected by the new Ukraine mandate. BII will work with partners with specific expertise of investing in Ukraine to identify the most effective way to deploy the funds.
To that end, BII, alongside bilateral DFIs from around the world, today signed a Memorandum of Understanding (MoU) with the European Bank for Reconstruction and Development (EBRD) to create the EBRD-G7-DFI-EDFI Ukraine Investment Platform.
This agreement delivers on an initial commitment by the EBRD and the G7 DFIs to establish the Ukraine Investment Platform, announced during the G7 meeting in Tokyo last month. The total number of participants, which also now includes all DFI members of the European Development Finance Institution (EDFI), alongside the Japanese, US and Canadian DFIs, has reached 18.
The MoU provides a framework for collaboration when making co-investments in Ukraine. The EBRD is the largest institutional investor in Ukraine. Given its skills, relationships and operational experience in the region, it will act as the lead institution for co-investments made through the newly established Ukraine Investment Platform.
The financial needs of Ukraine during a period of reconstruction are vast and beyond the scope of any single institution. The IMF estimates that GDP in the country has plummeted by at least one third in 2022, while 7.1 million people have been pushed into poverty.
The private sector will play a crucial role in restoring the Ukrainian economy. As a result, careful coordination is needed between Ukraine’s partners to maximise the effectiveness and impact of their interventions.
BII will co-invest with experienced partners in Ukraine across key sectors including:
- Green and resilient infrastructure, including digital infrastructure
- Energy markets, key to reducing reliance on Russia and supporting sustainable growth
- Financial services, helping to improve lending conditions and enabling access to financial services for internally displaced people
- Agriculture, supporting global food security and reducing immediate needs.
BII also intends to provide $25 million to the IFC’s Global Trade Finance Program to help facilitate trade to support the Ukrainian economy while the conflict continues. The announcement today, is made in partnership with the US International Development Finance Corporation (DFC), the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). DFC will provide $50 million and MIGA will provide $20 million.
The facility will help to keep trade lines open in support of Ukraine’s cross-border trade. DFC, BII and MIGA intend to risk-share IFC’s trade exposure, which will increase the capacity of the Global Trade Finance Program in Ukraine from $200 million to almost $300 million.
This will enable BII, along with its partners, to provide access to financing for as much as $1 billion of Ukrainian imports and exports, including food supplies, over the next three years.
Nick O’Donohoe, Chief Executive of BII, said: “We are proud to play a role alongside experienced partners, like the IFC, to support Ukraine to rebuild its economy and resilience. This program will help to unlock the vital flow of import and export goods, which is critical to sustain the livelihoods of Ukrainians during this difficult time and beyond.”
Commenting on BII’s extended mandate into Ukraine and Moldova, he added: “Given the scale of the humanitarian and economic crisis brought about by Russia’s invasion of Ukraine, it is entirely appropriate that the international DFI community, including BII, provide vital support to rebuild the country’s economy. The impact of the war has stretched beyond the borders of Ukraine with supply chain, food security and energy issues being felt by the across the world. This includes countries in Africa, South Asia, Southeast Asia and the Caribbean that remain in acute need of development capital and that remains the focus of our mission.”
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Notes to Editors:
British International Investment media contact: press@bii.co.uk
