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Why Ukraine is going all in on tech to rebuild its economy

Today, the whole world is talking about the Ukrainian people, their bravery, and resilience to stand for a peaceful future. As long as Ukraine heroically defends the values ​​of democracy and humanity, its economy must continue to grow.

The IT industry is one of the most significant sectors of the Ukrainian economy. Therefore, investing in Ukraine’s tech sector has become an investment in the country’s rebuilding.

The tech sector is a powerful driver of the Ukrainian economy. IT services exports brought in $2 billion during the first quarter of 2022, according to IT Ukraine’s research.

In February, the Ukrainian IT industry set an unprecedented record of exports at $839 million. Even after the full-scale invasion, the sector maintained 96% of services exports compared to March 2021.

According to the National Bank of Ukraine, the country exported $3.74 billion worth of IT services in the first half of 2022, up 23% from the same period a year earlier. The IT industry paid more than $1 billion in taxes and fees in the first half of the year. Meanwhile, other exports such as energy and agricultural products declined.

That’s why we call Ukrainian IT companies and their employees the heroes of the economic front.

Turning Ukraine into the biggest IT hub in Europe

Our goal is to bring Ukraine into the top five countries with the highest number of startups per capita in Europe. At the moment, Ukraine has 75 startups per 1 million inhabitants. We are doing our best to grow this number to several hundred by transforming the Ukrainian IT industry.

One of our key projects for the industry is a unique tax and legal space called Diia.City–a legal environment with the lowest taxes on tech businesses in the region. More than 300 companies have already joined the scheme, particularly EPAM Ukraine, SoftServe, Luxoft Ukraine, Reface, Revolut, and others.

We are also launching an e-residency project for IT specialists from around the world. This will allow them to register a business in Ukraine with competitive tax conditions and to run their businesses in our country without being physically present here.

We still see potential–and demand–in Ukrainian IT businesses creating their own products. We have developed a whole strategy together with businesses to stimulate the development of our venture capital and startup ecosystem, IT education, “digital resistance”, and Ukrainian IT brand awareness.

Developing a VC and startup ecosystem

To stimulate VC and startup ecosystem development in Ukraine, we have a Ukrainian startup fund that supports early-stage startups with grants, acceleration, and vouchers for participation in international events. By matching startups to grants, we can multiply the financial capacity of startups that have already attracted investment.

We are also working on an international investment fund aimed at attracting foreign investment capital. Business angels training programs will allow us to improve the level of investment literacy about tech in Ukraine and increase the number of business angels who are able to invest in startups.

Additionally, we want to implement the ІР Court and guarantee the free choice of litigation to make Ukraine the most attractive country for leading global investors and tech giants. We want to create a global platform for ideas that provides the conditions for launching the most ambitious international projects from Ukraine with comprehensive support from the state.

Digital resistance

One of our top priorities is digital resistance. Military Industrial Parks are special economic zones for the creation and development of military-grade equipment and cyber defense-related enterprises and startups. We focus on stimulating technical and financial support for the development and operation of military robotics.

Today, it is crucial for the state to support startups that produce drones, provide cyber security, and develop military technologies. As a result, we will be able to minimize casualties among our military and win the war.

We expect the development of military technology to remain a priority for several years. Within our ministry, together with the Ukrainian Startup Fund, we have already launched a new grant program of up to $35,000 to support military-tech projects. Winning projects also receive access to the best mentors and experts. Some 100 grant applications have been submitted in the fields of defence, cyber security, infrastructure reconstruction, education, and health care.

Investing in Ukrainian IT

We are working to transform Ukraine into the largest IT hub in Eastern Europe with the fastest growing GDP, industrial parks, and its own security-focused “Silicon Valley.”

Our aim for our government agencies is to operate like IT companies, making quick decisions, being adaptive, and focusing on big data. No other country in the world has implemented the most daring technologies at every level of the state level: This is an experiment. However, we are capable of this digital revolution with the invaluable support of the international community.

By keeping the economy going now, investing in Ukraine’s future, and supporting the IT companies that bring added value, we can re-establish Ukraine’s prosperity and competitiveness.

The global tech industry recognizes our contribution to the protection of freedom and democracy throughout the world. Now, they are invited to lead Ukraine’s digital revolution.

Oleksandr Bornyakov is the deputy minister of digital transformation of Ukraine and the head of the Diia City project.

The opinions expressed in Fortune.com commentary pieces are solely the views of their authors and do not reflect the opinions and beliefs of Fortune.

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