Saturday, May 18, 2024

Reasons why Ukraine’s fintech sector is growing despite war with Rusia

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krainians have often pioneered market-leading companies and built products that positively impact society, especially in the fintech sector.

Despite the hurdles of war, the Ukrainian fintech community is working to create better infrastructure and regulation for the country, which can attract valuable companies and institutional investors from different backgrounds.

It’s a valuable market

I’m sure many investors think the country’s IT sector is a risky investment right now. But it’s still business as usual at fintech companies here. They have proven their resilience even in wartime conditions, and impressively, 90% of Ukrainian tech startups are still hiring.

This March, Ukraine’s President Volodymyr Zelenskyy signed a bill to establish a regulatory framework for cryptocurrency in the country. While the bill doesn’t let you use digital assets as a form of payment, it seeks to create proper conditions to establish a strong cryptocurrency market.

Cryptocurrency exchanges can now claim a license to operate legally in the country. Banks will be able to open accounts for crypto companies, which can opt for different licenses depending on what they do.

The Ukrainian IT sector is still growing

In the first five months of 2022, Ukraine’s IT sector generated roughly $3.2 billion from exports — 27% more than the same period in 2021, and accounting for almost half of the country’s total volume of export services.

One of the main goals of the Ukrainian government is to increase the IT sector’s share of the country’s GDP from the current 4% to 10% by 2024.

The government’s backing and the strong growth together make for a strong signal of how the IT sector is ripe for investments.

Global finance and tech firms are supporting Ukraine

Earlier this month, the Ukrainian Ministry of Digital Transformation presented Digital4Freedom — a global initiative that is the primary source of charitable donations for tech companies to support Ukraine.

Digital4Freedom is part of the global UNITED24 effort and allows anyone across the globe to make monetary contributions to the restoration of the country’s economy.

The program consists of nine projects presented to 40 companies, of which the vast majority have agreed to help with monetary contributions or technology solutions.

Amazon, for example, will reportedly provide over $100 million in cloud hosting services for Ukrainian state registers and is planning to develop solutions for deploying artificial intelligence in courts.

Crypto exchange Binance will become an official partner of the Ministry of Digital Transformation of Ukraine to offer educational projects in the IT, web3 and finance fields.

Meta, with the support of the Ministry of Digital Transformation, recently launched a $1.5 million assistance program for the recovery of the Ukrainian economy, helping small- and medium-sized businesses with a specialized training centre.

Startups are an integral part of the Ukrainian economy

Ukrainian businesses expect a reduction in the production of goods and services due to the war. What’s more, company executives predict the next 12 months will bring inflation and devaluation of the hryvnia.

Ukrainian tech startups are dedicating their efforts to elevating the industry to new heights. They are set to become the foundational pillars for a new layer of technology companies that will add significant value to the economy.

Fintech is growing fast despite setbacks

This year, Ukrainian lawmakers introduced the Law of Ukraine on Payment Services (LPS), which will provide a better regulatory environment for the fintech sector, including for payment services.

Additionally, the Ukrainian Association of Fintech and Innovation Companies (UAFIC) became the first non-EU member to join the European Digital Finance Association (EDFA). Both organizations are collaborating to strengthen the fintech landscape in Ukraine.

I believe Ukraine’s resilience in the face of Russian aggression, and the tremendous growth of the fintech landscape despite the crisis has proven that investors should not hesitate to invest in the fast-growing industry.

Despite the difficult situation in the country, the industry continues to develop. While attending numerous conferences and fintech events, I meet investors from all over the world interested in companies from Ukraine. All this tells us that the prospects for fintech in Ukraine look good, and that now is an excellent time to invest in it.

Samuel Musila
Samuel Musila
Passionate Software Developer and Tech content creator From Nairobi, Kenya

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