Almost 15 percent of Ukrainian producers of building materials suffered as a result of Russia’s aggression, but the sector is capable of providing up to 90 percent of the materials needed to rebuild the country, the USAID press service said.
These are the results of a study conducted by specialists from the public organization Institute for International Economic Research and the state enterprise Ukrpromvneshekspertiza with the assistance of the USAID Economic Support for Ukraine Project (USAID Project).
As reported, in 2022 the USAID project supported a study of the Kyiv School of Economics to assess the extent and cost of damage to infrastructure and residential buildings in Ukraine. According to data as of November 2022, destroyed facilities needed construction materials and equipment worth about $62.8 billion.
“Experts from Ukrpromvneshekspertiza and the Institute for International Economic Research studied the state of production capacity of Ukrainian construction material factories during wartime. They learned that about 15% of these plants were damaged or destroyed, but this sector retains high production capacity for a wide range of building materials and can provide up to 90% of the materials needed,” said USAID Deputy Project Director Brian Milakowski.
In addition, local production of building materials would save about 100,000 jobs, generate $5.6 billion in wages and $4.4 billion in tax revenue.
The results of the study show that the production of sheet glass or electrical switchboard equipment has been virtually eliminated. These materials are imported from EU countries, which affects their cost. At the same time, the construction of factories, including the production of glass, aerated concrete, dry construction mixtures, continues.
Among the problems named in the study were power outages due to damaged energy facilities, difficulties in accessing finance for working capital and capital investment. Some manufacturers pointed to accounts receivable from builders and the potential loss of key engineering personnel due to conscription into the Armed Forces.
For investment activities, the main barriers are recognized high military risks, the inability to obtain loans, the lack of understanding of the market in the long term, the high cost of connecting to the power grid. At the same time, investment activities continue. This concerns the construction of new facilities for the production of glass, gas concrete, dry mixes, cement, mineral wool.
“Ukraine and its partners can be confident in the ability of the domestic construction materials sector to meet most of the needs of the country’s post-war reconstruction. Donors and lenders to Ukraine can focus on this domestic production potential when planning their assistance,” Volodymyr Vlasyuk, director of Ukrpromvneshexpertiza SE, was quoted in the release.
The survey results also highlight opportunities for technical assistance and improved access to financing to overcome specific limitations for further recovery and growth of the sector. For the international community, the construction materials sector can be viewed as a priority for investment and assistance to the war-torn economy.
The USAID Ukraine Economic Support Project (USAID Project) was created to strengthen Ukraine’s economy affected by the Russian invasion.
