For more resilience

For more than three years, Ukraine has been resolutely fighting against Russia’s war of aggression, which is illegal under international law. The Ukrainians have tolerated immeasurable suffering. Nightly rocket and drone attacks are a sad everyday reality in many cities – not just in the eastern part of the country. But while the war continues, life must go on, the economy must function, schools must remain open, and fields must be tilled. These aspects of life must remain intact if the daily needs for goods and services are to be met and even more suffering is to be prevented. KfW is supporting the country precisely in this regard.

KfW has been working closely with Ukraine on behalf of the German Federal Government since the 1990s. Back then, the main emphasis was on accompanying the transformation towards a modern, democratic state and an open economy. Now the focus has shifted to making Ukraine more resilient through civilian support – be it by restoring (social) infrastructure or creating economic prospects. Establishing a closer relationship to the EU also remains relevant.

With a portfolio currently totalling more than EUR 1.3 billion (as of November 2024), KfW is an important partner for Ukraine. In addition, KfW subsidiary DEG has been advising and supporting its customers from the Ukrainian private sector, particularly from the agricultural, IT and logistics sectors, on an ongoing basis since the start of the war and is supporting German companies in their investment projects via the “develoPPP” and "ImpactConnect" programmes.

KfW Development Bank’s current portfolio includes the three sectors of energy and nature conservation, sustainable economic development and vocational training as well as social infrastructure and services, including for internally displaced persons (IDPs) and host communities. The overall aim of KfW’s cooperation with Ukraine is sustainable and resilient social and economic development.

Russia is constantly carrying out targeted attacks against Ukraine’s energy infrastructure. Power lines, substations and power plants have been and continue to be hit and damaged primarily by night-time drone and rocket attacks, making constant repair work necessary. Electricity supply is essential for the economy and people’s everyday lives. Electricity is needed everywhere, in agriculture, in businesses, but also in schools, hospitals and private households. It is also an important prerequisite for the country’s heat supply. While it was possible to avoid major power outages in the second winter of the war thanks to tireless repair efforts, the situation is likely to become more difficult in the coming winter months, due to the increased Russian attacks. This makes international support for the energy sector, including by KfW, even more relevant. .

KfW’s current portfolio in the energy sector is mainly implemented with the state-owned energy grid operator Ukrenergo and via the Ukraine Energy Support Fund. In addition to repair work, Ukraine is also increasing the resilience of its electricity grid against Russian drone attacks, for example through physical protection devices such as concrete shelters. At the same time, the grid is being modernised, made more energy-efficient and climate-friendly. The share of renewable energy is growing every year - not least because of targeted attacks against thermal energy production capacities , by 600MW in 2023 alone. According to Ukrenergo, Ukraine wants to be almost carbon-neutral in ten years and ideally also supply green energy to the EU. Finally, KfW is also supporting Ukraine in connecting to the European electricity grid.

Factsheet Ukrenergo

The life of people in Ukraine is significantly impacted by the war. Many Ukrainians had to and have to leave their homes due to the fighting. Almost four million people, a quarter of which children, are currently displaced within their own country. This has led to a high demand for housing and municipal infrastructure. KfW is helping to cover this demand, especially for IDPs in host communities. The support includes education and social care for children and young people. Psychosocial care is also an aspect of this support. In addition, buildings are rehabilitated or converted into residential buildings, and low-interest loans for housing are made available. This allows people to finally have a place called home again.

In addition, KfW is making funds available for basic municipal infrastructure. Support covers cities and communities in large parts of the country. It includes, for example, the repair and modernisation of water and wastewater systems to ensure the security of supply for the local population and IDPs and to reduce the risk of diseases caused by pollution. In the city of Chernivtsi alone, this will improve the living conditions of 250,000 people. The financing of relevant social infrastructure also plays an important role. KfW has been cooperating with the Ukraine Social Investment Fund (USIF) for many years in this sector. Over the years, 500 sites and facilities throughout the country have been upgraded, modernized and refurbished to be more energy efficient and better equipped, including hospitals and health stations, kindergartens, schools and drinking water pipelines. Thousands of people benefit directly from this.

Keeping the economy running is a crucial precondition that allows people to live their lives as normal as possible despite the Russian attacks. In addition, the economy will also be able to recover more quickly once the fighting has ended if it is not coming to a complete standstill now. In this phase in particular, the private sector will play a decisive role in driving the country’s reconstruction forward. It is therefore important to support the economy in this acute time of crisis.

With the ongoing portfolio KfW cooperates with the Business Development Fund (BDF) in implementing a governmental economic promotion programme. The BDF provides low-interest loans primarily to small and medium enterprises, which include agricultural businesses, bakeries, food retailers and small logistics companies. On behalf of the German government, KfW, together with other international partners, is supporting BDF to advance to a national development organization. Through two large regional funds – the Green for Growth Fund (GGF) and the European Fund for Southeast Europe (EFSE) – KfW is providing further financing to businesses, which is strengthening the local economy, also with regard to energy efficiency. The reconstruction, renovation and equippment of vocational schools isanother important component of KfW’s portfolio. These schools provide young people with relevant skills for the labour market.

KfW is supporting Ukraine on behalf of the German Federal Government (primarily the Federal Ministry for Economic Cooperation and Development (BMZ), the Federal Ministry for Economic Affairs and Climate Action (BMWK) and the Federal Ministry of Finance) and the EU. It can draw on long-standing cooperation with various state, non-state and international partners in Ukraine:

Energy and nature conservation: Power Transmission Company Ukrenergo, Ministry of Energy, Ministry of Environmental Protection and Natural Ressources.
Social infrastructure and services: International Organization for Migration (IOM), State Fund for Support of Youth Housing, Ministry for Reintegration of the Temporarily Occupied Territories of Ukraine, Ministry for Communities, Territories and Infrastructure Development of Ukraine, Municipalities of Chernivtsi, Zhytomyr, Zaporizhzhia, Ukrainian Social Investment Fund (USIF), UNICEF, Norwegian Refugee Council (NRC).
Sustainable economic development and vocational training: Business Development Fund (BDF), Green for Growth Fund (GGF), European Fund for Southeast Europe (EFSE), IOM, USIF, Ministry of Finance

But it also seeks to get war damage repaired quickly, modernise dilapidated infrastructure and to begin on the process of reconstruction now. Whether it is power lines that are destroyed by attacks or buildings that are damaged, reconstruction cannot wait until the fighting is over. Instead, it must happen in parallel. To make this work, KfW is continuously expanding its portfolio and adapting to new circumstances.

A reliable partner

KfW remains a close partner of Ukraine. It will continue to support the country in this difficult time, stand reliably by its side and take responsibility. This applies to strengthening Ukraine's resilience in the current war situation as well as to reconstruction and the process of rapprochement with the EU.

Further Information

Financial Cooperation with Ukraine

Фінансова співпраця з Україною

“It´s a constant effort”

Interview with Volodymyr Kudrytskyi, former CEO of the power grid operator Ukrenergo, on Russian attacks against the Ukrainian grid, the effort of constantly repairing the system and the support of foreign donors.

Children sit and lie on their beds in a shelter at a kindergarten in Schytomyr.

Playing and learning during a state of emergency

In times of war, children need to be given a feeling of security and they need to be treated differently Kindergarten teachers are attending special trainings to learn the best ways for this.

A man in a suit is sitting at a desk looking into the camera. In front of him on the table are a German and a Ukrainian flag.

“The backbone of the economy”

Interview with Andrii Gapon, Chairperson of the Management Board of the Business Development Fund (BDF), on the state of the Ukrainian economy and the significance of the BDF.