NUCC update about each sector

We would like to give a quick overview on how each sector in Ukraine is doing. Below you will find the following sectors: manufacturing, seafood and agriculture, energy, and ICT.

Manufacturing: Project Manager Anastasiia Antonyk

Industrial manufacturing accounted for 13% of total value-added in Ukraine prior to the pandemic and the Russian war. According to our report, this was the second largest contribution after the wholesale and retail trades. The recent events, however, have shaken not only the Ukrainian industrial sector, but also global supply chains.

The main challenges of the industrial manufacturing sector in Ukraine are:

• Logistics
• Infrastructure
• Labor force
• Raw materials

Building and construction, furniture manufacturing, machine production, and infrastructure development are among the sectors in Ukraine that have the biggest potential for future growth. Steel manufacturing will have to be restarted in order for Ukraine to repair bridges, residential areas, factories, and social infrastructure.

Seafood and agriculture: Project Manager Anne Birthe Skaret

Update on Seafood as of June 16th, 2022:

Since 2016, the seafood industry has experienced rapid and consistent growth. Norwegian seafood exports to Ukraine increased by 66% in the first quarter of 2022 compared to the same period the previous year. The seafood industry could boast remarkable performance even during the pandemic. Apart from strong export numbers, Ukraine was gaining traction as a reprocessing hub for Norwegian seafood.

Since March 19^th,  the statistics showed a considerable increase in trade of seafood the following month. According to April 2022 figures, Ukraine imported Norwegian seafood worth 79 million NOK, which is an impressive 56 percent of the numbers of April the previous year. In May 2022, the number is up at 74 percent of the value in May 2021. Despite the positive figures, there is still a long way to go to obtain some semblance of normalcy.

Nonetheless, NUCC strongly encourages Norwegian companies to maintain their business relations with Ukrainian companies and will assist them in doing so.

Update on Agriculture as of June 16^th, 2022:

Agriculture is representing a backbone of Ukraine’s economy, with Ukraine being a key exporter of agricultural products such as various grains and oilseed, as well as a significant emergency food aid contributor to the United Nations' World Food Program. Also, Ukraine is noted for its highly favorable natural conditions for agriculture and possesses almost a quarter of the world’s most fertile soil. These are some of the reasons why Ukraine is oftentimes referred to as the breadbasket of Europe.

Therefore, an attack on Ukraine, is also an attack on the breadbasket of Europe.  Although Ukrainian farmers have proved exceptional bravery in their work, the war has brought along several fatal consequences for Ukrainian agriculture as well as the global commodity market.

Due to martial law, export quotas on some agricultural products are set to zero.  However, this is not the most serious concern. Damage to land, infrastructure, and agricultural machinery, poor to no market access in occupied territory, shortage of fertilizers and fuel are all major concerns.

Ukraine has suffered $4.292 billion in damage to farmland, machinery, and livestock as a result of Russia’s invasion, according to the Kyiv School of Economics. About half of the already immense destruction from the war comes from pollution caused by mines and unharvested crops, and almost a quarter of the total accounts for damage done to farm machinery due to military activity and occupation.

Maintaining collaboration and trade in any manner feasible is an extremely vital source of support. In addition, Ukrainian agriculture depends on the restoration of agricultural equipment, the replenishment of fuel and fertilizers, and the facilitation of easier access to European markets.

Energy: Project Manager Anatolii Kyryliuk

The last five years were very productive for the cooperation between the Norwegian and Ukrainian energy sectors. Norwegian companies were among the biggest investors in the Ukrainian renewable energy sector, reaching 20% of all FDIs to Ukraine in 2019 and 2020. Overall Norwegian companies invested in Ukraine around 10 billion NOK in solar and wind parks.

Since Russian full-scale invasion of Ukraine this February the energy situation in Ukraine is changing rapidly. As of today approximately 600,000 consumers all over Ukraine do not have access to electricity and 200,000 consumers remain without gas supply due to the damaged infrastructure as a result of the Russian war against Ukraine. At the same time Ukraine managed in a very short term to get connected to the EU grid and ensure the stability of the interconnected network. In June this year pilot volume of electricity exports to the EU countries will be determined.

NUCC urges Norwegian companies that would like to do business in/with Ukraine in either sector to apply for membership in NUCC and to get access to the unique network with extensive knowledge and experience of doing business between our two countries.

ICT: Project Manager Nataliya Sjøvoll

Despite the war, Ukrainian IT companies continue to do their job and to drive the country's economy. More than 80% employees of IT companies remain involved in daily work tasks. This is possible in part due to a stable internet connection. During the first quarter of 2022, the IT industry provided record-high $2 billion of export income in wartime. During the two and a half months of the War, the IT industry has managed not only to maintain its operational activities, but also to actively support the Armed Forces of Ukraine and the Government.

The Ukrainian IT industry keeps working, attracting regular foreign earnings to the state budget, and helping to reduce the financial impact of the war.

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