Interview with Cheryl Edleson Hanway

Ukraine: Preparing for a Green & Resilient Reconstruction

At IFC’s Regional Office for Europe in Vienna, Cheryl Edleson Hanway outlines a role that is constantly evolving. One that has put her at the heart of commercial financing in emerging markets over the past two decades, “I’ve spent much of my career in infrastructure finance, initially focusing on Latin America, and more recently in Europe. Our work in emerging Europe, which includes Ukraine as a key country, spans across the project cycle: we offer early-stage engagements through advisory and project preparation activities, do traditional transaction execution across debt and equity products and I also supervise our portfolio in the region.”

Hanway manages IFC’s infrastructure investment business across Europe. She oversees a team responsible for energy, transportation, telecommunications, media, technology, and environmental infrastructure projects. Together they play a crucial role in the development, advisory, and investment activities that drive private sector activity across the regions they serve.

As part of the World Bank’s broader response to Russia's invasion of Ukraine in February 2022, IFC’s board approved a $2 billion Economic Resilience Action (ERA) program for Ukraine to support the Ukrainian private sector. “Under this program, we have committed over $570 million for three vital areas: sustaining critical sectors and supplies, facilitating urgent repairs of housing, and bolstering vital economic infrastructure,” says Hanway.

IFC is working closely with the government of Ukraine to ensure that its $2 billion program is fully aligned with the state priorities for reconstruction and essential infrastructure. Much of this the backbone of Ukraine’s recovery plan – including renewable energy, transportation, and municipal infrastructure.

“In the renewable energy sector, for example, we are working with leading renewable energy producer Scatec” says Hanway, “to roll out an innovative distributed energy solution of solar panels and batteries which can provide localized clean and reliable power.” Amidst Russia’s invasion of Ukraine, IFC's collaboration with stakeholders like Scatec is designed to bolster the private sector which will have a critical role to play in the country's reconstruction.

IFC also advises the Ukrainian government on maximizing private finance for reconstruction. This includes support in structuring successful transactions to build investor confidence as well as thinking through programmatic approaches to crowd in capital at scale during the rebuild. IFC’s engagement with the Chornomorsk port, one of the largest in the Black Sea region, aims to increase Ukraine’s import and export capacity, whilst IFC’s partnership with the Danube Shipping Company will help boost maritime commerce by upgrading, expanding and ‘greening’ the company’s fleet. “The private sector accounted for 60 to 70% of GDP prior to the invasion.” notes Hanway. “There is tremendous potential for private sector investment in the country. If the right conditions are created - and initially appropriate de-risking approaches are strategically deployed - we estimate that as much as one-third of Ukraine's post-war reconstruction investment needs could be met with private sector financing. Together with the World Bank and Ukraine’s government, we have just presented a report that shows Ukraine can generate up to $130 billion in private financing to help address reconstruction needs identified in the Second Rapid Damage and Needs Assessment (RDNA2).”

Hanway elaborates, “Under a scenario proposing increased reforms, sectoral interventions, and EU integration, Ukraine can generate additional private sector opportunities totaling $282 billion.”

“To make projects attractive to the private sector and also bankable,” says Hanway, “it will absolutely be necessary to create a whole new array of public-private partnerships and co-investment schemes and also to develop and deploy instruments to partially de-risk opportunities for investors. Instruments that mitigate investor risks will pry open the door to future investments.”

Climate is a fundamental theme when considering rebuilding opportunities. Hanway envisages Ukraine not just rebuilt, but with a "build back greener" ethos, intertwining climate action with reconstruction. In the face of the massive, estimated outlay of Ukraine’s reconstruction – estimated at $411 billion, the private sector, international institutions, and donor communities must unite, she asserts.

With IFC as a strategic advisor to the Ukrainian government, Hanway and her team continue to explore and are starting to conceive such avenues to attract private capital. She is hopeful, even against the backdrop of such a challenging environment, that commercial investors – including domestic and international banks and institutional investors -- can become linchpins of long-term financing, “Over time, we expect and absolutely need to see commercial long-term financing. We are already looking at various mechanisms that could de-risk, standardize and crowd-in larger institutional investors, potentially even by eventually tapping into the capital markets.”