Why Ukraine’s Communities Keep Wasting Recovery Opportunities
The annual Ukrainian reconstruction fair exposed how many cities and towns remain unprepared to access investment and drive their own recovery.
ReBuild Ukraine 2025, held in Warsaw in mid-November, was a cold shower for many. The scale of the event and the number of international participants, investors, and donors were immense, but this did not compensate for the fact that a significant part of Ukrainian municipalities arrived unprepared. That was even more of a pity because this annual exhibition was focused precisely on connecting Ukrainian hromadas – Ukraine’s territorial self-governing units – with businesspeople, technologies, and reconstruction solutions.
About 100 hromadas were present, less than 10% of the total number in Ukraine. There were only 19 stands. In theory, this was supposed to be a selection of those most actively working on their own recovery and transformation. In practice, even for the best displays, there was a lack of prepared, economically verified, and technically realistic projects.
This is not a verdict. It is an indicator. The conference showed that the opportunities for Ukrainian towns and cities right now are unprecedented. Europe is open; development institutions are showing interest; and the private sector is ready to view Ukraine as a future major market. But access to these opportunities will only be granted to those capable of acting professionally. Those who do not will be losing a chance for years to come.
What Warsaw made clear is that several structural problems are holding hromadas back – and that each has a realistic solution.
1. Systemic Lack of Expertise: From Pretty Pictures to Feasibility Studies
Some hromadas continue to operate with the logic of 2022, assuming that an emotional letter or polished presentation about a need is enough to secure funding. But today, this no longer works. International partners say the problem is not a lack of ideas, but a lack of technically mature, bankable projects.
Investors and banks do not need drawings of a future park or school. They need full-fledged feasibility studies. The deep-seated problem remains the lack of technical and managerial expertise to prepare economic models, return-on-investment analyses, and total cost of ownership calculations.
The strategy must change. Grants should be sought not for building castles in the air, but for professional development of high-quality project documentation. Attractive visualizations simply cannot replace real economic models.
Instead, many hromadas at Rebuild Ukraine 2025 showed the same shortcomings: a lack of project managers, engineers, technical experts, and economists. Grant support, whether from international bodies, private funds, or state investment agencies, should therefore cover not only training, but also the creation of full business cases, financial calculations, technical specifications, operational models, and supply-chain assessments.
Without this groundwork, past mistakes will repeat. For example, a community may build a biomass plant that looks promising on paper but fails because it lacks fuel resources, cannot cover operating costs, or lacks engineering capacity. Technically sound and economically realistic documentation, not decorative renders, is what turns ideas into real, investment-ready projects.
If local authorities lack competencies for this, they must look for them externally while preparing their own staff. As the German Marshall Fund study “Local Stakeholders and Ukraine’s Resilience: A Survey of Community-Level Engagement During the War” shows, the answer lies in close cooperation. Where the municipality falls short technically, specialized NGOs and local businesses can step in to help.
2. International Presence: Beyond Volunteerism
During my conversations with representatives of local communities, it became clear that some hromadas now have a permanent representative in Brussels – someone who attends events, networks, does advocacy, and holds meetings. Hromadas that have such constant, working contacts within the EU receive many more opportunities. That makes sense: A direct presence in Europe provides an understanding of the context and access to real stakeholders. Still, a more effective model is institutional partnership with international organizations and city associations. Those who reach the level of peer-to-peer exchange receive not only funds but also knowledge that will stay in the hromada forever.
Others try to solve this challenge of being present in the EU by engaging volunteers, often members of the diaspora, to perform the same functions. Having someone present is valuable, but there is no guarantee that the quality of such volunteer-based representation will be professional or even knowledgeable about the most pressing issues.
3. Investments and Public Services: Economics Knows No Pity
Without utility tariff reform, there will be no investment in critical infrastructure. Not because Ukraine is uninteresting, but because the economics do not add up. Currently, utility rates are set by the National Energy and Utilities Regulatory Commission and effectively serve as a political lever. Officially, this is to protect households from unreasonable costs. However, behind the scenes of this process lies a very simple logic: any service has a cost price; the difference between the cost price of a service like water supply or heating and the price set in Kyiv is subsidized by local budgets. In the current rate-setting configuration, there is no room for making a profit; it is effectively a burden on local budgets in which money is burned.
As long as utility prices are politically motivated, the investor sees a lack of cash flow. Subsidies can exist, but they must be targeted toward the consumer in need, rather than covering the losses of an enterprise across the entire hromada. Residents are ready to pay for quality services; hromada leaders are ready to take political responsibility; and investors are ready to invest funds – only the appropriate legislative base is missing.
An investor must see a clear mechanism for the return of capital; otherwise, it is not an investment, but charity. Hromadas need to shift from the logic of “we are looking for money” to the logic of “we are proposing a business case.”
4. Mindset: “Skin in the Game” Instead of Requests
This is a key mental trap. Most hromadas began conversations with the words: “What can you give us?” This is consumer logic. True partnership begins with demonstrating one’s own contribution – one’s “skin in the game.”
Investors want to see what the municipality itself is risking. Willingness to co-finance a project – even 5% or 10% from the local budget – is the best proof that the community believes in this project and is ready to invest its own money to have the opportunity to earn later.
Moreover, mature communities go further. They are ready to propose models where the municipality forgoes its share of profits in joint projects for a certain period to soften the utility price shock for the population – that is, the sudden rise in utility bills that occurs when consumer costs are finally aligned with the real cost of providing services, not based on politically motivated decisions or other reasons – while guaranteeing the investor a return on investment. This is the language of adult partners, which is understood in Warsaw, London, or Brussels.
5. Quality of Delegations: Why It Is Important to Know Your Product
About half of the hromada representatives looked like people who came because they had to. A lack of a clearly stated task and ignorance of the details of their own projects undermines trust.
If a community representative cannot clearly answer what assets they offer and what guarantees they can provide, who makes decisions, and, ultimately, whom to talk to, the international side draws a conclusion: one cannot work with this community as an institution. Opportunities pass to those who prepared better.
6. Demography: Competition for the Future
Competition is not only for money but also for people: Ukrainians who fled the country, internally displaced persons, and those returning from abroad to destroyed cities.
These people will look for a new place to live. They will choose the community that offers the best conditions. First and foremost, this means jobs or conditions for doing business. A hromada may have a good hospital, school, or potable tap water, but if there is no opportunity to earn a living, all of this is secondary. The winners will be those preparing now for the return of prewar residents, thinking two to three years ahead rather than just patching holes.
7. Digital Twin: A Test of Political Will
There was much talk on the panels about “digital twins” – a virtual model of a process or system that allows changes to be tested – assessing the effect of project implementation, attracting additional investment, encouraging scaling, and more. That sounds like a powerful instrument, but in reality, it is a test of honesty and the presence of political will.
Without high-quality data, a digital model is fiction. But starting to properly collect and release real data about water and heat losses or the state of utility systems, for example, is a risk. It will inevitably show management inefficiency, which can hit the political capital of local authorities.
This leads to a crucial dilemma for the mayor: either you show the truth and potentially lose some of your inflated political capital, while gaining investor trust and funds for modernization. Or you hide the data and keep the peace, but remain a closed schemer to the world with whom no one will do business. Transparency is painful, but it is the only path to capital.
It should be noted that there are currently no working examples of digital twins for hromadas. Businesses are trying to do this, but when it comes to local governments as a whole or even municipal enterprises, it is all theory. Here, it is worth taking a more modest approach, for example, narrowing down to a single municipal enterprise – heating, water, sewerage, waste processing – and getting an honest answer as to whether it is worth the effort. Is it possible to collect the necessary data without distortions and human factors? Is the hromada ready for openness and, most likely, criticism?
8. The “New Europe” Experience: Learning from Mistakes
Some Central and Eastern European countries have already undergone admirable transformations. Their experience is not only a success story, but above all a map of structural mistakes that Ukrainian local communities cannot afford to repeat. Here are a few examples:
A lesson in financial stability (Poland). In the early 2000s, Polish municipalities fell into an “easy money” trap, making large capital expenditures while ignoring asset maintenance costs. The large-scale construction of water parks and stadiums in small towns led to budget crises when municipalities were unable to pay utility bills for the new facilities. There is a risk that Ukrainian communities may repeat this mistake: proposing the construction of parks when energy efficiency issues remain unresolved is financial suicide. Institutional investors evaluate not the “pretty picture” but the total cost of ownership.
The lesson of overcoming fragmentation (Romania). Big capital is not interested in micro-communities. Romania solved this problem with the help of inter-community development associations (ADIs). This has enabled even the smallest villages to implement joint low-cost projects: for example, purchasing a single communal vehicle for three villages or building a shared sewage network. This culture of cooperation is expanding: from shared garbage trucks in rural areas to a strategic alliance between Bucharest and Ilfov County to expand the metro. In Ukraine, however, we often see hromadas “bullying” their neighbors and misappropriating resources, instead of creating joint projects that can be financed.
A lesson in urban efficiency (Czech Republic). Extensive growth is a luxury that Ukraine cannot afford. A classic example of misguided planning in the past was the idea to build a new airport in the steppe between Dnipro and Zaporizhzhia instead of modernizing the two existing ones. The same logic applies at the city level. Instead of creating industrial parks on greenfield sites, the city of Ostrava in the Czech Republic transformed the closed Dolni Vitkovice metallurgical complex into a unique cultural, educational, and IT hub. Importantly, this is not a subsidized burden, but a profitable asset that generates real cash flow from tourism, festivals, and rentals, covering its own maintenance costs instead of draining the municipal budget.
There are hundreds of such cases. From water treatment and waste recycling technologies to the modernization of centralized heat supply, Ukraine’s neighbors had the same “post-Soviet infrastructure code.” Their solutions have already been adapted to the realities of the region. Hromadas do not need to reinvent the wheel; they need to implement the conclusions reached by European partners today, rather than repeating their mistakes of 20 years ago.
Ukraine has painful but valuable experience to offer in return, to be not just a listener, but a conversationalist. Horizontal cooperation is a multiplier.
From Lessons to Next Steps
ReBuild Ukraine 2025 made one thing unmistakably clear: money exists, but no one is waiting to hand it out – you have to chase it.
The success of a hromada is determined not by donors or, in many cases, not by the war itself, but by its own capacity to act. The competence of the team determines a lot – including the ability to write feasibility studies and prepare high-quality business projects. It also requires a willingness to invest one’s own funds through co-financing, as well as the political will to be transparent, even if it is unpleasant.
Europe can come to Ukraine’s cities and towns much sooner than Ukraine can join the EU. But only if the hromadas open the right doors.
This article was first published by Transitions on December 4, 2025.
The views expressed herein are those solely of the author(s). GMF as an institution does not take positions.