Repairing Ukraine’s Poor Road Infrastructure to Improve Business

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SEATTLE — By pure geographic virtue, Ukraine finds itself in a position to become an international trading hub with the potential to seamlessly connect much of Europe, Asia and the Middle East. Yet, the country’s poor road infrastructure has instead left the country struggling to execute day to day economic activity due to crumbling roads. Renewed investment in the country’s infrastructure problems could, however, prove to be a turning point.

It is estimated that upwards of 97 percent of Ukraine’s roads are currently in desperate need of repair and are expected to cost the country over four billion dollars in the next few years if not repaired properly. Many drivers have started making their own dirt roads parallel to the highways in order to avoid the massive potholes and other safety hazards that seem to mark every twist and turn.

Ukraine’s poor road infrastructure is only worsening at a time when the country has just barely gotten back on its feet. Sudden economic crisis in 2014 and 2015 caused Ukraine’s GDP to contract by more than ten percent in 2015 and real wages to fall by 13 percent.

“Ukraine’s economic revival depends on the presence of a high quality and efficient transport system,” said Qimiao Fan, World Bank Country Director for Belarus, Moldova and Ukraine. Ukraine’s poor road infrastructure is prohibiting it from efficiently transporting goods and services and effectively modernizing its economy–both of which are critical for reducing poverty and boosting the country’s growth.

Thankfully, officials both nationally and abroad have begun to recognize that Ukraine’s poor road infrastructure presents a serious problem requiring immediate attention.

The European Union has identified Ukraine as a major East-West transportation corridor and has begun providing assistance to the research bureau within Ukraine tasked with finding strategies for improving road infrastructure.

One of the main reasons for Ukraine’s poor road infrastructure is mismanagement of funds and a lack of transparency within the government. The Infrastructure Ministry has found that of the roughly $1.5 billion government budget dollars earmarked for road construction and maintenance, only between 20 and 30 percent of the funds are actually used to repair roads.

In light of this, the EU has partnered with research teams in Ukraine to help them find areas where transparency can be improved and ways to more efficiently manage the country’s road system.

Ukraine Prime Minister Volodymyr Groysman has also pledged in the next year or two to establish a direct state road fund that gives more authority to local officials in the decision making process and ensures that the funding provided for road maintenance meets its mark.

Perhaps even better evidence that Ukraine’s poor road infrastructure may one day be a thing of the past comes from the country’s partnership with The World Bank. The World Bank has provided Ukraine with several rounds of funding and loans for assistance in major road repair projects. The latest installment, in the form of a $560 million loan, will allow Ukraine to finish repairs to a popular road between Poltava and Kharkiv and vastly improve the road’s safety features–nearly cutting in half the number of traffic accidents on this stretch of road each year.

What’s more, the number of road users on this road alone is expected to increase to more than 40,000 per day once the repairs are finished. As many as 4.4 million people in the region are expected to benefit from the road improvements.

Ukraine is situated in an area where it has the potential to become an international trading hub and a rapidly growing market. Repairing the roads provides the potential for a widespread increase in per capita income and reduction in poverty, allowing Ukraine’s citizens to become hugely influential buyers in the international markets–a good thing both for Ukraine and exporting countries like the U.S.

Sara Christensen

Photo: Flickr

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About Author

Sara Christensen

Sara is a West Coast transplant born and raised in the foothills of Glacier National Park in Montana. Currently, attending Pacific Lutheran University where she is writing for The Borgen Project and pursuing a Bachelor's degrees in Economics and Political Science.

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