France’s comprehensive support for Ukraine: aid, reconstruction, and investment

December 12, 2024

Since the onset of Russia's invasion of Ukraine, France has been a steadfast ally, providing extensive support across various sectors. This commitment is evident in the recent €200 million grant agreement signed between Ukraine and France, aimed at bolstering Ukraine's recovery and critical infrastructure.

Financial aid and infrastructure support

The €200 million grant agreement, signed on 21 October 2024 in the presence of Ukraine's First Deputy Prime Minister Yuliia Svyrydenko and French Ambassador to Ukraine, Gaël Veyssière, underscores France's dedication to Ukraine's reconstruction. This funding will be directed towards maintaining critical infrastructure, demining operations, and supporting priority sectors of the economy. Notably, at least €60 million will be allocated to maintaining energy supplies and implementing water supply projects.

French companies and local authorities will have access to this grant funding, enabling them to participate in reconstruction efforts. French companies have already put forth projects worth more than €700 million, highlighting the significant interest and potential impact of this collaboration.

Strategic partnerships and development initiatives

In addition to the recent grant agreement, various French agencies have expanded their mandate to operate in Ukraine. This strategic partnership with Ukraine is designed to accelerate recovery projects and support Ukraine's long-term development. Focus areas include energy, healthcare, water supply and sanitation, demining and infrastructure. By fostering these collaborations, France is playing a crucial role in rebuilding and modernizing Ukraine's infrastructure.

Agence Française de Développement (AFD)

AFD, the French public financial institution that implements France's development and international solidarity policies, together with Expertise France (the French public agency for international technical cooperation) and Proparco (the French development finance institution and a subsidiary of AFD), is actively setting up cooperation projects with Ukrainian ministries and local authorities. These projects aim to promote stability and development, providing financial support in the form of loans, grants and guarantees to both public and private enterprises. AFD will provide €400 million in loans and €50 million in grants through to 2027, without impacting Ukraine's debt.

Earlier this summer, the AFD Group announced the establishment of a representative office in Ukraine to support Ukrainian enterprises. This initiative aims to provide financial and technical assistance to foster economic resilience and development in Ukraine. The office will facilitate access to funding, promote sustainable development projects and enhance cooperation between French and Ukrainian businesses.

Expertise France

Expertise France has been actively involved in Ukraine since 2006, primarily through European technical cooperation and French bilateral programs. In response to the Russian invasion, Expertise France has restructured its support to address urgent needs, focusing on judicial reform, healthcare system strengthening and digitalization. Key initiatives include the Pravo-Justice project, which supports the Ukrainian judicial system, and the mAIDan Ukraine program, which aids in health, mobility, urban development and governance. These efforts aim to enhance Ukraine's resilience and align its systems with European standards.

Proparco

Proparco, together with the US International Development Finance Corporation (DFC), have agreed to provide up to US$100 million in trade finance guarantees for Ukraine in 2025. Each institution will contribute up to US$50 million in risk-sharing guarantees to support the export and import of critical goods. This initiative, announced during the June 2024 Ukraine Recovery Conference (URC2024) in Berlin, aims to bolster the Ukrainian private sector and enhance trade.

In addition, Proparco has joined forces with 17 other development finance institutions (DFIs) to establish the EBRD-G7 DFI-EDFI Ukraine Investment Platform. This platform aims to promote co-financing and strengthen cooperation among DFIs to support Ukraine's reconstruction, focusing primarily on the private sector.

War risk insurance for French companies

To further support French companies investing in Ukraine, France has introduced a war risk insurance mechanism through Bpifrance Assurance Export. Bpifrance provides a range of export insurance solutions to French companies and banks, covering various risks associated with international trade and investments. This latest initiative ensures that French businesses can confidently participate in Ukraine's reconstruction efforts, knowing that their investments are protected against the risks associated with the ongoing war.

The insurance covers up to 95 percent of potential losses due to property damage, non-payment, non-transfer, expropriation or political violence. It is expected to encourage more French companies to engage in critical infrastructure projects and invest in other key sectors.

Financing for Priority Sectors

In addition to existing instruments like concessional loans, the Private Sector Study and Aid Fund (FASEP), a French Treasury initiative that supports the establishment and development of French SMEs abroad by guaranteeing investments against economic risks, and export insurance (including war risk insurance discussed above), France is working to support sectors that are essential to Ukrainian resilience in the medium and long terms.

Several specific steps have been taken in this regard, including:

• Contribution to the Ukraine Energy Support Fund (UESF): France has contributed almost €6 million to the Ukraine Energy Support Fund, managed by the Energy Community Secretariat. This fund supports the resilience of Ukraine's energy infrastructure, ensuring a stable and reliable energy supply during and after the conflict.
• Concessional loans to the Ukrainian Ministry of Health: France has granted two concessional loans totaling €46 million to the Ukrainian Ministry of Health. These loans aim to strengthen the healthcare system by building new hospitals and supporting the fight against breast cancer. Further loan projects are being considered to continue enhancing Ukraine's healthcare infrastructure.
• Financing of the Superhumans Centre in Odesa: Expertise France is financing the new Superhumans Centre in Odesa. This center will build Ukraine's capacities for physical and psychological rehabilitation, providing essential services to those affected by the conflict.

These initiatives highlight France's comprehensive approach to supporting Ukraine's resilience and development, focusing on critical infrastructure, healthcare and energy sectors, while promoting sustainable growth and integration with the European Union.

French private sector investment

Certain private sector transactions illustrate the contribution of French companies to growth and the reconstruction of priority sectors:

• NJJ's investment in telecommunications: NJJ, a French telecom investment holding company owned by Xavier Niel, has made the largest foreign investment in Ukraine in a decade (French billionaire Xavier Niel closes deal on historic merger of Ukrainian telecom companies). In collaboration with Horizon Capital, NJJ is leading a landmark project to modernize Ukraine's telecom infrastructure. This initiative involves the merger of two leading Ukrainian telecom companies, lifecell LLC and Datagroup-Volia, to form a new group, Datagroup-Volia-lifecell. Supported by the International Finance Corporation (IFC) and the European Bank for Reconstruction and Development (EBRD), the project aims to enhance digital connectivity and network resilience across the country. It will improve mobile connectivity for 10 million subscribers and provide faster, more reliable broadband access to 4 million homes, strengthening Ukraine's telecom sector and signaling the resilience and potential of Ukraine's economy.
• Saarstahl Rail's supply of rails: Saarstahl Rail in Hayange (Moselle), France, has supplied 20,000 tons of rails to the Ukrainian rail company Ukrzaliznytsia. This supply, enabled by a concessional loan of €37.6 million to the Ukrainian Government, will repair more than 150 km of railway track. This initiative is crucial for restoring Ukraine's rail infrastructure, which is vital for both civilian and military logistics.
• Alstom's Memorandum of Understanding with Ukrzaliznytsia: Alstom has signed a memorandum of understanding with Ukrzaliznytsia to supply locomotives tailored to Ukrainian needs. This agreement aims to modernize Ukraine's locomotive fleet, enhancing the efficiency and reliability of its rail transport system, which is essential for economic recovery and growth.
• EDF and Schneider Electric's modernization of electricity infrastructure: EDF and Energoatom, along with Schneider Electric and DTEK, have signed memoranda of understanding to modernize Ukraine's electricity infrastructure. These agreements focus on upgrading the country's energy systems to ensure a stable and reliable power supply. The modernization efforts will incorporate advanced technologies and best practices, contributing to the resilience and sustainability of Ukraine's energy sector.
• Grolleau's investment in telecommunications infrastructure: Grolleau has committed to investing €10 billion in the restoration and modernization of Ukraine's damaged telecommunications infrastructure. In partnership with the Ukrainian government, Grolleau has signed an agreement that includes assessing the costs of comprehensive fiber-optic network coverage and rebuilding 4G stations in areas near the front line. This ambitious project will help improve Ukraine's connectivity and support its post-war recovery.

These initiatives highlight the significant role of French companies in supporting Ukraine's reconstruction and development, fostering economic resilience, and strengthening bilateral relations.

Commitment to long-term recovery

France's commitment to Ukraine's recovery has been unwavering. Recent agreements and ongoing projects and private sector investments reflect a comprehensive approach to support Ukraine's immediate needs and long-term development. By leveraging financial aid, strategic partnerships, and significant investments, France is helping to build a resilient, sustainable, and prosperous future for Ukraine.