“Digital. Everything that can be digitalized must be digitalized,” Rustem Umerov, Ukraine’s newly appointed defense minister, declared during a momentous parliamentary plenary session on Sept. 6, 2023, as he discussed the digitalization of military processes and soldiers’ tickets. This resolute statement serves as the natural continuation of Ukraine’s remarkable digitalization journey.
Back at the Davos 2022 Summit, Ukraine already earned the moniker of a “digital tiger” from Europe – a well-deserved accolade. In just four years, Ukraine surged from the 82nd to the 46th position in the world’s Economic Government Development Index, a testament to its relentless commitment to digital advancement. Since 2019, Ukraine has been marching steadfastly towards becoming a leading digitalized nation, outpacing many of its regional peers.
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For a number of years, Ukraine has been pioneering some of the most remarkable global digital developments. For example, it was the first country in the world to officially recognize a digital ID as a legal document and one of the first countries to implement a digital Covid-19 certificate in Europe. It has also been investing heavily in its IT sector and is now home to a large, and growing, number of tech startups.
Digital leap: How Ukraine became digitalized before the full-scale invasion
Ukraine embarked on its digitalization journey in 2015, introducing the Prozorro procurement system and the E-Data portal, with a strong emphasis on transparency and fiscal responsibility. These foundational initiatives paved the way for a broader digital agenda. Simultaneously, 2016 marked the onset of significant healthcare reforms that eventually led to the complete adoption of electronic medical records and electronic doctor referrals by 2020.
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In 2019, a pivotal moment occurred with the creation of the Ministry of Digital Transformation. This ministry was established with the goal of fulfilling President Zelensky’s promise to transform Ukraine into a “digital state in a smartphone.” The objective was to enhance transparency, combat corruption, and simplify complex administrative processes, all with “one click.”
One of the defining moments in Ukraine’s digital evolution was the launch of the Diia app and its affiliated services under the Diia umbrella. This multifunctional portal revolutionized the way citizens engage with the government, allowing Ukrainians to manage various tasks conveniently, including residence registration, pension applications, housing support requests, and unemployment benefit claims – all accessible through smartphones or laptops.
For businesses, Ukraine introduced Diia.City, a specialized legal and tax regime designed to attract IT companies. It offers enticing incentives, including a competitive 5 percent flat tax rate, simplified reporting requirements, and visa-free access for foreign employees. Diia.City received widespread recognition within the IT industry, positioning Ukraine as a highly attractive destination for foreign investment.
Another important initiative is Diia.Digital Education, a platform that provides free online courses. The platform offers courses on a variety of topics, from coding to management and baking. Diia.Digital Education is aimed at helping Ukrainians to develop skills to find new employment, with a focus on the digital skills needed to succeed in the 21st-century economy.
Wartime digitalization
As the full-scale war erupted in 2022, despite Russia’s expectations, the digital became a lifeline for many Ukrainians. Russia had launched a vast number of cyberattacks on the state services prior to the invasion, expecting the digital infrastructure to collapse and wreak havoc in the country. However, Ukraine withstood the attacks, and in the first days of the invasion, it even launched new crucial services in Diia.
The number of Diia users has increased by 20 percent since the start of the full-scale invasion and now stands at 18.6 million – half of Ukraine’s population. That is because Diia successfully accommodated the pressing wartime needs – remaining connected, keeping up with reliable news, changing the place of registration, donating to the army, and so much more.
In addition to Diia, the Ukrainian government has also taken other measures to step up its digital security. It partnered with the global tech giants to move its critical data to the Cloud abroad, in order to protect it from cyberattacks and ensure its availability in the case of physical infrastructure damage.
The government, including the Ministry of Culture and Information Policy, together with the Digital Transformation Ministry, have partnered with local and international NGOs and the private sector to counter Russian propaganda and disinformation both in Ukraine and abroad.
With the appointment of the new defense minister, one should expect accelerated efforts with digitalizing the ministry and all crucial military-related services. Among its key priorities for the post, Defense Minister Umerov listed the establishment of a digital system of advance planning and forecasting of soldiers’ needs – from electronic military ID card to medical evaluation and hospitals. Thus, the Ukrainian defense, already equipped with military tech, will become even more digital.
Digital Marshall Plan: how Ukraine plans to develop in the future
The vision for Ukraine’s future is one of complete digitalization. It envisions a nation with a world-class tax system, cutting-edge defense technology, and efficient public administration. The ambitious goal is to make all public services accessible online by 2030, with a major push to digitalize key services this year.
At the heart of this transformation lies the strategic objective of positioning Ukraine as one of Europe’s premier IT hubs, where the digital economy significantly contributes to GDP. The Ministry of Digital Transformation’s priorities for the near and medium term are centered around emerging technologies, including artificial intelligence, augmented reality, and machine learning.
One notable project in this realm is BI Government, a collaboration between the Ministry of Digital Transformation and the State Statistics Service. This initiative aims to optimize decision-making at the state level, harnessing the power of data-driven insights.
However, the spotlight remains firmly on defense technology as a cornerstone of Ukraine’s digital future. Recognizing the global interest and investment potential in this sector, the defense ministry is poised to export its innovations internationally, potentially spawning a new generation of tech unicorns.
Lastly, the government uniformly agrees that digital will play a great role in the reconstruction efforts. The DREAM platform exemplifies the utilization of digital solutions in the reconstruction oversight process, illustrating Ukraine’s commitment to technological advancement at every level.
How Global Tech can help
The Ukrainian government’s plans for the future are ambitious, but they are achievable. With the right support, Ukraine can become a leading digital nation and a major player in the global economy. Vice Prime Minister Fedorov underscored that Ukraine’s digital future also envisions a close partnership between the government and major technology players, with the goal of transforming Ukraine into a European equivalent of Israel – a nation known for its tech innovation.
Here are some of the most important ways businesses can get involved:
- Strengthen human capital. Come educate the talented pool of IT specialists and the public, or invest in training and education programs in areas such as cybersecurity, AI, and ML;
- Create R&D centers and data hubs. Ukraine is a good location for data centers, due to its low energy costs and its strategic location;
- Resume Ukrainian operations. Many businesses left Ukraine when the full-scale invasion started or stopped outsourcing to Ukraine. The IT sector has proved strong and vital during the war, so there should be no hesitation in returning;
- Assist with reconstruction efforts. Businesses could come with proposals providing digital solutions, including solutions for managing construction projects, tracking the delivery of aid, and providing financial services;
- Rebuild digital infrastructure. The Russian invasion has destroyed a significant amount of Ukraine’s digital infrastructure, including telecom stations, internet lines, and so on. Businesses can help rebuild this infrastructure by providing funding and expertise;
- Support startups. Ukraine has a vibrant startup scene. Businesses can help support startups by providing funding, mentorship, and access to markets.
Ukraine’s digital transformation is a global opportunity for businesses to partake in the growth and resilience of a nation poised for a digital renaissance. By actively engaging in these processes, businesses can help shape a brighter and more technologically advanced future for Ukraine, while also contributing to the broader global tech community.
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