Ukraine is already looking towards a digital post-war future

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This week, Mykhailo Fedorov, Ukraine’s young T-shirt-wearing deputy prime minister, delivered an impassioned speech before a packed audience in washington.

But unlike most Ukrainian delegations, he did not ask for more help. Instead, he had an idea to sell: a piece of digital innovation, known as DIIA, short for “state and me”. And investors should take note.

Three years ago, the digital ministry headed by Fedorov launched an app to allow citizens to perform government and private sector services on their phones.

Initially, it seemed like a modest tool to “fight corruption and turn Ukraine into a digital state”, as Fedorov puts it. During the Covid-19 pandemic, for example, the app allowed Ukrainians to check their vaccination status.

But its use has multiplied to an astonishing degree. The app is installed on 70 percent of all Ukrainian phones and 19 million citizens, about half of the population, regularly access the 100 services found in it.

These include tools that provide citizens with the world’s first digital passport, enable them to obtain digital driver’s licenses, organize building permits, register newborn babies, pay taxes, make digital signatures, and do banking.

More recently, features have been added that teach Ukrainians how to fly drones (and shoot them down), receive refugee payments, report on Russian troop activities, and request funds to rebuild when bombs destroy their homes.

In fact, the app is so effective that the US Agency for International Development, which funded part of its development with the British government, is working with kyiv to export it. Estonia, for example, is importing the DIIA code, which is surprising since the baltic state is itself a technological pioneer. USAID is now working with Zambia, Kosovo, and Colombia to have them import the code as well.

“DIIA is Ukraine’s best kept secret; we should all envy him,” USAID Director Samantha Power tells me. In fact, she suspects that officials in the United States’ own “municipal and federal government” could also learn from innovation, given the low levels of government digitization in the United States.

This is surprising, for several reasons. On the one hand, DIIA provides another sign of Ukraine’s resilience. The fact that kyiv has expanded the application in a war and defended it from cyber attacks is impressive.

But this is just one example of the frenetic public and commercial digital activity in Ukraine, says Power. The sector grew 5 percent in 2022 amid record digital exports (albeit from a low base). This happened even when in general economic output fell by a devastating 30 percent that year.

Second, DIIA also shows that we now live in an era of “reverse innovation,” to quote a phrase sometimes used in tech circles. In the 20th century, Western governments and companies generally assumed that brilliant innovations started in the West and were then given to poorer countries.

But that assumption was undermined when M-Pesa, one of the world’s first mobile money companies platforms, it emerged in Kenya and was later copied elsewhere. Subsequently, technological innovations have flooded China, also to be emulated throughout the world. This could also happen with DIIA, since it makes the government not only more efficient, but also more accountable and transparent.

“The legacy of the Soviet Union was corruption: if you wanted to apply for a building permit or change a car registration, you had to pay an official. But DIIA eliminates that,” says Fedorov.

Power echoes this: “We [in America] they have given about $15 billion in cash to the Ukrainian government, and I don’t think we would have been able to do that without DIIA [because] this would have been untraceable in a previous regime and the Ukrainian government was notorious for its corruption.”

But now, he says, “there’s a digital trail going directly to bank accounts” to track money flows, backed up by geolocation tools.

Third, DIIA also highlights a possible path for the future of Ukraine. The country’s prewar economy was dominated by agriculture and heavy industry. But government officials now see the potential of technology as a key pillar and dream of imitating Israel.

After all, they say, Israel has previously shown that hostile neighbors need not impede growth, or at least not if massive defense investments are used to foster entrepreneurial, diaspora-backed civilian businesses. With Ukraine also having hordes of tech-savvy citizens, a diaspora, and an increasingly entrepreneurial culture, Kiev officials are eager to tell potential foreign investors that it is the next “start-up” nation.

A cynic might retort that this sounds very premature as the war continues. After all, Ukraine is struggling to get the weapons it needs to win. And while financial institutions like JPMorgan and BlackRock have already signaled their willingness to help with the rebuild (and Visa and Google have supported DIIA with grants), inward investment is (unsurprisingly) low.

This is unlikely to change for the duration of the conflict. But at least DIIA shows that necessity is the mother of invention, and that Ukraine has the ability to surprise on the upside. Non-Ukrainians should remember that, both for military and civilian reasons.

gillian.tett@ft.com