The Center for Innovations Development, Entrepreneurship and Export Promotion Office, national project of Diia. Business jointly with Advanter Group with the support of the European Union and within the Initiative for economic recovery, entrepreneurship development and export of Ukraine have studied the condition and needs of the Ukrainian businesses in the context of the martial law.

Survey period: 20.07–01.08.2022. In total, 842 owners and CEOs of SMEs have been surveyed. The publication presents the general national survey results in the macro-regional context.

 

More than 30% of the Ukrainian business have already adapted to the new circumstances and have the business strategy and/or business plan for development.

In the West of Ukraine, there is the highest percentage of the businesses (37.7%) that have the strategy, have established the basic processes and have even started adapting to the strategy. However, around 50% of the businesses all over Ukraine are still contemplating and managing intuitively (from 46.6% in the Centre of Ukraine to 58.9% in the East).

 

 

Only 10% of the enterprises are planning to recover their manufacturing facilities in accordance with the best available techniques (BAT)*. The numbers in regional terms are as follows: 14.1% — East of Ukraine, 10.1% — Centre, 9.6% — West, 8.5% — North, and 8.3% — South.

 

In the first place, it is explained by the low level of the businesses’ awareness: only 15.7% know what the BAT* are (from 13.8% in the West of Ukraine to 18.6% in the Centre).

 

*For reference: Best available techniques are the technologies that are most efficient in terms of environmental protection and have been developed with account of peculiarities of industrial sectors and economic feasibility of introduction thereof.

 

The number of businesses that have fully or almost suspended their operations has reduced twice (from 80% in March down to 40% in July).

In general, as of July and August, 39.9% of all the enterprises in Ukraine have fully or almost suspended their operations. However, the business situation differs in each region. Thus, the indicator of the enterprises that have fully or almost terminated their operations is higher than in Ukraine on average and makes 63.9%.

In the West and North, majority of all the enterprises have decreased the scope of their operations or operate partly, which is 57.3% and 56.6% accordingly. In the Centre and South of Ukraine, there are 44.9% and 46.9% of the enterprises like that, and the smallest quantity is in the East: 29.1%.

All over Ukraine, 11.5% of the enterprises have managed to maintain or even decrease the scope of their operations in comparison with 23.02.2022. The largest quantity of such enterprises is in the West of Ukraine, 16.9%, but most of the enterprises that claim to have materially increased their income (140%+) are located in the South: 2.3%.

 

Instead, 17.1% of the businesses all over Ukraine forecast the same level of income as in 2021 or even growth of 120% and more, including the following in regional terms: in the West — 23.7%, in the Centre of Ukraine — 20.2% (4.5% are planning material growth), in the South — 15,3, in the North — 14% and 9,6% — in the East.

 

 

The enterprises in the East of Ukraine have suffered the largest direct losses, and some have lost more than five million US dollars.

The total losses of the Ukrainian businesses since 24.02.2022 have generally been estimated to make 87 billion US dollars. Minor losses have been sustained by more than half of the enterprises in the Centre of Ukraine (50.6%) and more than one third of the enterprises in the West (38.9%). 8.2% of the enterprises in the East of Ukraine have sustained the biggest direct losses: from one to five million US dollars, and 2.7% — more than five million US dollars.

 

 

The financing necessary to recover the manufacturing process and set up business processes for most enterprises varies from 30 to 300 thousand US dollars. However, some enterprises need the financial aid of more than ten million US dollars: 1.5% — in the East, 1.3% — in the South, 0.9% — in the North, and 0.8% — in the West.

 

 

 

Less than 2% of the enterprises have been fully or mostly relocated abroad. Moreover, 38% of the enterprises are focused on export.

Businesses are mostly relocated from the East of Ukraine: 39.7% of the enterprises are planning or have effected relocation in Ukraine or abroad. In the other regions, 80% to 90% of the businesses have not been relocated. Most of the enterprises that have been forced to relocate do this only or mostly in Ukraine; less than 2% of the enterprises from the East, West and Centre of Ukraine have been relocated abroad.

 

Instead, we observe an increase in the number of the enterprises that are refocusing their operations on export rather than relocating their business abroad. In total, 38% of the businesses are focused on export: 5.5% of them had exported before the full-scale war, and 15.3% have started to develop this area. In regional terms, the largest share of the enterprises that are planning to develop the export area are from the East (20.5%) and the North (20.1%).

 

 

Almost 100% of the businesses are ready to pay the internally displaced persons (IDPs) the same salary as to the local residents.

The headcount has considerably decreased in each region of Ukraine for the last month: from 42.7% in the West up to 68.5% in the East. It should be assumed that such tendencies are connected both with redundancy and displacement into safer regions of Ukraine or abroad. However, almost half of the businesses believe that IDPs have good prospects of long-term employment or reintegration into the local community, and 97.3% are ready to pay the same salary as to the local residents provided that there are necessary qualifications.

 

 

The Ukrainian businesses believe in our victory and make it closer day by day.

For five months of the full-scale war, registration of new businesses keep demonstrating positive recovery dynamics, which started in April. The quantity of newly registered economic operators keeps growing every month, from 15 thousand in April up to more than 22 thousand in July. In general, during the recovery period (since April), the pace of new business registration in the war time has made 85% against the equivalent period of 2020 and 63% against the respective period of 2021.

In general, 65.8% of the Ukrainian businesses have joined the volunteer activities whereas the others help win by developing businesses, creating jobs and paying taxes.

 

In the following publications, we will continue monitoring the dynamics, condition and needs of the businesses during the full-scale war. After it is over, we will study the business environment and attractiveness of the regions, performance of the business and export support tools etc., namely by means of large data monitored by the Economic Profile system, which is developed by the Center for Innovations Development on the big data platform Vkursi.

Read the series of the analytical articles on the condition of the Ukrainian businesses, attractiveness of regions etc. during the full-scale war that have been prepared within the Initiative here.

The publication has been developed by the Center for Innovations Development, Entrepreneurship and Export Promotion Office, national project of Diia.Business jointly with Advanter Group with the support of the European Union , the Ministry of Digital Transformation, the Ministry of Economy, the Ministry of Finance, the Ministry for Development of Communities and Territories, and the Coalition of Business Communities for the Modernization of Ukraine, and the USAID's Competitive Economy Program for Ukraine. The publication represents the authors’ opinion and does not have to coincide with the stance of the European Union. The research has been prepared within the Initiative for economic recovery, entrepreneurship development and export of Ukraine.