More than 60% of small and medium-sized businesses in Ukraine have reported a significant deterioration in their economic and financial performance as a result of Russia’s full-scale invasion. These are the findings of the study “Resilience of Ukrainian business during a full-scale invasion” conducted by the Kyiv National Economic University named after Vadym Hetman, Komersant ukrainskyi
reports
The survey results showed that Russia’s full-scale invasion had a significant negative impact on Ukrainian business. Companies located in the regions that have been directly affected by the consequences of active hostilities have suffered the most.
Only 14.1% of respondents said that their business has not changed significantly. There is a direct correlation between the percentage of affected businesses and the intensity of hostilities in the region: the frontline regions have suffered the greatest losses.
According to the study, the biggest challenges for entrepreneurs were the rising cost of products and services, lack of funds for investment in development and a significant decline in production performance.
The strengthening of mobilisation processes is the biggest factor affecting business in all regions, with an average score of 3.66. This indicates that increased mobilisation has a significant impact on the operation of enterprises regardless of the region.
High energy costs and problems with sales of products/services are also significant factors, with average scores of 3.42 and 3.24 respectively. This is especially true in the frontline regions, where energy costs have a greater impact.
Lack of skilled labour and reduced demand for products/services are also important, with mean values around 3.26-3.28. These factors have the same level of impact in both types of regions.
Legislative barriers remain a significant factor with an average score of 2.98, with a slightly higher impact in the frontline regions (3.06).
Inadequate infrastructure and loss of suppliers are more relevant for the frontline regions (by 7 and 9 per cent respectively), which is explained by the difficult infrastructure and logistics situation in these areas.
Lack of access to finance has a greater impact on businesses in other regions than in the frontline areas. However, the difference is not significant – about 2%.
Cultural differences and problems with exporting products/services have a low average score, indicating that they have little impact on businesses, regardless of the region.
Key inquiries for establishing business operations
Among the main challenges facing businesses today, retaining staff, expanding sales markets, and upgrading equipment are the most pressing needs. These needs are particularly pronounced in medium-sized enterprises.
Although the general trends are similar for all categories of businesses, there are some differences. For example, large enterprises are more likely to mention the need for new premises, transportation of products and raw materials, which is related to the larger scale of their operations.
