Current state and needs of businesses during the war: results of the July survey
22 August, 2022
Center for Innovations Development, Entrepreneurship and Export Promotion Office, and Diia.Business national project jointly with Advanter Group, with the support of the European Union, and within the framework of the Initiative for economic recovery, business development, and export of Ukraine carried out a new research on the current state and needs of the Ukrainian businesses during the war.
Survey period: 20.07–1.08.2022. A total of 842 business owners and CEOs participated in the survey.
Key results of the survey
1. Current state of business environment
Ukrainian Business Index (UBI) constitutes 25.16 (out of the maximum value of 100). The index has slightly increased since June 2022 but remains at a low level, which indicates that businesses lack confidence in the rapid improvement of the economic situation.
Additional information: UBI shows business activity and its ability to increase trade turnover and create jobs. If the index is lower than 50, it indicates that businesses have negative expectations regarding the further course of events.
2. SME losses during 175 days of the active phase of the large-scale war
The total direct losses of small and medium-sized enterprises for five months of the war are estimated at $87 billion. This figure has slightly increased compared to the previous wave of surveys.
This indicator reflects a generalized self-assessment by businesses of their direct losses. These losses cover resources, goods, fixed assets, forced overpayments, and relocation costs.
3. The work of enterprises
39.9% of enterprises have completely or almost completely stopped their operations since February 24, 2022. This figure is lower compared to June 2022 when 46.8% of enterprises were completely or almost inactive. The same situation was observed in May.
4. The current status and plans for relocation
- 14.3% of businesses have already relocated within Ukraine
- 1.8% of businesses have relocated abroad
- 6.6% of businesses are planning to relocate, however, 50% of them have not yet decided on a place for relocation
5. Losses of personnel
As compared to 23.02.2022:
- 24% — reduction of 1 280 000 employees (which is over 200 000 more in comparison with the previous research)
- 18% — sent on vacation
- 26% — salary cuts
6. How businesses see the prospects of 2022
The average expected volume of sales in 2022, as compared to 2021, comprises 50%, which is 2 pp higher than June 2022 figures.
Compared to June, the share of entrepreneurs hoping for business growth increased (8.3%). The share of entrepreneurs who do not see an opportunity to restart their businesses that have stopped operating (10.3%) or believe that their turnover in 2022 will not surpass 20% of last year's turnover (23.3%) remains stable.
7. The need for financing
- The total financing needs of SMEs constitute $63.5 billion.
8. Top key decisions for the future
- 41.6% of businesses plan to develop further and compete using unique business connections and partnerships
- 38.9% of businesses plan to do it using technological innovations
- 20.9% of businesses plan to use business innovations for this purpose
9. What prevents businesses from recovering
The top 3 obstacles to recovery remain the same: lack of a sufficient number of solvent customers in the domestic market, the unpredictability of how the situation is going to develop in Ukraine and in the domestic market, and the lack of sufficient capital.
The factor “disrupted supply chains” which hinders the recovery of businesses, has lost its position significantly (from 22% in the previous wave to 16% in July).
10. Helping the country during the war
90% of enterprises are involved in helping the country during the war, in particular, 65.8% of them have joined volunteer activities.
11. How businesses interact with territorial communities and Regional State Administrations (Regional Military Administrations)
The majority of businesses do not interact with territorial communities or Regional State Administrations (Regional Military Administrations) regarding support programs, however, in July, the interaction has slightly improved, as compared to the previous month. At the same time, the situation has improved in comparison with the previous survey: at the beginning of July, 80.1% of businesses participating in the survey did not interact with Regional State Administrations and 94.1% of businesses did not know whether they were involved in community or Regional Military Administration support programs.
Full version of this research is available in PDF format.
Additional information:
- This research was conducted by the Center for Innovations Development, Entrepreneurship and Export Promotion Office, and Diia.Business national project jointly with Advanter Group, with the support of the European Union, Ministry of Digital Transformation, Ministry of Economy of Ukraine, Ministry of Finance of Ukraine, Ministry of Communities and Territories Development, Ministry for Reintegration of the Temporarily Occupied Territories, UN Global Compact, the Coalition of Business Communities for the Modernization of Ukraine, and the USAID Competitive Economy Program in Ukraine. This publication reflects the position of the authors and does not necessarily reflect the opinion of the European Union.
- This research was conducted within the framework of the Initiative for economic recovery, business development, and export of Ukraine.