Current state and needs of businesses during the war: results of the September survey
04 October, 2022
Center for Innovations Development, Entrepreneurship and Export Promotion Office, and Diia.Business national project jointly with Advanter Group 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: 09.09.2022 – 19.09.2022. A total of 863 business owners and CEOs participated in the survey.
Key results of the survey
1. Current state of business environment
Ukrainian Business Index (UBI) constitutes 33.9 (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, but the growth of the indicator in recent months shows that negative business expectations are decreasing.
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. The work of enterprises
33.8% 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.
At the same time, 8% of enterprises indicate that their volumes of work have increased compared to the pre-war period.
3. How businesses see the prospects of 2022
The average expected volume of sales in 2022, as compared to 2021, comprises 54%, which is 4 pp higher than August 2022 figures.
Compared to August, the share of entrepreneurs hoping for business growth didn’t increase (8.8%). The share of entrepreneurs who do not see an opportunity to restart their businesses that have stopped operating (11.5%) or believe that their turnover in 2022 will not surpass 20% of last year's turnover (20.6%) remains stable.
There is a significant regional difference in business expectations from the western and central Ukraine compared to the frontline regions. 63% of enterprises in the eastern Ukraine and 39% in the south do not see opportunities to resume their activities this year (they note that business is either completely stopped or the turnover is up to 20% of last year).
4. Focus on the domestic market or export
One of the strategies for overcoming the negative consequences of the war for Ukrainian business is export. Therefore, 21.5% of the surveyed entrepreneurs are already exporters, another 18% reported that they plan to develop the export direction.
However, the development of exports is hindered by serious logistical problems. Among the key factors, the surveyed enterprises listed the rise in the cost of transport, the increase in delivery time and delays at border crossing.
5. What prevents businesses from recovering
The lack of financial resources in the country hinders business recovery the most, namely: the lack a sufficient number of solvent customers, the lack of sufficient capital, the inaccessibility of credit funds, etc.
38% point to the unpredictability of how the situation is going to develop in Ukraine, and 35% to the unpredictable actions of the state which can worsen the condition of the business.
6. Helping the country during the war
93% of enterprises are involved in helping the country during the war, in particular, 67.1% of them have joined volunteer activities.
7. Personnel situation
Compared to the situation before February 24, the share of reduced personnel increased to 28% (in August this figure was 24%). This means that more than 1,300,000 people have been fired in SMEs.
In addition, hidden unemployment is 18%.
At the same time, there was a tendency to hire new personnel (35% of enterprises hired new personnel since the beginning of the full-scale war).
8. Government assistance
Almost 35% of the surveyed enterprises indicated that they had used government assistance for business since the beginning of the full-scale war. The most popular type of such assistance was tax benefits (17.5% of respondents).
The number of companies interacting with Regional Military Administrations and territorial communities is increasing.
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 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, the Coalition of Business Communities for the Modernization of Ukraine, and the USAID Competitive Economy Program in Ukraine.
- This research was conducted within the framework of the Initiative for economic recovery, business development, and export of Ukraine.