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2 years of resilience: business continues to operate in the country

24/ 02/ 2024
  Today marks the 2nd year of the full-scale war started by Russia against Ukraine. What trends do we as a community see in business operations during this time? Over these two years of war, business has not only survived but is developing. While at the beginning of the war, even among EBA members, there were companies that did not work (29% in March, 4% in April), there are no such companies now. Among micro businesses (the EBAs Unlimit Ukraine project), there are 7% that are not working. At the beginning of the war, their number exceeded 15%. In addition, businesses continue to pay taxes and salaries to their employees (and now there are many more of them than at the beginning of the war - more than 90%, at the beginning - more than 60%). During this period, the community observed minor changes in financial stability. For context, in March 2022, 15% of businesses estimated they had a financial safety margin of a year or more. By October, this percentage had increased significantly, with 61% of companies reporting a financial safety margin of a year or more. And at the end of 2023, the number was 59%. This does not mean that businesses are not facing losses. It is simply that during this period, companies are progressively discovering methods to sustain operations and growth. Venturing into global markets is one such strategy. We have initiated our extraterritorial unit, Global Business for Ukraine, to support such companies. On the one hand, it helps businesses from Ukraine enter the global market. On the other hand, it helps global companies learn more about economic opportunities in Ukraine, look for partners among Ukrainian businesses, or invest in Ukraine. The picture is similar to company losses. For example, at the beginning of the war, no business incurred losses exceeding $10 million, while 34% experienced losses ranging between $1 million and $10 million. By the end of 2023, these percentages had shifted to 14% and 32%, respectively. What has changed? These are, in fact, problems and issues that are relevant to business. For example, at the beginning, the concerns of energy, macroeconomic stability and stability of the banking system, and the stability of the telecommunications system were relevant. Nowadays, people-related problems have come to the fore - booking employees, mobilization, migration, and difficulties in finding qualified personnel to fill vacancies. In addition, there are logistics issues. By the way, it is worth saying that we are grateful that we managed to get through this winter without blackouts.  At the same time, the business believes in the future as it continues to invest. According to the EBA Investment Index, 32% of CEOs think it will be profitable for new investors to enter Ukraine (17% of respondents thought so a year ago). At the same time, 57% of existing companies in the Ukrainian market plan to invest during the war, and 79% are ready to join the reconstruction process. Moreover, they expect their businesses to perform better. Companies are improving their financial performance forecasts. Most managers expect revenue growth in 2024: 72% expect an increase in hryvnia, and 55% expect an increase in physical terms. Last year, the numbers were 58% and 43%, respectively. In addition, 2 out of 5 CEOs plan to hire people. But the mood is, of course, cautiously optimistic. What is the impact of this period on business sentiment? The war is in the first place. But the next on the list is the importance of making fundamental changes that we as a country need to implement (fighting corruption and building the rule of law). However, even in such circumstances, businesses remain, operate, and plan to continue working in the country.  How can we promote business sustainability? In addition to Ukraines victory and work on fundamental reforms, we need to resolve the issue of booking, actively work towards European integration, resolve logistics issues, and strengthen cohesion within the country (communicate about reforms or why they are not being implemented, explain the need for decisions, including when meeting with business, etc.) And finally, the logical question is how to strengthen cohesion and trust within the country? Unity is formed by communication. In our case, business with the government. Business understands how difficult it is for the government to work and how difficult decisions have to be made. And it is ready to provide expertise and suggestions on any decision. Thats why its so important to have a dialog to hear each other, listen, and communicate. It is also crucial for the economy to move forward to continue business operations, development, and expansion.

Today marks the 2nd year of the full-scale war started by Russia against Ukraine. What trends do we as a community see in business operations during this time?

Over these two years of war, business has not only survived but is developing. While at the beginning of the war, even among EBA members, there were companies that did not work (29% in March, 4% in April), there are no such companies now. Among micro businesses (the EBA’s Unlimit Ukraine project), there are 7% that are not working. At the beginning of the war, their number exceeded 15%.

In addition, businesses continue to pay taxes and salaries to their employees (and now there are many more of them than at the beginning of the war – more than 90%, at the beginning – more than 60%).

During this period, the community observed minor changes in financial stability. For context, in March 2022, 15% of businesses estimated they had a financial safety margin of a year or more. By October, this percentage had increased significantly, with 61% of companies reporting a financial safety margin of a year or more. And at the end of 2023, the number was 59%. This does not mean that businesses are not facing losses. It is simply that during this period, companies are progressively discovering methods to sustain operations and growth. Venturing into global markets is one such strategy. We have initiated our extraterritorial unit, Global Business for Ukraine, to support such companies. On the one hand, it helps businesses from Ukraine enter the global market. On the other hand, it helps global companies learn more about economic opportunities in Ukraine, look for partners among Ukrainian businesses, or invest in Ukraine.

The picture is similar to company losses. For example, at the beginning of the war, no business incurred losses exceeding $10 million, while 34% experienced losses ranging between $1 million and $10 million. By the end of 2023, these percentages had shifted to 14% and 32%, respectively.

What has changed? These are, in fact, problems and issues that are relevant to business. For example, at the beginning, the concerns of energy, macroeconomic stability and stability of the banking system, and the stability of the telecommunications system were relevant. Nowadays, people-related problems have come to the fore – booking employees, mobilization, migration, and difficulties in finding qualified personnel to fill vacancies. In addition, there are logistics issues. By the way, it is worth saying that we are grateful that we managed to get through this winter without blackouts. 

At the same time, the business believes in the future as it continues to invest. According to the EBA Investment Index, 32% of CEOs think it will be profitable for new investors to enter Ukraine (17% of respondents thought so a year ago). At the same time, 57% of existing companies in the Ukrainian market plan to invest during the war, and 79% are ready to join the reconstruction process. Moreover, they expect their businesses to perform better. Companies are improving their financial performance forecasts. Most managers expect revenue growth in 2024: 72% expect an increase in hryvnia, and 55% expect an increase in physical terms. Last year, the numbers were 58% and 43%, respectively. In addition, 2 out of 5 CEOs plan to hire people. But the mood is, of course, cautiously optimistic.

What is the impact of this period on business sentiment? The war is in the first place. But the next on the list is the importance of making fundamental changes that we as a country need to implement (fighting corruption and building the rule of law). However, even in such circumstances, businesses remain, operate, and plan to continue working in the country. 

How can we promote business sustainability? In addition to Ukraine’s victory and work on fundamental reforms, we need to resolve the issue of booking, actively work towards European integration, resolve logistics issues, and strengthen cohesion within the country (communicate about reforms or why they are not being implemented, explain the need for decisions, including when meeting with business, etc.)

And finally, the logical question is how to strengthen cohesion and trust within the country? Unity is formed by communication. In our case, business with the government. Business understands how difficult it is for the government to work and how difficult decisions have to be made. And it is ready to provide expertise and suggestions on any decision. That’s why it’s so important to have a dialog to hear each other, listen, and communicate. It is also crucial for the economy to move forward to continue business operations, development, and expansion.

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