Business environment development in the Dnipro region
For a better understanding of the business environment in the Dnipro region, the European Business Association conducted a survey among the CEOs to assess the ease of doing business, cooperating with the authorities, and determine the factors that affect the local business climate.
According to the results of the research, none of the respondents considers the conditions of doing business to be easy and favorable. Thus, 42% of respondents say that it is difficult to do business in the Dnipro region, while 58% consider the business climate to be satisfactory. Among the factors that negatively affect the situation the most, about 25% named corruption, 22% – unsatisfactory infrastructure, and 21% – lack of the rule of law. Also, among other negative factors are bureaucracy (16%), complicated relations with the authorities (10%).
The state of infrastructure is an important condition for attracting investment, success, and business development. If we consider the situation in the Dnipro region in more detail, we have the following indicators: 45% of businesses in the region consider the state of infrastructure to be poor, 48% – satisfactory, and only 6% believe that the transport in the region is in a good state.
To improve the situation, the business considers the following measures to be the priority: road reconstruction (46%) and airport construction (22%), modernization of railways (17%), and the development of river connections (8%).
The level of satisfaction with the judiciary, expressed in the survey, is not surprising but also not inspiring. According to the latest EBA survey, conducted in May, the Judicial Index in Ukraine was only 2.45 on a five-point scale. As for the Dnipro region, currently, 61% of businesses are dissatisfied with the work of the judiciary, 35% have expressed a neutral attitude and only 3% of respondents are fully satisfied with the work of the judiciary.
In general, most businesses have a neutral attitude to other state authorities, with the most complaints about the activities of the City Council (41%), the Ecoinspection (39%), and the National Police (39%).
We also asked managers about the impact of quarantine restrictions on their companies and their plans for the next six months. More than half said that between March and September, their businesses suffered losses. Thus, 29% of respondents report on losses from 20 to 50%, 26% – from 10 to 20% and 16% of respondents were heavily affected by the losses of more than 50%. Meanwhile, 6% of companies were able to make extra profit.
Regarding plans for the near future, 24% of companies aim to expand investment, 20% – to digitalize their activities, 17% of companies will enter new markets. At the same time, some entrepreneurs have less positive plans – 13% are going to reduce costs, 11% – to optimize office space and 2% will have to reduce the scale of companies.
The crisis has also affected the corporate HR policy and many companies have had to revise it. However, the majority, namely 61% of respondents, do not plan any changes and will leave the entire staff, while 16% plan to even increase it. Still, employee cuts are still inevitable. Thus, 13% of companies will reduce the number of employees by less than 10%, while 10% will be forced to reduce staff by 10% – 50%.
The European Business Association also sought to identify what real action business needs from the state to improve working conditions in the region. The answers are as follows:
- Reduction of the payroll burden (21%);
- Infrastructure development (17%);
- Improving the judicial and law enforcement system (17%);
- Access to affordable loans (15%);
- An effective fight against the shadow economy (15%)
- Reduction of pressure from regulatory authorities (14%)
“The European Business Association conducted a study of the regional business environment for the first time. Businesses are generally expected to complain of unsatisfactory working conditions, which are significantly affected by factors such as relationships with local authorities and the state of infrastructure. Thus, since the beginning of September, we have received complaints from companies about the difficulty in communication with customs authorities. As for infrastructure, it is no secret that we have all been waiting for the construction of the airport and the reconstruction of roads for a long time.
At the same time, the research came up at a very difficult time for all, when almost every business suffered certain losses and was forced to adapt to new realities. And yet we see that the crisis has given certain growth points for companies, such as digitalization, diversification, and an incentive to seek new foreign markets.
The Dnipro region has always been and remains the one with significant potential, so we have room to grow and develop, and I am sure that together we will be able to do it much easier. “
The survey was conducted from 7 to 27 October. Altogether, 31 member companies of the EBA Dnipro office took part in the research.