99% of EBA member companies continue doing business, and 63% - to invest in Ukraine during the war

99% of EBA member companies continue doing business, and 63% - to invest in Ukraine during the war

Anna Derevyanko, executive director of the European Business Association and co-founder of Global Business for Ukraine: "Despite difficult times, numerous challenges and difficulties, the business ...

Despite difficult times, numerous challenges and difficulties, the business community continues to operate and invest in Ukraine during the war. Most companies remain optimistic about further development, but at the same time take seriously the challenges of the winter season that may lie ahead. A business must be prepared for different scenarios.

Thanks to the courage of our defenders in the Armed Forces of Ukraine and the stability of our business, we now have the opportunity to sum up the results of the first half of 2023.

So, despite the difficult times, the European Business Association community is working at full capacity: 99% of companies continue to operate, and 63% - to invest in Ukraine during the war. There is a feeling that Ukrainian entrepreneurs, at least most of the companies of the Association, have used this time to adapt and rebuild work processes and are now focused not on survival, but on development and improvement of results.

Starting from the first month of the full-scale Russian invasion, we at the Association have been following the state of affairs in the business and we see that during this time it is gradually recovering, only slightly sagged in the fall and winter during the massive attacks on the Ukrainian energy infrastructure. As of the second quarter of 2023, the business not only works and supports employees (90% pay wages in full), but also supports the Armed Forces of Ukraine and the population. Thus, 47% support the Armed Forces financially and support their mobilized employees, 42% provide their products, and 24% provide services for the needs of the Armed Forces and social purposes.

The financial "cushion" of the business also remains stable: 25% have financial reserves for half a year, 23% - for a year, and 37% - for a year or more. And this despite the fact that the companies suffered significant losses - 38% had direct losses as a result of hostilities, and 21% of them have assets (production facilities, land, machinery, transport, real estate, products) that remained in the occupied territories.

At the same time, it is somewhat more difficult for small and micro businesses. Among the individuals-entrepreneurs we interviewed, who participate in the small business support project of the Unlimit Ukraine Association, 90% are currently working. At the same time, 62% pay salaries in full. However, the financial reserves of small enterprises are gradually running out. The number of those who do not have any reserves has increased over the past six months from 25% to 32%. 31% of entrepreneurs now assess their own financial stability in a few months, and 18% in six months.

Despite numerous challenges and difficulties, most companies remain optimistic about the further development of their business. Almost half, namely 47% of the surveyed member companies of the Association expect growth based on the results of 2023, 28% expect to maintain the indicators at the level of 2022, 25% expect deterioration. Although an increase is expected from the previous decline, the trend points to a recovery.
Some companies do not stop investing in Ukraine. We see an example of how, even during full-scale Russian aggression, they invest millions of euros in the construction, creation or expansion of production facilities. In addition, 60% of our companies invest an average of about 8% of their income in social projects.

The small business also has plans for development. Despite the difficulties, 76% of entrepreneurs plan to scale in 2023, namely expanding the geography of presence, opening new areas, entering foreign markets. To expand the business, the majority of respondents (67%) will attract new funds.

These are companies that are already operating in Ukraine, but we have the potential to attract new investors, especially in the context of future reconstruction, for which we need to prepare now. Therefore, in February 2023, the European Business Association, together with Global Business for Ukraine and Ukraine Invest, launched the Investment Map of Ukraine to collect relevant projects, on the one hand, to make it possible to find the necessary partnership or financing, and on the other hand, to present opportunities for investors. This map is a practical tool containing projects from businesses seeking investment and regeneration projects from municipalities. At the beginning of August, the map included 124 projects with an investment potential of about four billion hryvnias, and we continue to receive new ones.

In total, 14 industries are represented on the map, and Kirovohrad, Dnipropetrovsk, and Odesa regions are the leaders in the number of projects among the regions. The directions of the projects are completely different: industrial parks, construction of factories (biofuel production, production, processing and packaging of various types of food, etc.), construction of medical and recreational centers, construction of eco-towns and residential complexes, geological research and mining projects, construction of energy facilities, in particular green , logistics facilities, etc.

Lack of funding is just one of the challenges facing businesses today. Other difficulties for companies in Ukraine, in addition to direct hostilities, shelling and destruction, remain complicated logistics, restructuring of supply chains, a decrease in the domestic market and the solvency of the population, seasonal interruptions in electricity supply and communication, the outflow of specialists and difficulties associated with the mobilization of employees.

Currently, 83% of the Association's companies have mobilized workers, while 43% of businesses have mobilized critical specialists, including engineers, IT specialists, electricians, mechanics, machinists, and drivers. In addition, about 15% of the employees of the member companies still remain abroad and their return home will depend on security and economic factors. Therefore, it is extremely important for enterprises to be transparent and understandable in the procedure of booking employees, so that there is an opportunity to ensure uninterrupted work.

Business also takes seriously the challenges of the winter season that may await us ahead. Currently, neither the government nor business have clear predictions about whether the electricity situation will be worse or better this winter, because too many factors affect it. At least, we heard from the authorities that active repair work and preparations are currently underway, coal and gas reserves are being formed. At the same time, the private sector, like last winter, should be ready for different scenarios.

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