What most of all hinders the restoration of Ukrainian business today?

What most of all hinders the restoration of Ukrainian business today?

Advanter Group research suggests that Ukrainian small and medium-sized businesses are largely unable to resume work due to the lack of a sufficient number of solvent customers in the domestic market

Advanter Group together with the Center for Innovation Development, the Office for Entrepreneurship and Export Development, "Diya.Business" conducted the sixth study / survey of the state of small and medium-sized businesses in Ukraine during the full-scale military aggression of Russia in Ukraine.

According to the results of the study, 46.8% of enterprises have completely or almost completely stopped working since February 24, 2022 (as of May 10, there were 49% of such enterprises). The total financing needs of SMEs are about $73 billion, about 41% of small and medium-sized businesses consider the search for financing a priority. InVenture continues to help Ukrainian entrepreneurs attract private financing to reduce activity in the investment market.

So, among the most popular reasons that prevent a business from recovering:

  • Lack of a sufficient number of solvent customers in the domestic market - 62%
  • Unpredictability of the development of the situation in Ukraine and on the domestic market - 48%
  • Lack of sufficient capital - 43%
  • Unpredictable actions of the state that can worsen the state of business - 29%
  • Unavailability of credit funds - 28%
  • Destruction of supply chains - 26%

“The reasons may be the prolongation of the war (and, accordingly, the difficulty in predicting the results of work and evaluating the effect of investments) and the reduction in consumer demand. However, there are issues that concern businesses, but can be resolved by the government. This is, first of all, access to a financial resource, the restoration of logistics capabilities and the booking of key employees, ”Andrey Dligach, head of the Advanter Group, co-founder of the Center for Economic Recovery, is quoted in the study.

The UBI business activity index (Ukrainian Business Index) has reached its lowest level since December 2020 and stands at 22.73 (out of 100 possible). The index fell by a third compared to May 2022, which indicates the uncertainty of the business in the rapid improvement of the economic situation, the study notes.

Since February 24, 2022, SMEs have reduced 20% of their staff (that's 1.07 million employees). The share of employees sent on vacation is 20%. The share of personnel from those currently working on the terms of salary reduction is 27%.

The total direct losses of small and medium-sized businesses over the three months of the war are estimated at $83 billion. This indicator is a generalized self-assessment of direct business losses, including lost resources, goods, fixed assets, forced overpayments, and relocation costs.

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