Due to the full-scale invasion and martial law, Ukrainian businesses are facing many challenges. Nevertheless, there are still regions in Ukraine where the business environment is satisfactory or even good. Find out where in Ukraine it is easier for businessmen to do business, and in which regions entrepreneurs face difficulties

Legal assistance in starting and doing business in Ukraine

GET

For the fifth year in a row, the European Business Association (EBA) has been conducting a survey on the mood of Ukrainian entrepreneurs, and the years of full-scale invasion were no exception. Here we tell you where in Ukraine business conditions are perceived as satisfactory and where they are considered extremely difficult.

EBA survey: objective figures and common problems of Ukrainian business

Today, every Ukrainian region is facing the challenges of doing business in the midst of the war in the country. The EBA surveys are conducted in 4 cities where the EBA has offices - Lviv, Dnipro, Odesa, Kharkiv - and the survey organizers are particularly attentive to the local business situation and entrepreneurs' activities in certain regions.

This year's EBA survey involved representatives of 83 Ukrainian companies from:

1. Western Ukraine (companies from Lviv, Ivano-Frankivsk, Ternopil, and Zakarpattia regions);

2. Southern Ukraine (companies from Odesa, Mykolaiv and Kherson regions);

3. Dnipro region (companies from Dnipropetrovska, Kirovohradska and Zaporizka oblasts)

4. Kharkiv region (companies from Kharkiv, Sumy and Poltava regions).

Compared to 2023, the survey showed that the situation in Lviv (2.62 points) and Dnipro (2.20 points) has hardly changed. At the same time, in Odesa (2.15 points) and Kharkiv (1.45 points), business climate scores have deteriorated. Thus, respondents mostly assess the business environment in Ukraine as difficult, and only in the Western region do companies consider business conditions more satisfactory.

Most Ukrainian regions have common problems in the form of mobilization processes, difficulties with booking employees, staff shortages, and electricity shortages. At the same time, most entrepreneurs are currently focused on digitalizing their business and entering new markets. While companies in Kharkiv region have plans to cut costs and organize remote work for their staff in the near future.

Lviv is the best region for doing business in Ukraine

For several years in a row, Lviv has been receiving the highest ratings for the business climate in Ukraine, as it is the city of choice for most entrepreneurs in the Western region of Ukraine.

At the same time, the number of those who find it difficult to work in Lviv has increased from 28% in 2023 to the current 41%.

53% of respondents consider the business environment in Lviv to be satisfactory, while last year this figure was 72%.

Only 6% of respondents said that it is currently easy for them to do business in Lviv.

It is worth noting that during the martial law 56% of companies in Lviv region operate fully, and, accordingly, 44% operate with certain restrictions.

The main obstacles to doing business in Lviv are mobilization, difficulties in booking employees and, as a result, a shortage of staff. According to the survey, 85% of companies in the region have employees who are active members of the Armed Forces. In particular, almost 70% of companies in the Lviv region employ up to 20% of the total number of employees liable for military service, and 16% of companies employ 20-30% of such employees.

The EBA also informed that Lviv companies currently remain focused on the “three pillars” of sustainability: maintaining operations under martial law, digitalizing business processes, and expanding business.

Only 13% of the surveyed entrepreneurs believe that the end of the war may come by the end of 2024, while 28% of entrepreneurs expect the war to end in 2025. Another 19% believe it will happen within the next three years.

Visit Ukraine on social media: Telegram | YouTube | Instagram | Facebook | Twitter | TikTok

Dnipro: industrial region lacks staff and electricity

This year, Dnipro and the Dnipro region were ranked second in the ease of doing business in Ukraine. The business climate in the region has hardly changed since 2023, and despite the second place, 75% of surveyed entrepreneurs consider the working conditions in the region to be difficult. Accordingly, 25% of respondents consider the business environment in Dnipro to be satisfactory.

Only 20% of companies are fully operational in the region, while 80% operate with certain restrictions due to martial law.

Mobilization issues and difficulties in booking employees are the main problems faced by local entrepreneurs. In addition, Dnipro region is an industrial region, and it is heavily affected by the power outage.

60% of the region's companies currently have up to 20% of their employees in the Armed Forces, while 25% of companies have 20-30%. There are also 5% of companies in the region whose staff consists of 30-40% of those serving in the Armed Forces. At the same time, 90% of the surveyed companies in the region have mobilized or volunteered employees.

The digitalization of business processes and entry into new markets are a priority for Dnipro businessmen.

35% of surveyed entrepreneurs believe that the war will end in 2025, while 25% of respondents believe that the war will end within one to three years. 15% of the surveyed businessmen in the Dnipro region believe that Ukraine will remain at war for a long time.

Earlier, we wrote that during the full-scale invasion, Ukrainians opened a record number of businesses in Poland.

Odesa: business stagnation is on the verge

Compared to last year, even more Odesa entrepreneurs believe that business conditions in the region have become more difficult. Namely, 75% of respondents compared to 53% last year.

20% of businessmen in Odesa region consider the business environment in the region to be satisfactory, and only 5% consider it easy.

In the region, 40% of companies are fully operational, while 60% operate with restrictions due to martial law.

The key problems faced by companies in the Southern region are similar to those in other regions of Ukraine: difficulties in booking employees, complicated mobilization processes, and a shortage of human resources.

80% of companies in Odesa region have employees in the Armed Forces. In particular, in 65% of companies, the number of employees serving in the armed forces is up to 20% of the total number of people liable for military service, and in 15% of companies this figure is more than 20%.

The difficulties do not prevent businesses from focusing on digitalization and expansion, but there is little support for current business activities in Odesa and the region. 20% of EBA respondents believe that the war will end by the end of 2024. Another 25% of respondents believe that the war will end either in 2025 or within the next three years.

If you are interested in detailed information about the relocation of Ukrainian business abroad, please read our previous article.

Is Kharkiv the worst place to do business in Ukraine?

This year, as in previous years, Kharkiv entrepreneurs' assessments of doing business are the worst. Thus, almost 100% of the surveyed entrepreneurs in the region rated the business environment as difficult, 55% of them as very difficult.

No company in Kharkiv region rated the regional business environment as satisfactory. At the same time, last year, 6% of respondents rated the business environment in Kharkiv as satisfactory.

As of August 2024, none of the companies surveyed by the EBA is fully operational, while last year there were 6% of companies that were fully operational. Today, the survey data show that 91% of companies in the Kharkiv region operate with restrictions, and 9% of companies do not operate at all.

Among the main difficulties in doing business, entrepreneurs name constant power outages, as well as mobilization issues and difficulties in booking employees.

All companies in Kharkiv region surveyed by the EBA stated that they have employees who serve in the Armed Forces as mobilized or as volunteers. In 81% of companies, the number of such employees is up to 20% of all those liable for military service, and in 18% of companies it is 20-30%.

The main difference between the business priorities of the Kharkiv region and other regions of Ukraine is the focus on reducing costs and creating conditions for remote work of their employees to ensure stable operation of companies in the face of constant shelling and other restrictions of martial law.

Kharkiv entrepreneurs are extremely cautious about the duration of the war. Thus, more than 55% of respondents believe that the war has a chance to end within the next three years. 27% of respondents predict the end of the war in 2025, and 9% of Kharkiv businessmen surveyed expressed the opinion that the war will last for a long time.

A general positive point for Ukrainian business is the provision of affordable loans to Ukrainian businesses during the war under the 5-7-9% program, which we wrote about here.

As a result, we have a situation where business in Ukraine, although it is difficult, continues to exist and support the national economy during the war. In addition, the war has opened up new niches for businessmen in the defense sector, which attracts many foreign investors to set up new companies and open production facilities in Ukraine. To ensure that such a business in Ukraine can operate with all the nuances and military risks in mind, it makes sense to contact lawyers in advance. Our specialists provide comprehensive support to foreign legal entities and individuals when registering a business in Ukraine (sole proprietorships/legal entities).

Our lawyers also provide a full range of services to Ukrainian entrepreneurs: documentary support, assistance in registering a sole proprietorship, employee recruitment, and simple advice on starting and running a business in Ukraine - all of which can be ordered on our website.

Just a reminder! Starting from September 2024, Ukrainian businesses will be able to submit applications to the International Register of War Losses. 

Want to know more? Read the latest news and useful materials about Ukraine and the world in the News section.

Ihor Usyk is the Head of Legal Department at Visit Ukraine

Before you travel to Ukraine or while you are already in the country, seek legal advice. Our team will help you feel safe and confident during your trip, business trip or relocation.