Ukraine seeks to rebuild economy with small businesses despite Reuters


© Reuters. The herbs and botanicals used by Victoriia Maslova and her mother Inna Skarzhynska, founder of cosmetics company Vesna, to create their skin and hair care products, are seen in the resulting photo. The hand does not write this date. Vesna is a Ukrainian word that means spring I


By Andrea Shaal

LVIV, Ukraine (Reuters) – Victoria Maslova abandoned her herbal cosmetics factory in the Ukrainian town of Bucha on the first day of Russia’s invasion of the country, fleeing to Poland with her mother and three younger brothers when Missiles began hitting the nearby airfield.

A month later, they returned to Ukraine, determined to continue producing Maslova’s brand of plant-based cosmetics, Vesna.

“We love Ukraine. We want to return to our country and work here,” said Maslova, 24, who founded the business seven years ago with her mother, Inna Skarzhynska, 44.

To reverse the economic shock caused by the biggest war in Europe since the Second World War, the Ukrainian government is pinning its hopes on the entrepreneurial determination of the likes of Maslova, along with the return of millions refugees – and large-scale international financial aid.

It wasn’t until Russia’s chaotic April withdrawal from Bucha, a town near Kyiv now famous for an occupation that left civilian bodies littered the streets, that Maslova’s mother returned to the factory. The store floor was looted and littered, but she salvaged some equipment and loaded it onto a truck. They set up a new campaign in relatively quiet Lviv, about 450 km (280 mi) west near the Polish border.

Five months later, Vesna products are sold in more countries than ever before, including Poland and Lithuania, and Maslova recently won a contract to manufacture goods for a private label in the United States. speak. During that time, the company sponsored skin and hair care products, labeled “You are our hero,” to women and men serving on the front lines.

The war, which Moscow calls a “special military operation,” is now nearing its eighth month. Despite Ukraine’s recent victories on the battlefield, experts believe it could last for a long time, leaving millions of Ukrainians internally displaced and nearly 8 million outside the border.

So, at the same time that Ukraine’s forces are fighting to regain territory held by Russia since the 24 February invasion, the government in Kyiv is racing to stabilize the economy and find opportunities. employment opportunities for people leaving homes, jobs and businesses in the east and south.

The economy is expected to shrink by more than a third this year, but with businesses reopening, Economy Minister Yulia Svyrydenko sees output stabilizing and growing up to 15% in 2023, albeit from a low level. And in a decade, she dreams that this figure will more than double from pre-war levels to reach $500 billion, thanks to foreign investments and accession to the European Union.

“We always say we have two fronts: one is military and the other is economic,” Svyrydenko told Reuters in an interview in the basement of the majestic Soviet-era Cabinet of Ministers building. of Ukraine, where the corridors and windows are. packed with sandbags. “Economics is no less important than military.”

SMEs like Maslova’s are at the core of government efforts.

Economic activity froze across the country after the war began, but restaurants, retail stores and even nightclubs have now clearly reopened in Kyiv, Lviv and the cities. not otherwise occupied, even in Zaporizhzhia, near a besieged nuclear power plant.

The Economy Ministry has helped 700 companies relocate from frontline areas, of which 480 have resumed operations, Svyrydenko said. These companies are benefiting from the return of some 3 million refugees, helping to boost demand, while money flows back into the economy from new exports, including from three Black Sea ports.

To give relocation companies a fresh start, the Ukraine Center for Trade and Investment Facilitation in Lviv, is providing companies with free access to office and production space, a valuable wings.

The task facing the country, and entrepreneurs like Maslova, is daunting, according to recent World Bank and European Union estimates of war losses totaling nearly $100 billion and conflicts. Russia’s continued attacks on civilian infrastructure.

Ukraine also faces growing budgetary problems, despite the fact that Western government creditors agreed this month and private creditors agreed in August. It is seeking foreign aid, but also need private capital to rebuild.

Any investment will require strong security and accountability guarantees, based on what the German Marshall Fund called Ukraine’s “corrupt history,” in a report last month.

Leading economists from Ukraine, the World Bank, the International Monetary Fund and other donors will address some of these questions at a recovery conference hosted by Germany in Berlin on May 25. ten.

The International Monetary Fund on Friday approved $1.3 billion in additional emergency funding for Ukraine that could catalyze support from other donors towards a larger official program in the future. future.


Iryna Tytarchuk, head of the investment center in Lviv, which helps connect displaced business owners with resources, including government microcredits and loans up to $68,000, and US Agency for International Development funds for women-owned companies helped get Maslova back on her feet.

“These are brave businesses and brave people who didn’t drop everything and go abroad, but decided to start over again and again,” she said. Tytarchuk recalls that many companies saw a spike in revenue in 2014 as they diverted away from the Russian markets following the annexation of Crimea.

“Now, even more markets are opening up for them,” she said, noting that several businesses in the UK had contacted her to search specifically for “Made in Ukraine” products.

Near the front line, Mykolaiv, 800 km (500 mi) southeast of Lviv, was home to regular artillery. Here, Julia Konovalova is waiting for her time, eager to restart Fresh U & detox, her once healthy food delivery business, when the fight stops.

Konovalova stayed when more than half of Mykolaiv’s population fled. She donated her supplies to the military when the war began, and has coordinated food aid for relief group World Central Kitchen in recent months.

“I still have all my equipment. Now I’m waiting until the war is over, and then I’ll start over,” said the former hotel manager. “We just need to survive.”

Near the Russian border, heavy fighting has left Ukraine’s second-largest city, Kharkiv, with three-quarters of its population of 2 million, although Ukraine’s recent advances have recaptured nearby territory.

Rockets damaged Evgeniy Safonov’s pub in Kharkiv, but he searched for new locations in safer cities and eventually wanted to return to Kharkiv.

“Our investors are interested, even now,” he said. “Call me brave or stupid, I know. But our planned horizon is a matter of the day. You never know what tomorrow will bring.”


Svyrydenko acknowledged Ukraine faces major challenges, but said she and other officials are looking for investments wherever they can, with an estimate that every $10 billion of investment will generate a jump of 5 percentage points in national output.

Her department is studying 50 requests from the US, Germany, UK and Poland filed after the launch of the new investment portal “Ukrainian Advantage” at the New York Stock Exchange last month, outlining 400 billion dollars in investment opportunities, but said it was too early to provide details.

The private financing arm of the World Bank, the International Finance Corporation and the European Bank for Reconstruction and Development also said last month they would invest $70 million in a private equity fund that invests in technology and export-oriented businesses in both Ukraine and neighboring Moldova. It aims to raise up to $250 million over the next 12 months.

Andy Hunder, head of the American Chamber of Commerce in Ukraine, said Ukraine’s economy was demonstrating “extraordinary resilience”, with internet and banking services performing better in wartime Kyiv than in a regions of Europe in peacetime.

The group’s latest survey, released this week, found that 77% of the 600 member companies believe the war will end by 2023, and all but 2% plan to continue operating. business here.

Yulia Zavalniuk, whose small flower farm Villa Verde about 40 kilometers west of Kyiv was devastated by Russian forces four days after the war, originally planned to move to Slovakia, but decided to temporarily move to Lviv, at the same time selling trees to continue paying salaries and living expenses. basic business expenses.

“Now is the time for us – small entrepreneurs,” she told Reuters. “We have to be the most creative, service and quality oriented to produce goods, sell them and pay taxes,” she said.


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