As Ukraine endures the challenges of war, the country’s small and medium-sized businesses stand out as the key to future economic recovery. Quietly yet persistently, these businesses have weathered immense challenges, demonstrating resilience and ingenuity in the face of unprecedented disruption. They are not just vital contributors to today’s wartime Ukrainian economy, but can also serve as the engine that drives its revival and future growth.
The resourcefulness of Ukraine’s SME sector since February 2022 has been striking. By the end of 2023, more than three-quarters of SMEs that had suspended work at the start of the war had at least partially resumed their operations, reflecting the remarkable adaptability of the sector in crisis conditions. This ability to rebound is not just a testament to their determination; it also highlights the potential of Ukraine’s entrepreneurial class to drive the country’s economic transformation.
The Ukrainian authorities certainly seem to recognize the crucial role being played by SMEs. A national strategy for the development of the sector was approved in August 2024, while a range of individual programs have been unveiled to provide access to grants, affordable loans, and war risk insurance. Meanwhile, an SME Resilience Alliance was launched at the 2024 Ukraine Recovery Conference in Berlin, helping to further mobilize international support for Ukraine’s entrepreneurs. Private sector investments and individual international donor initiatives are also playing a pivotal role.
To fully realize the potential of Ukraine’s SME sector, partnerships with international private equity firms will be crucial. Such collaborations can help integrate Ukraine’s economy with Western markets, creating lasting economic ties and accelerating post-war recovery. By aligning with international private equity, Ukrainian SMEs can gain access to critical capital, global expertise, and expansive networks, enabling them to scale their operations and meet EU standards. These partnerships not only empower SMEs to grow but also deepen Ukraine’s economic connections with Western markets, fostering mutual benefits and laying the groundwork for sustainable, long-term economic recovery.
Stay updated
As the world watches the Russian invasion of Ukraine unfold, UkraineAlert delivers the best Atlantic Council expert insight and analysis on Ukraine twice a week directly to your inbox.
Ukraine’s SMEs are now well positioned to act as engines for growth in several priority sectors of the economy that are essential for Ukraine’s recovery and successful EU integration. In the digital infrastructure domain, high-tech SMEs will play a critical role in building data centers, telecommunications networks, and energy-efficient systems.
Logistics and warehousing are key areas where expanding temperature-controlled facilities will enable Ukraine to meet EU trade standards. The construction materials and industrial production sectors hold immense potential, with SMEs poised to supply concrete, steel, glass, and eco-friendly materials necessary for rebuilding infrastructure. Given the scale of anticipated reconstruction work in Ukraine, the scope for growth and partnerships with experienced EU contractors in this segment of the SME sector is huge.
In the HR and education sectors of the Ukrainian economy, SMEs can help address the significant skills gap by training and recruiting over a million specialists needed across various industries. Similarly, healthcare modernization including clinics, hospices, and long-term care homes presents significant opportunities for Ukrainian entrepreneurs specializing in medical equipment, facility upgrades, and auxiliary services, ensuring the sector meets EU standards and serves the nation for decades to come.
Eurasia Center events
Even amid the trauma and destruction of Russia’s ongoing invasion, it is evident that the Ukrainian SME sector offers a remarkably wide range of opportunities. Looking ahead, it is possible to envision a time when Ukrainian SMEs are listed on global capital markets, providing new liquidity for business owners, creating pathways for Ukrainian citizens and state pension funds to invest in the country’s growth, and attracting the attention of emerging market investors.
Platforms such as the Warsaw Stock Exchange have already expressed interest in facilitating IPOs for Ukrainian SMEs. This development could potentially unlock billions of dollars in capital and help further integrate Ukrainian enterprises into the global economy.
The Ukrainian SME sector is poised to be at the forefront of efforts to create a modern, innovative, postwar economy. By continuing to adopt Western management practices, leveraging financial mechanisms such as private equity capital and public-private partnerships, and embracing international collaboration, SMEs can rebuild Ukraine’s economy and drive its transformation into a hub of technological advancement.
The importance of Ukraine’s entrepreneurs goes far beyond the valuable contributions they are already making to wartime economic resilience. With sufficient support from the Ukrainian authorities and the country’s partners, the SME sector can serve as the cornerstone of Ukraine’s integration into the European Union and its emergence as a competitive force on the global stage.
Anton Waschuk is Director of Innovation, Education, and Entrepreneurship at the Ukraine-Moldova American Enterprise Fund.
Further reading
The views expressed in UkraineAlert are solely those of the authors and do not necessarily reflect the views of the Atlantic Council, its staff, or its supporters.
The Eurasia Center’s mission is to enhance transatlantic cooperation in promoting stability, democratic values and prosperity in Eurasia, from Eastern Europe and Turkey in the West to the Caucasus, Russia and Central Asia in the East.
Follow us on social media
and support our work
Image: Sergei Chuzavkov / SOPA Images via Reuters Connect