As Ukraine endures the hardships of war, the country’s small and medium-sized businesses stand out as key to future economic recovery. Quietly but persistently, these enterprises have withstood enormous challenges, demonstrating resilience and ingenuity in the face of unprecedented upheaval. They are not just an important contributor to Ukraine’s war-torn economy today, but they can serve as the engine that will fuel its recovery and future growth.
The ingenuity of Ukraine’s SME sector since February 2022 has been astounding. By the end of 2023, more than three-quarters of SMEs that had suspended operations at the start of the war had at least partially resumed their activities, reflecting the sector’s remarkable ability to adapt in the face of crisis. This resilience is not only a testament to their resolve; it also highlights the potential of Ukraine’s entrepreneurial class to drive the country’s economic transformation.
The Ukrainian authorities are certainly aware of the crucial role that SMEs play. A national strategy for the sector’s development was approved in August 2024, and a number of individual programmes have been introduced to ensure access to grants, affordable loans and war risk insurance. Meanwhile, the SME Resilience Alliance was launched at the 2024 Ukraine Recovery Conference in Berlin, which will help further mobilise international support for Ukrainian entrepreneurs. Private sector investment and tailored international donor initiatives also play a key role.
To fully realize the potential of Ukraine’s SME sector, partnerships with international private equity firms will be critical. Such cooperation can help integrate Ukraine’s economy with Western markets, creating strong economic ties and accelerating post-war recovery. By partnering with international private equity, Ukrainian SMEs can gain access to critical capital, global experience, and extensive networks, allowing them to scale their operations and meet EU standards. These partnerships not only enable SMEs to grow, but also deepen Ukraine’s economic ties with Western markets, promoting mutual benefits and laying the foundation for a sustainable, long-term economic recovery.
Ukrainian SMEs are now well positioned to become growth engines in several priority economic sectors that are essential for Ukraine’s recovery and successful integration into the EU. In the area of digital infrastructure, 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 expansion of temperature-controlled facilities will enable Ukraine to meet EU trading standards. The construction materials and industrial manufacturing sectors have huge potential, with SMEs poised to supply the concrete, steel, glass and green materials needed to rebuild infrastructure. Given the scale of the expected rebuilding work in Ukraine, the opportunities for growth and partnerships with experienced EU contractors in this segment of the SME sector are enormous.
In the HR and education sectors of the Ukrainian economy, SMEs can help fill a significant skills gap by training and hiring over a million professionals needed in various industries. Similarly, the modernization of healthcare, including clinics, hospices and nursing homes, offers significant opportunities for Ukrainian entrepreneurs specializing in medical equipment, facility modernization and ancillary services, ensuring that the sector meets EU standards and serves the country for decades to come.
Even amid the trauma and destruction caused by Russia’s ongoing invasion, it is clear that Ukraine’s SME sector offers a surprisingly wide range of opportunities. Looking ahead, one can envision a time when Ukrainian SMEs will be listed on global capital markets, providing new liquidity for business owners, creating avenues for Ukrainian citizens and government 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 businesses into the global economy.
Ukraine’s SME sector is poised to be at the forefront of efforts to create a modern, innovative post-war economy. By continuing to adopt Western management practices, using financial mechanisms such as private equity and public-private partnerships, and embracing international cooperation, SMEs can rebuild Ukraine’s economy and turn it into a hub for technological advancement.
The importance of Ukraine’s entrepreneurs goes far beyond the valuable contribution they already make to wartime economic resilience. With sufficient support from the Ukrainian authorities and the country’s partners, the SME sector can become a cornerstone of Ukraine’s integration into the European Union and its emergence as a competitive force on the global stage.
Anton Vashchuk is the Director of Innovation, Education and Entrepreneurship at the Ukrainian-Moldovan American Entrepreneurship Foundation.
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