UNDP Launches MSMEs Access to Finance Assessment to Accelerate Recovery in Ukraine
March 23, 2023
The Assessment of Access to Financing by MSMEs in Ukraine has been launched on the margins of the 5th National SME Development Forum in Kyiv, Ukraine. The report was prepared through collaboration among the UNDP Ukraine Country Office, Lviv Invest Office, and UNDP Istanbul International Center for Private Sector in Development (IICPSD).
Keynote remarks were delivered by the Deputy Head of the Office of the President of Ukraine Mr. Ihor Zhovka, the Secretary General of the International Chamber of Commerce Mr. John Denton, and UNDP Resident Representative a.i. in Ukraine Mr. Jaco Ciliers. Mr. Taras Yeleyko, the CEO of Lviv Invest Office, presented the findings of the report.
Small businesses are among the main sources of economic activity and employment in Ukraine. Before the war, small and medium companies accounted for almost 99.98% of the total business population of Ukraine, constituting 82% of the total labour force (OECD, 2022). The war in Ukraine has severely impacted small businesses. The report presents the findings of the current situation, availability of funding, and financing needs of micro-, small, and medium-sized enterprises (MSMEs) in Ukraine.
As part of the assessment process, IICPSD, in partnership with Lviv Invest Office, surveyed 304 MSMEs in the Lviv district and interviewed five key stakeholders from the financing sector. This was done to identify the main financing needs, barriers and success factors in raising financing, as well as to map the existing financing instruments and draft recommendations for the way forward.
The results showed that 46% of companies have never used external financing. Businesses appeared uninformed about alternative financing support programs and almost 50% choose to rely on their own equity or long-term bank loans. Most MSMEs reported requiring less than USD 100 thousand of external support, focusing their efforts on cashflow management rather than new investments.
The report proposes potential action points for addressing the identified barriers, including ensuring effective coordination of the flow of international aid, enhancing the competencies of Ukrainian businesses, enabling partnerships with European businesses to integrate local MSMEs into the EU supply chain, and increasing MSMEs' awareness of innovative financing tools and mechanisms.
“We believe that only a strong business can ensure stable and sustainable development. In such difficult times, UNDP focuses on restoring and strengthening the resilience of the business community, which is important for Ukraine that is moving forward. Small and medium-sized businesses play a key role in the Ukrainian economy, providing more than 80% of jobs and 60% of added value in Ukraine”, said Jaco Ciliers, Resident Representative a.i. of the UNDP in Ukraine.
UNDP supports the Government of Ukraine in its work to revive business activity and build the resilience of micro, small, and medium enterprises, while also drafting prospects for green transitioning, and accession to the EU.
About UNDP IICPSD
UNDP’s Istanbul International Center for Private Sector in Development (IICPSD) supports the private sector and foundations to become transformative partners in development through research, advocacy for inclusive business, facilitation of public-private dialogue, and multi stakeholder-partnerships.
Gergana Georgieva, UNDP IICPSD Communication Consultant. Email: firstname.lastname@example.org