12 June 2020

Micro- and small enterprises in government-controlled areas of Donetsk and Luhansk regions had to dismiss one in three employees due to the COVID-19 pandemic and quarantine, revealed a survey*, conducted by the International Organization for Migration (IOM).

“The role of micro- and small businesses in eastern Ukraine, heavily affected by over six years of ongoing hostilities, is hard to overestimate, as they provide much-needed services and create jobs in their communities,” said Anh Nguyen, Chief of Mission at IOM Ukraine. “Because of their pre-existing vulnerabilities, IDPs appear more at risk of being unable to recover from the economic shock of COVID-19 control measures. Female-owned businesses are under greater strain as well,” he added.

Forty-nine per cent (49%) of the firms owned by internally displaced persons (IDPs) had to stop running, IOM survey revealed. Among the companies owned by members of Donetsk and Luhansk regions host communities, this share was lower at 36 per cent.

The average drop in sales during the quarantine was estimated at 25 per cent for the companies with monthly sales ranging from UAH 5,000 to UAH 50,000, and at 44 per cent for the enterprises with monthly sales from UAH 51,000 to UAH 250,000.

Almost one third (29%) of all businesses which had to shut down their operations said they would not be able to reopen without external support after the quarantine restrictions are lifted. Female respondents were less confident in the ability to restart a business without external support compared to the males: 34 per cent of women and 23 per cent of men said they are unable to restart a business without external support.

Over a half of the businesses surveyed by IOM (55%) indicated the need for financial assistance to cover their fixed operation costs, including staff wages; 41 per cent needed equipment to help run businesses online; 37 per cent said they wanted additional tax holidays or tax reduction; 15 per cent stated they required training on online business management.

“IOM calls on international, government and private stakeholders to jointly support the micro- and small businesses in eastern Ukraine,” said Anh Nguyen.

Background:

The International Organization for Migration has been one of the key providers of livelihood support to vulnerable populations in Ukraine. Since 2014, it has provided grants for vocational training, self-employment or micro-business to over 11,000 of conflict-affected people, 61 per cent of them are IDPs and 53 per cent women.

*Four hundred and ninety-one (491) respondents from Donetsk and Luhansk regions, government-controlled area, were interviewed from 11 to 12 May 2020 via phone. One fifth (121) of the respondents were IOM beneficiaries who received in-kind livelihood assistance through IOM projects from 2016 to 2019, and others were entrepreneurs who previously applied for livelihood programmes. Women represented 53 per cent of the surveyed entrepreneurs.