On October 8, Viktoria Maslova, the first day of Russia’s invasion of the country, left her herbal cosmetics factory in Bucha, Ukraine, fled to Poland with her mother and three younger brothers when rockets started hitting a nearby airport.
A month later, they returned to Ukraine, where they decided to continue production of Maslova’s plant-based cosmetics brand, Vesna.
“We love Ukraine, we want to come back to our country and work here,” said 24-year-old Maslova, who founded the business seven years ago.
To reverse the economic shock of the biggest war in Europe since World War II, Ukraine’s government is pinning its hopes on the entrepreneurial resolve of people like Maslova, the return of millions of refugees and massive international financial aid.
In a town near Kiev now infamous for human raids, where corpses of civilians are left to be destroyed in the streets, waiting for Russia to emerge from Bucha in April after its chaos, Maslova’s mother returned to the factory. The shop floor was looted and in disarray, but she saved some tools and loaded them on a truck. They established a new operation in the relative stability of Lviv, 450 km (280 mi) west, near the Polish border.
Five months later, Vesna products are sold in many countries, including Poland and Lithuania, and Maslova recently won a deal to produce private label goods in the United States. All the while, the company has been donating “Our Hero” skin care and hair care products to the men and women serving on the front lines.
The war, which Moscow calls a “special military operation”, is now approaching its eighth month. Despite the recent victory for Ukraine on the battlefield, experts believe that it can last for a long time, millions of Ukrainians have been displaced in the country and about 8 million outside the borders.
So as Ukrainian forces fight to recapture territory seized by Russia since the February 24 invasion, the Kiev government is scrambling to keep the economy afloat and find employment opportunities for people displaced from homes, jobs and businesses. East and South.
The economy is expected to shrink by more than a third this year, but as businesses reopen, Economy Minister Yulia Sviridenko sees output stabilizing and growing by 15 percent in 2023, albeit from a lower level. And within a decade, she helped it to more than double its pre-war level to $500 billion, through foreign investments and EU membership.
“We always say that we have two fronts, one is military, and the other is the economic front,” Sviridenko told Reuters in an interview in a building beneath a building with corridors and windows of Ukraine’s Soviet-era cabinet of ministers packed with sandbags. “The economy is no less important than the military.”
Small and medium-sized businesses like Maslova are at the heart of the government’s efforts.
Economic activity has slowed across the country since the start of the war, but restaurants, retail shops and even nightclubs are now openly open again in Kiev, Lviv and other unoccupied cities, Zaporizhzhia, near a besieged nuclear power plant.
The Ministry of Economy has helped 700 companies relocate from the frontline areas, of which 480 have already resumed operations, Svyrydenko said. Those companies will benefit from the return of an estimated 3 million refugees, helping demand, and the money will flow back into the economy from renewed exports, including from three Black Sea ports.
To help displaced companies get a fresh start, the Ukrainian Investment and Trade Facilitation Center in Lviv is offering companies rent-free office and manufacturing space, a vital lifeline.
The task ahead for the country and entrepreneurs like Maslova is daunting, given recent estimates by the World Bank and the European Union that total nearly $100 billion in war and Russia’s damage to civilian infrastructure.
Ukraine faces a budget crisis despite a debt-payment deal agreed to by Western government creditors this month and in August. It is seeking foreign aid, but it also needs private capital to rebuild.
Germany’s Marshall Fund called Ukraine’s “corruption history” a report last month, requiring security clearances and strong accountability for any investments.
Top economists from Ukraine, the World Bank, the International Monetary Fund and other donors will address some of these questions at a recovery conference in Berlin, Germany, on October 25.
‘Smart Businesses, Brave People’
Irina Tytarchuk, who runs the Investment Center in Lviv, helps connect displaced business owners with resources, including government microcredits and loans of up to $68,000 and a U.S. Agency for International Development designation for women-owned enterprises that helped Maslova get back to work. Her legs.
“These are brave businesses and heroes who didn’t leave everything and go abroad, but decided to start over and over again,” she said. In the year Tytarchuk noted that many companies saw an increase in revenue after the annexation of Crimea in 2014, when many companies withdrew from Russian markets.
“Now more markets are opening up for them,” she said, noting that many businesses in Britain have reached out to her specifically looking for “Made in Ukraine” products.
Mykolaiv, 800 kilometers (500 mi) southeast of Lviv, comes under regular artillery fire near the front line. Here, Julia Konovalova is biding her time as she looks forward to restarting FreshU and Detox when the fight stops.
As more than half of Mykolayiv’s population fled, Konovalova remained. When the war started, she donated her supplies to the army and in recent months has been coordinating food aid for the World Central Kitchen aid group.
“I still have all my equipment. Now I’m waiting for the war to end, then I’ll start again,” said the former hotel manager. “We just need salvation.”
Heavy fighting near the Russian border has drained Ukraine’s second-largest city, Kharkiv, of three-quarters of its 2 million residents, although recent Ukrainian advances have taken nearby territory.
Rockets damaged Evgeny Safonov’s wine bar in Kharkiv, but he is exploring new locations in safer cities and wants to eventually return to Kharkiv.
“Our investors are still interested,” he says. “Call me brave or stupid, I know. But the horizon of our plans is a matter of days. You never know what tomorrow will bring.”
Looking for investment
Svyrydenko admits Ukraine faces big challenges, but she and other officials are hunting for investments wherever they can, citing estimates that every $10 billion invested will create a 5-percentage-point jump nationally.
The ministry is studying 50 requests from the United States, Germany, Britain and Poland after a new “Advantage Ukraine” investment portal featuring $500 billion in investment opportunities opened on the New York Stock Market last month, but it is too soon to give details.
The private financing wing of the World Bank, the International Finance Corporation and the European Bank for Reconstruction and Development said last month they would inject $70 million in private equity funds into technology and export-focused businesses in Ukraine and neighboring Moldova. It plans 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 is showing “more remarkable strength” in wartime Internet and banking services in Kiev than in some parts of Europe at peace.
The group’s latest survey, released this week, found that 77 percent of its 600 member companies believe the war will end by 2023, and all but 2 percent plan to continue doing business here.
Yulia Zavalniuk, whose small Villa Verde flower farm 40 kilometers west of Kiev was heavily damaged by Russian forces during the four-day war, initially considered moving to Slovakia, but decided to move temporarily to Lviv, selling plants and paying wages and cover. Basic business expenses.
“Now is the time for us – the small entrepreneurs,” she told Reuters. “We have to be very creative, service-oriented and quality-oriented to produce, sell and pay taxes,” she said.
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Report by Andrea Shallal; Editing by Frank Jack Daniels
Our Standards: The Thomson Reuters Trust Principles.
