Blackouts hit Ukrainian small businesses and wider economy hard

Blackouts hit Ukrainian small businesses and wider economy hard
Blackouts hit Ukrainian small businesses and wider economy hard

By Dan Peleschuk

Kyiv – Oleksii Revutskyi rolls his eyes when he talks about the challenges Ukrainian businesses have been facing lately.

“Two years of quarantine, one year of war – bring in the aliens already,” said Revutskyi, head of technology at a sleek coworking space in Kyiv that could soon find itself dependent on generators if Russian airstrikes continue.

After enduring a pandemic and then the economic crisis that followed Russia’s Feb. 24 invasion, Ukrainian businesses are struggling to adapt to the widespread outages that have become a feature of everyday life.

Russian forces have increasingly fired missiles at critical infrastructure such as power plants and substations as their battlefield casualties mount, forcing suppliers into power cuts to preserve grid stability and complete the repairs.

Officials said Tuesday’s wave of attacks was the largest in nine months of war. Russia said the strikes against Ukraine targeted military and energy infrastructure.

For businesses, especially small and medium-sized enterprises (SMEs) which accounted for around 60% of Ukraine’s economy and accounted for around 40% of tax revenue before the invasion, regular blackouts mean loss of revenue and the inability to plan ahead.

Kateryna Markevych, senior expert on economic and social programs at the Razumkov Center think tank in Kyiv, said SME activity had “deteriorated significantly” since the Russian strikes began in mid-October.

She added that many are forced to splurge on accessories like generators or make expensive concessions to retain customers.

Those who lack financial “safety cushions”, or who are unable to secure favorable lines of credit in Ukraine’s war-ravaged economy, could suspend operations or shut down altogether, she said.

Last week, Ukraine’s Economy Minister Yulia Svyrydenko told reporters that Russian strikes on critical infrastructure could lead to a bigger economic contraction this year than the 35% originally predicted.

‘THIS ISN No.‘T COMPANY

Revutskyi said his coworking space, Kooperativ, has been attracting new visitors since he announced it was serviced by two different power lines and internet providers, allowing him to avoid most outages.

But ultimately, he said, that influx wouldn’t offset the cost of running one of their two generators for an extended period if they needed it.

Organizing events – another key source of income – had also become more difficult amid frequent air raid warnings.

Last month, the chairman of Ukraine’s parliament’s finance, taxation and customs policy committee said the economy lost more than $200 million every time national alerts lasted the entire working day.

“Yes, we survive,” Revutskyi said inside the loft space. “But that’s not business.”

Some large companies seem better equipped to deal with uncertainties.

But smaller businesses, especially those in the service sector, are under more pressure, often dependent on factors such as customer loyalty and a rift with the owner.

OBTAIN BY

Sashko Borovsky, who co-owns two trendy cafes in Kyiv and runs another, said his businesses have benefited from both. The agility offered by his small team also helped him.

During sudden or planned outages, employees switch roles: cashiers become hosts who politely refuse customers, and cooks work on “cold procedures” like making sandwiches.

“Hate, fury – these emotions last for a few minutes,” Borovsky said, describing the first moments after a Russian airstrike knocked out the power. “Then you erase them and start thinking constructively.”

But his projects generate much less revenue during outages, and although he holds weekly tactical meetings, he is unable to plan his finances more than six weeks in advance.

Some experts warn that stabilizing Ukraine’s energy grid will be a long-term effort.

Oleksandr Kharchenko, director of the Energy Industry Research Center in Kyiv, estimated this week that it would take up to six weeks before it was repaired enough for most customers to experience minimal outages. or zero.

“But that doesn’t assume there are no more attacks,” he said during a briefing on Wednesday, a day before more Russian strikes on energy facilities and a defense factory.

Businesses in towns closer to the fighting, meanwhile, are being hit harder by the flight of potential customers.

Oleksandr Chumak, chairman of the Kharkiv Association of Private Employers, estimates that the city’s population of over one million has dropped to around 600,000 today.

“It makes it impossible for some of them to survive,” he said.

Chumak added that 12% of businesses that left Kharkiv have already decided not to return, and another 21% would only return if it was safe and they could get sufficient funding.

‘I HAVE MADEPEACEWITHTHIS

Still, Borovsky and Revutskyi said many Ukrainians are now conditioned to a series of hardships, so neither they nor their colleagues panicked yet. Kyiv’s military successes had also helped maintain a sense of purpose among the population.

A survey by Ukrainian market research firm Gradus found that 65% of companies believe active battles will be over by the end of 2023 at the latest. The survey was conducted in early November and included 203 respondents representing small, medium and large Ukrainian businesses.

For now, Borovsky said he is more concerned about his mental health and that of others than the potential economic losses he may suffer.

“It’s what I can control at this exact moment – not the future of my business,” he said. “I made peace with it, and it got easier for me.”

. blackouts power hit hard small ukrainian business economy sense large

. Blackouts hit Ukrainian small businesses wider economy hard

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