Impact of War on Entrepreneurship in Southern Ukraine: Trends and Challenges

The war in Mykolaiv region and in the South of Ukraine in general has had a significant impact on business: hundreds of thousands of new sole proprietorships were opened in three years, but at the end of 2024 a wave of mass closures began due to tax pressure. At the same time, the share of women among new entrepreneurs increased to 61%, and the most popular industries were trade, IT, and services.

This is evidenced by data from the monitoring service Opendatabot.

Since the beginning of the full-scale invasion, more than 763 thousand new individual entrepreneurs have been opened in Ukraine, while 685 thousand entrepreneurs have ceased operations. Most new businesses were registered in Kyiv, Dnipro and Lviv regions. At the same time, the number of new businesses in the frontline regions has significantly decreased.

Entrepreneurs who started a business after the start of the full-scale invasion most often chose retail as their main field of activity - 28.1% or 214.2 thousand entrepreneurs. The IT sector (9.1% or 69.5 thousand) and wholesale trade (7.2% or 54.6 thousand) were in second place. It is noteworthy that before the full-scale invasion, the number of new IT fops was registered almost twice as much every month.

Screenshot: Opendatabot

Compared to the period before the war, 3 times as many new businesses appeared in the postal and courier services sector. The number of new sole proprietorships in education increased by 2.6 times, and in finance by 2.5 times.

At the same time, businesses in the IT sector and in the motorcycle and car trade have become less frequent.

The full-scale war and mobilization significantly affected the gender distribution among entrepreneurs. Before the war, men dominated business, but now 61% of new sole proprietorships are started by women.

Most women entrepreneurs are registered in Khmelnytskyi, Kirovohrad, and Poltava regions. Women mostly develop services, education, and manufacturing, while men choose construction and transportation.

Screenshot: Opendatabot

The largest number of new sole proprietorships during the great war was registered in Kyiv - 108,536, in Dnipropetrovska oblast - 68,377, and in Lvivska oblast - 60,009.

The war has also shifted business to regions where working conditions are more comfortable. Thus, in the regions close to the combat line, the number of new businesses has significantly decreased compared to January 2022: Luhansk (-85%), Kherson (-67%), and Donetsk (-60%). Odesa region was also among the regions with fewer businesses (-7.1%).

At the same time, there has been an increase in the number of new entrepreneurs in Rivne (+25%), Ivano-Frankivsk (+10%), and Chernihiv (+10%) regions. In Mykolaiv region, business increased by 5.3%.

Screenshot: Opendatabot

During the three years of full-scale war, individual entrepreneurs paid UAH 126 billion in taxes to the budget. Despite the challenges of the war, business activity in the South remained stable, but at the end of 2024, the number of closed businesses increased, likely due to tax pressure. January 2025 was an anti-record month: over 61,000 sole proprietorships were closed in a few weeks, while only 21,000 new ones were registered.

In Ukraine, the number of raider cases decreased by 11% over the year, but the number of complaints from businesses increased. Only 28% of registered criminal proceedings went to court. The Office for Combating Raiding also notes an increase in appeals from entrepreneurs - their share has risen to 42%. However, the total number of complaints has decreased compared to previous years: in 2024, 1,722 complaints were registered, which is half as many as in 2021.

The White Business Club established by the tax service includes 468 companies from the South of Ukraine. Most of these companies are concentrated in Odesa region - 312 companies. Mykolaiv region has 143 companies registered, and Kherson region rounded out the top three with only eight companies.

More than 180,000 companies are registered in the frontline regions of Ukraine, of which more than 43,000 are located in Mykolaiv and Kherson regions. Mykolaiv region ranks third in terms of the number of businesses - 27,346, which is 15.2% of the total. Kherson region has 16,108 registered companies.

Анна Бальчінос