At least 109 large and medium-sized businesses were damaged or destroyed

According to the results of 2022, at least 109 large and medium-sized enterprises suffered damages as a result of the full-scale invasion launched by Russia on February 24, 2022. This is an estimate by experts from the “Russia Will Pay” project at the KSE Institute (Analytical Center at the Kyiv School of Economics).

The total amount of damages to businesses, including state-owned and private individuals, is estimated at $13 billion, with $9 billion attributed to the damages of large and medium-sized enterprises. The overall losses amount to $33.1 billion, and the required amount for the recovery of businesses is $24.9 billion.

“The majority of destroyed and damaged enterprises are concentrated in six regions: Kyiv (17% of the total), Donetsk (17%), Zaporizhzhia (14%), Kharkiv (13%), Luhansk (10%), and Mykolaiv (8%). Usually, the region of company registration coincides with the region where the company suffered damages, but there are exceptions,” said Dmytro Goryunov, the head of the Economic Losses Division of the “Russia Will Pay” project and senior economist at the Center for Economic Strategy.

Among the largest enterprises in terms of asset size that suffered damages from Russia’s armed aggression in 2022 were the Ilyich Iron and Steel Works of Mariupol, Azovstal Iron and Steel Works, Nibulon Ltd, and JSC Motor Sich. According to the project experts’ estimation, 19 private and state-owned enterprises (17%) among the large and medium-sized ones were completely destroyed, while 90 (83%) were partially damaged.

Among the recently documented damaged large enterprises, JSC Motor Sich was destroyed by a missile strike in October 2022, as well as Ukrainian State Enterprise Ukrkhimtransamiak, PJSC Hlyny Donbasu, Company KONTI, and Nibulon Ltd.

“With the stabilization of the front line, the number of newly damaged enterprises is decreasing. Additionally, the number of new cases of looting or theft of remaining goods is also decreasing. It should be noted that information regarding damaged objects is received with some delay,” explains Dmytro Goryunov.

These estimates are primarily based on open data and utilize analytical methods for assessment, and they may differ from individual independent damage assessments. The presented data is used for an overall evaluation of the damages inflicted on Ukraine, its infrastructure as a whole, and its economy, rather than for the individual assessment of specific companies or objects. Due to the ongoing nature of the conflict and the lack of access to temporarily non-government-controlled territories, data collection regarding the nature of damages is primarily conducted remotely but verified using available information.

Methodology for the damage assessment to Ukrainian enterprises: 

1. The source of information for the analysis of data on damaged and destroyed large and medium-sized enterprises was 1) information on damaged facilities from local administrations, and 2) monitoring of Internet resources on large enterprises in regions where the presence of Russian occupying forces was recorded.

2. To avoid duplication of direct damage, enterprises in other sectors were excluded from the list. For example, the damage to energy-producing enterprises is included in the “Energy” section.

3. The classification of enterprises as medium or large was based on their volume of realized production according to YouControl data (medium-sized enterprises were those with a volume of ≥ €10 million per year).

4. For assessing the damages of micro and small enterprises, an assumption was made that the proportion of damaged assets is equal to the proportion of damaged residential property in the respective region. Data on the value of assets for such enterprises were disclosed by regional statistical offices. The same approach was applied to determine the damages of private individuals who are entrepreneurs: it was assumed that the ratio of asset size to revenue (sales) is similar to that of micro-enterprises.

5. Precise data on the amount of damages suffered by enterprises are mostly not available. In this case, the amount of damage was defined as 40% of the value of the enterprise’s assets in the case of damage and 100% in the case of destruction.

6. Losses were estimated by taking into account the reduction in turnover of enterprises and individual sectors. To calculate the recovery needs, the amount of damage is increased by the “build back better” coefficient (implementation of higher quality standards: increased energy efficiency, inclusiveness, safety, etc.). Restoring business activity requires working capital. 

Detailed data on the destruction and damage caused to the Ukrainian economy has been collected by the Kyiv School of Economics (KSE Institute) as part of the project to develop independent methodologies for the analytical assessment of infrastructure damage and economic losses caused by the Russian aggression, implemented by the KSE Institute in cooperation with the USAID Economic Support for Ukraine Project. 

The KSE Institute team of experts and partners will regularly collect damage data from all available information sources, develop separate methodologies for independent analytical damage assessment, calculate damage and losses to the Ukrainian economy based on international experience in damage assessment and post-war reconstruction in Africa, the Middle East, Central Asia and the Western Balkans, including six sub-methodologies for the main sectors Social infrastructure; Transport infrastructure; Agrarian infrastructure; Housing and enterprises; Energy infrastructure; Environment). 

The methodology, data collection and assessment results will be presented on the KSE and damaged.in.ua websites and will be available for public and stakeholder discussion and improvement.

The USAID Economic Support for Ukraine project is a six-year initiative (2018-2024), implemented by DAI Global, aimed at improving Ukraine’s economy in response to Russian aggression. The USAID project was designed to strengthen the economy and increase the resilience of businesses and communities in eastern Ukraine following the annexation of Crimea and the seizure of certain areas of Donetsk and Luhansk regions by Russian-backed separatists in 2014. The USAID project is now shifting its focus from activities targeting businesses and communities in the eastern regions to supporting internally displaced persons (IDPs), micro, small and medium-sized enterprises (MSMEs), universities and other partners in these regions. The USAID project provides technical assistance and co-investment support to MSMEs, financial service providers, local NGOs, educational institutions, cities and municipalities.