40% of Ukrainian entrepreneurs plan to expand into foreign markets, and one in five uses AI – Mastercard research
Kyiv, 24 October 2024 — Ukrainian entrepreneurs are resiliently overcoming the challenges of the third year of the full-scale war, continuing to grow their businesses and launch new ones. One in six surveyed entrepreneurs started their current business after the outbreak of the full-scale war, with 66% of them having no prior business experience. Today, 75% of entrepreneurs are leveraging digital channels for sales and customer communication, and 56% are either already exporting their products or planning to enter new markets. These are the findings of the Mastercard SME Index 2024 study, which examined the state, key needs and growth prospects of micro, small, and medium-sized businesses in Ukraine.
Trend towards cashless payments continues to grow
Today, 9 out of 10 Ukrainian SMEs accept card payments for goods and services, with 17% of them having started offering this payment method in the last two years. Notably, for 80% of entrepreneurs, cashless payments account for more than half of their income, marking an 8-percentage-point increase from the previous year.
Cashless payments methods that have seen growth include bank transfers, offered by 58% of surveyed entrepreneurs, POS terminal (35%), and online payments via websites or payment services (34%). Meanwhile, card transfers (40%) as a payment method have decreased by 6 percentage points compared to last year.
Digitalisation and AI adoption
Currently, 3 out of 4 entrepreneurs actively use digital channels to promote their brand's products and services. Specifically, 37% of businesses have their own website, a quarter of respondents (24%) are represented on marketplaces, and every sixth entrepreneur (16%) has developed a mobile application for their business.
Additionally, Ukrainian entrepreneurs are actively adopting innovative tools and services, particularly those involving artificial intelligence. One in five entrepreneurs (21%) uses AI functionality in their business operations: 16% among microbusinesses, 30% among small businesses, and 47% among medium-sized businesses. Another 34% of respondents have expressed interest in exploring the potential of these technologies.
The most common uses of AI-based tools and services among entrepreneurs include developing marketing, social media, and communication strategies; translating content into other languages; communicating with customers through digital channels; generating images; and writing texts.
“Ukrainian businesses have always been known for their flexibility and high level of customer service. Today, digital channels are increasingly becoming a key tool for entrepreneurs, helping both with business resilience and scaling. Notably, each year the number of entrepreneurs whose sales are mostly generated by cashless payments increases by 7-10%, and today, almost one in five entrepreneurs is fully cashless, receiving all their profit exclusively in cashless form,” said Anzhela Kashperuk, Vice President of Business Development at Mastercard Ukraine and Moldova.
Key needs and focus on export
Among the key challenges identified by Ukrainian entrepreneurs are the need for financing for business development and a lack of orders and markets. Moreover, one in five respondents highlighted a shortage of staff as an important issue.
Despite the current challenges, Ukrainian SMEs are demonstrating flexibility and looking for ways to support and grow their businesses. Thus, 27% of entrepreneurs have taken part in grant program offered by the government or other organisations.
One of the main strategies for Ukrainian entrepreneurs to scale up is expanding into export markets. Every sixth respondent (16%) already sells their goods or services abroad, while another 40% plan to enter foreign markets. The most popular export destinations are Poland (32%), Germany (22%), the USA (16%), Lithuania and Italy (13% each).
Notably, 88% of entrepreneurs operating in both domestic and international markets have observed an increase in demand for products from local manufacturers among Ukrainians over the past year.
Mastercard has been actively supporting Ukrainian small and medium-sized businesses for many years. The company works closely with the Ministry of Digital Transformation of Ukraine, contributing to the development of the online portal Diia.Business, offline consulting centres in Ukraine and abroad, and launch of digital services, including the financial functionality of the e-Entrepreneur integrated service, that allows entrepreneurs to access a package of financial services online simultaneously with business registration. The company also collaborates with the Ministry of Economy of Ukraine and serves as a technology partner in implementing the ‘National Cashback’ program to support local producers within ‘Made in Ukraine’ policy. Recently, the company has also opened access for Ukrainian entrepreneurs to Mastercard Easy Savings, a free discount and special offers program for Mastercard business cardholders.
XXX
About Mastercard SME Index
Mastercard SME Index is a study of the state of Ukrainian micro, small and medium-sized businesses conducted by Gradus Research on behalf of Mastercard in June-July 2024. The online survey involved 445 respondents – men and women who own or manage micro, small and medium-sized businesses – in 20 regions of Ukraine.
