Supporting Internally Displaced Businesses – Karsten Weitzenegger Consulting

A methodology for stabilization and reconstruction, drawing on Ukraine’s experience, local economic development practice, and gender-responsive programming.

Framing the Challenge

When war displaces not only people but entire enterprises, the economic fabric of a country tears in ways that humanitarian aid alone cannot repair. Ukraine’s full-scale war since 2022 has produced one of the most instructive case studies in modern history for understanding what it means to support internally displaced businesses, or IDBs, as a distinct category of intervention. Alongside millions of individual IDPs, tens of thousands of Ukrainian enterprises were forced to relocate, suspend operations, or dramatically downsize. How reconstruction practitioners respond to this challenge will define the resilience of local economies for a generation.

This article proposes a structured methodology for IDB support that draws on Ukraine’s experience, integrates local economic development principles, and mainstreams gender throughout.

Why Businesses Displace Differently Than People

Internally displaced businesses carry assets, liabilities, workforce relationships, and market dependencies that individual IDPs do not. A relocated ceramics workshop from Kharkiv brings its equipment and craft tradition but loses its customer base, supply chain, and reputational geography. A women-led textile SME from Mariupol may arrive in Lviv with skilled workers but without the informal networks, municipal registrations, or access to credit that its original location provided.

Research confirms that IDP entrepreneurs face specific structural barriers beyond those of the general displaced population: loss of business premises, disrupted banking relationships, broken supplier contracts, and the psychological weight of having lost both home and livelihood simultaneously.¹ Crucially, Ukrainian government data shows that in 2023 alone, 10,000 businesses participated in state programs to hire IDPs, generating UAH 181 million in compensation, suggesting that IDB integration into host community economies is viable and scalable when the right instruments are in place.¹

The Methodology: Six Integrated Pillars

Pillar 1 Rapid business profiling and triage

Pillar 2 Legal and administrative fast-tracking

Pillar 3 Tiered financial instruments

Pillar 4 Market reconnection and LED integration

Pillar 5 Gender-responsive business support

Pillar 6 Monitoring, advocacy, and return planning

Pillar 1: Rapid Business Profiling and Triage

The first step is distinguishing between three categories of displaced enterprises:

Hibernating businesses: legally registered but inactive, awaiting return or a signal to restart
Relocating businesses: actively operating in a new location but under strain
Nascent entrepreneurs: IDPs with skills and intent to start businesses in displacement

Each category requires a different intervention logic. Profiling should be conducted at arrival registration points and linked to local employment center databases. Ukraine’s experience with the PLEDDG municipal development framework demonstrated that local self-government bodies are the most effective first-contact points for IDB identification and onboarding.²

Pillar 2: Legal and Administrative Fast-Tracking

Displaced businesses consistently rank legal and informational support among the highest-relevance interventions.³ A simplified re-registration process, portability of tax identification numbers, and digital business continuity certificates must be prioritized in any stabilization framework. Municipal governments should designate a single point of contact for IDB administrative issues, reducing the bureaucratic friction that drives businesses into informality.³

Pillar 3: Tiered Financial Instruments

No single grant size fits the diversity of displaced enterprises. A tiered structure works best, as evidenced by the EU-funded program in Sumy, Chernihiv, and Kyiv regions, which offered grants of up to EUR 7,000 for micro-businesses, EUR 20,000 for small businesses, and EUR 15,000 for start-ups.⁴

Financial instruments should include:

Emergency liquidity grants for immediate operational costs, up to three months
Restart grants tied to re-registration in the host municipality
Growth matching grants for businesses demonstrating recovery milestones
Revolving loan funds managed by local business support centers for medium-term needs

Critically, IDPs often do not understand grant mechanisms and fear repayment obligations. Financial literacy communication must accompany every instrument.⁵

Pillar 4: Market Reconnection and LED Integration

Relocated businesses do not automatically find new markets. Local economic development policy must actively create connective tissue between IDB suppliers and host-community buyers. This means:

Preferential access to local government procurement for IDB-certified suppliers
Business matchmaking events between IDBs and established local firms
Integration into existing LED cluster strategies, including agri-food, textile, IT, and construction
Support for digital market entry, e-commerce, and platform sales

UNDP’s economic recovery program in Ukraine explicitly targets at least 100,000 self-employed persons and entrepreneurs for capacity building, with at least 50 percent from relocated, re-established, or women-led businesses.⁶ This quota logic should be replicated in LED frameworks at the municipal level.⁶

Pillar 5: Gender-Responsive Business Support

Gender cannot be an afterthought in IDB programming. Women-led SMEs face compounded vulnerabilities in displacement: care burdens increase as male partners serve in the military, access to informal credit networks collapses, and gender stereotypes constrain entry into reconstruction-related contracting.⁷

Key gender-responsive elements include:

Childcare co-location at business support centers, reducing the barrier for women entrepreneurs to participate in training
Women-only peer learning circles to rebuild the informal networks that displacement destroys
Reserved procurement quotas in reconstruction tenders for women-led IDBs, with anti-capture safeguards⁷
Targeted mentoring by women entrepreneurs with post-displacement experience, building on UNDP’s global expertise in this model⁶
Trauma-informed business coaching that recognizes the psychological dimension of enterprise recovery

UN Women research confirms that the war has disrupted women’s employment and entrepreneurial activity simultaneously, creating new vulnerabilities while also transforming gender roles in ways that can open new economic opportunities if support is well-designed.⁸

Pillar 6: Monitoring, Advocacy, and Return Planning

IDB support cannot be a one-time intervention. Periodic monitoring of IDP needs, cross-referenced with business survival data, must inform funding allocation decisions. Practitioners should track:³

Business registration and survival rates by sector and gender
Employment generated in host communities by IDBs
Readiness indicators for eventual return or permanent relocation

Stabilization programming must also plan for the eventual reconstruction phase. Some IDBs will want to return to their areas of origin, while others will have established deep roots in host communities. Policy must accommodate both trajectories without penalizing either choice.

Displaced businesses are not failed businesses. They are enterprises under extraordinary stress, and they can recover if the right instruments reach them at the right moment.

Conflict-Sensitive Business Support

Any IDB methodology operating in or near active conflict zones must incorporate conflict sensitivity as a design principle, not an add-on. UNDP’s documentation of risks in Ukrainian business environments, including unfair dismissal, informal employment, and exploitative labor conditions especially affecting IDPs, points to the need for labor rights monitoring alongside business support.⁹ Business support programs that inadvertently concentrate resources among conflict-connected elites, or that create tensions between IDB newcomers and established local businesses, can undermine the very stabilization they aim to support.⁹

Conclusion: Toward a Stabilization Standard

Ukraine’s displacement crisis is unprecedented in scale but not without precedent in structure. The methodological lessons emerging from its business support programs, when systematically documented and applied, can form the basis of a globally applicable IDB support standard within stabilization and reconstruction frameworks. The core insight is deceptively simple: displaced businesses are not failed businesses. They are enterprises under extraordinary stress, often led by women, always embedded in community, and capable of recovery if the right instruments reach them at the right moment.

Key References

The following freely available sources provide essential grounding for practitioners designing IDB support methodologies:

UNDP Ukraine (2024): Support to the Economic Recovery of Ukraine (undp.org), comprehensive economic recovery framework with explicit IDB and gender targets.
UN Women / UCSR (2025): Challenges of Empowering Women in the Labour Market and Entrepreneurship in Conflict-Affected Ukraine (euneighbourseast.eu), gender-disaggregated analysis of displaced women entrepreneurs.
OECD (2024): Ukraine’s Strategic Response to the Displacement Crisis (oecd.org), policy assessment of displacement, return, and reintegration architecture.
People in Need (2026): Supporting Business in Times of War (peopleinneed.net), practitioner-level report on grant programs in Kharkiv Oblast.
Business Perspectives (2025): Financing Support Programs for IDPs in Ukraine: Effectiveness and Needs Alignment (businessperspectives.org), evidence-based analysis of IDP financing program effectiveness.
KSE / Ukraine (2024): Needs of and Challenges Faced by Ukrainian Female Entrepreneurs (kse.ua), quantitative study on women-led SME needs in wartime.
U-LEAD / Council of Europe (n.d.): Facilitating IDP Business Relocation: Economically Empowered Municipalities (u-lead.org.ua), municipal-level toolkit for IDB relocation facilitation.
USAID (2019): Economic Opportunities for People, Life of Project Results (usaid.gov), foundational methodology from post-2014 Donbas displacement, directly applicable to current context.

Footnotes

All URL were accessed on 1 April 2026. Text and image were supported by AI.