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 NEWS


Local currency SME lending model introduced within EU4Business Initiative demonstrates high efficiency

October 28, 2019.

    On October 23, 2019, within the European SME Week, the German-Ukrainian Fund together with the Delegation of the European Union to Ukraine, the German Development Bank KfW and the partner banks of the GUF - Kredobank, Ukrgasbank and Bank Lviv - presented the results of the second project year of the local currency SME lending model.
    Two years ago, the German-Ukrainian Fund launched the local currency SME lending model on the basis of the SME Investment Support Program, consisting of:
    a loan from the German Government through KfW amounted to EUR 10 million and
    a financial contribution for compensation of currency risk losses from the European Union under the EU4Business Initiative through KfW in the amount of EUR 5 million.
    Thanks to the EU currency risk compensation, the German Government's loan funds were converted into hryvnia and provided to the partner banks to support SME financing under the Program in the amount of UAH 300 million.
    During the first two years of implementation following results were achieved: 217 SME loans were financed in the amount of UAH 709 million, 59% of which were directed to investment purposes; under the financed SME projects 6 217 jobs were secured and 587 jobs were created.
    Local currency SME lending model helped to increase the Program volume as of 01.10.2019 by 47% from the initial EUR 10 million to EUR 14.7 million due to interest income and foreign exchange gains as a result of strengthening of national currency. The generated revenue will be re-extended to SME and increase the buffer for foreign exchange risk compensation.
    «We are thankful to the German Government made funds available for Ukrainian SME and to the EU provided grant funds to cover FX risks. Such a synergy helped to set up an appropriate SME loan product for local SMEs and enable them to make needed investments», – said Kurt Strasser, Director of KfW Office in Ukraine.
    «In view of the results of the Local currency SME lending model and the SME Investment Support Program, the Delegation of the European Union to Ukraine is considering ways of replicating and expanding such risk compensation model, which has given excellent results for Ukrainian SMEs», – informed Simone Raudino, Sector Manager Economic, Trade and International Financial Cooperation, Delegation of the European Union to Ukraine.
    «The GUF is currently working to attract new funding from international financial institutions to use them effectively within the framework of the Local currency SME lending model», – believes Oleg Strynzha, Executive Director of the GUF.
    «Due to the sharing of currency risks with the EU under the model, the GUF was able to start actively financing SME investment projects despite the negative currency expectations at the beginning of the Program implementation», – noted Valeriy Mayboroda, Acting Head of the GUF.
    


Supported by Eurasia Foundation Supported by Eurasia Foundation

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