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KfW in Ukraine

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  • 1. KfW in Ukraine Strengthening Ukraine’s SME-Sector Dr. Kirk Mildner, Co-ordination Unit Kiev Tel.: ++ 380 44 246-99-93 kost@kost.kiev.ua
  • 2. Ukraine: SME-Development Key problems during transition: • Unfavourable regulatory and legal environment • Underdeveloped financial institutions and financial services • Small enterprises sector without access to the banking sector • Lack of adequate human resources • Lack of technical knowledge
  • 3. Response of KfW • Policy and legal advice to the Ukrainian Government by the German Advisory Group and the Institute for Economic Research and Policy Advice • German-Ukrainian Fund • Micro Finance Bank • Branch Centres (Bakery, Meat & Milk Processing) • Technical Advice to Ukrainian SME • Training (Internships, Management Initiative)
  • 4. German-Ukrainian Fund: First Micro-Lending Programme in Ukraine Founders: KfW, NBU. MinFin with a financing contribution of DM 10 Mio. each • Non-banking financial institution under Ukrainian law with an exemption from profit taxis • Technical assistance to train partner- banks • Partner-Banks: Privat Bank, Aval Bank, Kiev Privat, Forum, Micro Finance Bank • GUF among the founders of Micro Finance Bank Ukraine
  • 5. German-Ukrainian Fund Objectives: strengthening of the Ukrainian SME-sector development of the Ukrainian banking sector contributing the improvement of the Ukrainian employment situation fostering societal change by developing self-initiative and responsibility
  • 6. German-Ukrainian Fund Main Results I: from 1997 until now almost 3500 loans totalling more than e 32 Mio. disbursed (2001 –1755 loans for almost e 9 Mio.) visible contribution to the development of the Ukrainian SME-sector more than 25.000 new jobs created or secured creation of sustainable micro and small lending facilities in Ukrainian banks
  • 7. German-Ukrainian Fund Main Results II: Impact on the Banking Sector Increasing capacities of the Partner Banks demonstrated by - selection of promising enterprises with strong growth potential - financing a multitude of sectors to spread risks evenly - intensive training of personnel Contribution to strengthen the Banking sector - improved loan analysis - high portfolio quality - professional loan administration and management - expansion of the range of services and broadening of the customer base
  • 8. German-Ukrainian Fund Future: Evolving into an European-Ukrainian Fund Inviting new Donors to join the Fund Development of new programme loans, such as: Øagriculture, including refinancing of credit unions Øhousing loans Øenergy saving loans Øenvironmental programmes Øtechnology and innovation
  • 9. Micro Finance Bank Ukraine • Founders: German-Ukrainian Fund (KfW), EBRD, IFC, Western Enterprise Fund, DOEN, IMI • Headquarters in Kiev, branch offices in Charkiv, Lviv, Doneck, Slavutich, Odessa, Bila Tserkva (5 more to be opened this year) • Technical assistance be German Government, TACIS, USAID, CIDA
  • 10. Micro Finance Bank Ukraine In the first year of operation 2000 loans totalling more than e 18 Mio. disbursed Initial capital of e 10 Mio. Sources of refinancing: Ø German-Ukrainian Fund Ø EBRD credit line Ø IFC credit line Ø Western NIS Enterprise credit line
  • 11. German-Ukrainian Branch Centres Bakery, Milk&Meat-Processing Training in co-operation with local vocational training institutions, universities and employment offices Advice for start-ups Restructuring and refurbishing advice for SME in the respective sectors Close co-operation with European training institutions, equipment manufacturers and investors Set-up of investment fund “Interchlib” as a PPP-venture
  • 12. European Fund for BiH: A Model for Ukraine Bilateral EU Donors Cooperation with : Refinancing Fund (EFBH) - other donors - implementing HCLP SME agencies European Union Germany, Austria Capital Market EURO 25 m Switzerland, EU - local authorities EURO 18,6 m KfW acting agent KfW acting agent Credit lines PB 1 PB 2 PB 3 PB 4 PB 5 Consultant (LFS) B1 B2 B3
  • 13. Benefits for the EC 1. Quick and effective implementation of a successful programme with EC-funds 2. Clear visibility of EC-funding 3. Relief of the EC´s strained capacities from administrative tasks 4. Mobilisation of additional funds from bilateral donors 5. Use of KfW banking capacities to tap the capital market 6. Effective donor co-ordination loading to an increased credibility of the Commission´s external aid 7. Preparation, administration and supervision of the programme by the KfW in line with the EU- guidelines
  • 14. Benefits for the EC II 8. Establishment of a continuously growing Fund, reducing the pressure providing new funds 9. Emergence of the EC as major actor in the banking sector of Ukraine enabling it to implement easily EC´s development objectives in the financing sector 10. Synergy-effects: experience gained from the credit programmes can be used in other FSU countries