The European Fund for Southeast Europe (EFSE) is expanding its partnership with ProCredit Bank Ukraine by providing a new local currency loan for the equivalent of US$10 million in Ukrainian hryvnia (UAH), with a focus on farmers and agricultural businesses.
The new facility will support ProCredit Bank Ukraine to increase its outreach and scale with small and medium enterprises (SMEs) in rural areas with a focus on farmers and agricultural businesses. This transaction continues the successful cooperation between EFSE and ProCredit Bank under the EU4Business initiative, which started in 2015 and has facilitated an investment of more than €50 million equivalent in over 700 local currency loans to SMEs in Ukraine to date.
EFSE Board Chairman Christoph Tiskens said: “Our cooperation with ProCredit Bank has proven to be an efficient joint effort in supporting small and medium Ukrainian businesses and their sustainable growth in a responsible way. With this innovative transaction, we are proud to reinforce EFSE’s commitment to foster local currency lending in Ukraine and specifically to agricultural businesses as part of the EFSE’s mission to support economic development and prosperity in the regions it serves.”
This is the first UAH-denominated facility in Ukraine, which was hedged with the Amsterdam-based Currency Exchange Fund (TCX), and thus a market-enabling transaction that opens the door for donors, investors and other external lenders to provide hedged funding in the much needed local currency in Ukraine.
“Committed to support the development of small and medium-sized enterprises across the country, in 2016 alone, ProCredit Bank invested approximately €100 million in loans to SMEs, increasing its loan portfolio by 50%,” said Viktor Ponomarenko, Chairman of the Executive Board of ProCredit Bank. “The bank will follow a similar dynamics in 2017, reflective of its high dedication to support SMEs as the most dynamic and mobile sector of the economy and help them increase competitiveness on both domestic and international markets.”
The European Fund for Southeast Europe (EFSE) was initiated by KfW Development Bank (KfW) with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission under the EU4Business initiative.
EFSE focuses on assisting local financial sectors in strengthening their ability to ensure adequate and sustainable financing. The funding the EFSE provides as finance primarily for micro and small enterprises (MSEs) – but also for private households in the form of home improvement loans – is channelled to these loan customers through local partner lending institutions.
