Supporting Ukraine's Growth in Key Areas

In the 15 years that IFC has been working in Ukraine, the country has experienced substantial changes and economic growth, averaging more than 7 percent annually from 2000 to 2007. This has made the country more attractive for foreign investors. Peoples' incomes have grown and domestic companies are more competitive.

IFC began operating in Ukraine in 1993 by pioneering advisory projects in privatization and land reform. This helped create a base for the private sector, with support from such governments as Canada, Japan, Norway, Sweden, the United Kingdom, and the United States. Our work in the mid- to late-1990s helped establish 60,000 small businesses and created 700,000 new jobs. We also helped the government draft and adopt the first land code, introducing private land ownership rights in the country.

Today, IFC's strategy in Ukraine focuses on: Helping maximize agribusiness potential Promoting energy efficiency and cleaner production Increasing access to finance

Maximizing Agribusiness Potential

With some of the world's best farmland, Ukraine has the potential to double the amount of grain, fruits, and vegetables that it produces. IFC is providing investments and advisory services to support agribusiness companies, helping expand their production and strengthen local supply chains.

For example, a $40 million IFC loan to Ukraine's leading juice producer, Sandora, has helped the company expand and modernize production. This played a large role in the company's acquisition by Pepsi in 2007.

We have helped the government draft and adopt 18 agriculture-related laws, including one on grain market regulation in 2002. IFC is also working to develop the country's nascent agri-insurance market.

Promoting Energy Efficiency and Cleaner Production

As one of the most energy-intensive countries in the world, Ukraine is facing a crisis amid rising gas prices and supply shortages. IFC is helping address this issue in various ways. We recently provided ProCredit Bank, the country's first financially viable microfinance institution, with a $20 million credit line for energy efficiency loans for housing and micro, small, and medium enterprises.

We are also investing, along with private banks, in the Industrial Union of Donbass, a leading steel producer. This long-term financing is enabling the company to upgrade equipment and raise environmental standards at its facilities, which is expected to help reduce pollution fivefold.

Increasing Access to Finance

IFC is helping increase access to finance in Ukraine through loans and equity investments to local financial institutions for on-lending to micro, small, and medium enterprises and individuals. We recently provided JSC Swedbank and Swedbank Invest with a $70 million loan for IFC's own account for on-lending to SMEs and residential mortgage borrowers. We will also play a critical role in mobilizing parallel and syndicated loans of about $69 million to complete the financing package.

With the Ukrainian mortgage market growing exponentially, IFC is helping build lending capacity so that local institutions can help improve access to affordable housing. We are partnering with banks, mortgage refinancing institutions such as the State Mortgage Institution, and the Ukrainian National Mortgage Association to develop a standard mortgage closing document and address gaps in the regulatory framework. We recently provided $75 million in long-term financing to support the International Mortgage Bank's residential mortgage-backed securitization.

Leasing is another effective financing instrument for SMEs, as it offers them a way to expand their businesses without the collateral and capital requirements of traditional loans. IFC invests in and provides advisory services to help financial institutions develop and expand leasing operations. We have invested $17 million in ALD Automotive, one of the first companies to offer operating leases in Ukraine. We have also trained nearly 800 local organizations on leasing.

Improving Corporate Governance

With support from the Canadian and Swiss governments, IFC has played a large role in improving corporate governance in Ukraine. We have trained more than 2,500 joint-stock companies on how to improve their practices, enabling companies and banks to attract close to $1 billion in investments while improving their performance and lowering business risks. As a result of our advisory work in the country, the Securities Commission and the National Bank of Ukraine have adopted corporate governance guidelines for banks and companies.

To date, IFC has committed about $1 billion in 42 projects in Ukraine, covering such sectors as agribusiness, financial markets, infrastructure, and manufacturing and services. We are also implementing seven advisory services projects in agribusiness, housing finance, leasing, and regulatory simplification.

For more information contact:

Ilya Sverdlov
IFC Communications Officer
Phone: + 7 (495) 411 7555 ext. 2072
E-mail: isverdlov@ifc.org