On January 18, the German-Ukrainian Fund (GUF) and the Ternopil Regional State Administration (Ternopil RSA) signed a memorandum on cooperation in the area of financing and development of small and medium-sized enterprises (SMEs) in the Ternopil region. Part of the EU4Business SME Finance Facility in Ukraine, the agreement allows joint implementation of a programme of interest rate subsidy for local SMEs and programmes for their advisory support in the region.
Acting GUF head Valeriy Mayboroda presented the GUF programme of financing support for SME investment projects, which is being implemented thanks to the joint efforts of the German government, which provided the GUF with a loan of €10 million through the German KfW Development Bank, and the European Union, which provided €5 million in financial assistance to compensate for currency losses under the loan under the EU4Business initiative.
"We aim at distributing affordable lending to small and medium-sized enterprises throughout Ukraine, and began 2018 actively, by signing a memorandum on cooperation with the Ternopil Regional state administration. I am very pleased to see such active SME support from the local authorities, as it will contribute to the influx of credit resources into the region, both the GUF and its partner banks," Mayboroda said.
Facilitating business access to cheap loans aims to stimulate the Ukrainian economy. A similar initiative is already in place Kyiv, where the subsidization of interest rates on SME loans allowed to lower the interest rate to the lowest level in Ukraine – 7.5%. Last autumn, implementation of a similar project also began in Kharkiv.
Powerful incentive for business development
Chairman of the Ternopil RSA Stepan Barna noted that the signing of the memorandum would be a powerful incentive for the development of entrepreneurship in the Ternopil region, and would increase the investment attractiveness of the region.
"We understand how important the authorities’ participation is in the implementation of projects like these. That is why it is important for us to join this programme and develop in this direction. For Ternopil region, this will be a big step forward, to a developed ‘living’ economy, to new jobs," Barna stated.
Since 1996, the GUF has been directly and indirectly supporting SMEs in Ukraine. Over this period, more than 162,000 loans were provided to SMEs for a total amount of about €750 million. The signed memorandum on cooperation will help to reduce the cost of SMEs lending in the Ternopil region and increase its investment activity.
Within a year, the German-Ukrainian fund plans to sign a number of similar agreements with other regions of Ukraine in the framework of its strategy. Specific plans will be announced at the Second Financial Fair, which will be held in Kharkiv in April, 2018.
The latest initiative in Ternopil is part of second phase of the EU4Business SME Finance Facility, implemented by the German-Ukrainian Fund, with funding from the EU and Germany through the German Development Bank KfW. The emphasis in Phase II of the SME Finance Facility is to stimulate local currency lending, especially for micro, small and medium-sized enterprises (MSMEs) in Ukraine that are not earning foreign currency and cannot afford the high costs of borrowing.