Release date: 17 July 2024
Promoter – Financial Intermediary
THE STATE EXPORT-IMPORT BANK OF UKRAINE JSCLocation
Description
The operation will finance eligible small and medium investments undertaken by micro, small and medium-sized enterprises (MSMEs) and mid-caps in Ukraine.
Additionality and Impact
This operation aims to support private sector development and provides financing to projects promoted by SMEs and Mid-Caps in Ukraine, through a credit line to Ukreximbank, which would channel the funds to local enterprises through their branch network in the country, thereby contributing to promote inclusive growth, sustain employment and reinforce long-term economic resilience.
SMEs are the backbone of the Ukrainian economy and play a vital role in creating and safeguarding employment, especially for young people and women. Before the Covid-19 crisis and the war, approximately 7.4 million people were employed in the SME sector and 65.5% of sales of goods, works and services, and 64% of value added in Ukraine was attributable to SMEs. The Covid-19 pandemic and the war triggered by the Russian invasion in February 2022 have disrupted and rerouted global supply chains, negatively impacting Ukrainian SMEs. Migration of the workforce and a reduction in consumer demand have hampered business activity and economic growth across the country. SMEs, particularly those located near conflict zones in the eastern, southern, and western regions, have been hit particularly hard, and many have been forced to relocate their operations, either to other parts of Ukraine or neighboring countries. Since the outbreak of the war, SME business contracted by an estimated 29% and some 2.4m related jobs have been lost, while SME export contracted by 35%.
Despite the extremely challenging operating environment, Ukrainian SMEs have demonstrated resilience, and business activity levels for most Ukrainian SMEs have now stabilized. It is estimated that some 57% of all SMEs were able to maintain their activities at pre-war levels, while some 30% of them have been operating at reduced capacity. The remaining ones have gone out of business (included those whose assets have been destroyed or damaged). Access to long term financing has been identified as one of the most significant obstacles to the survival and recovery of SMEs. The EIB operation will enable the funding at attractive terms, which address the needs of final beneficiaries. The proposed operation is expected to address this issue while alleviating the maturity mismatch between assets and liabilities that bank would incur to meet such demand.
Objectives
The aim is to enhance access to finance to MSMEs and contribute to economic resilience and employment-generating activities in the country.
Sector(s)
- Credit lines - Credit lines
Proposed EIB finance (Approximate amount)
EUR 100 million
Total cost (Approximate amount)
not applicable
Environmental aspects
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.
Procurement
Final beneficiaries will be requested to comply with applicable national and EU legislation, as appropriate.
Status
Signed - 20/12/2024