German-Ukrainian Fund will help Kyiv to develop SMEs

Representatives of the German-Ukrainian Fund and the Kyiv City State Administration signed an agreement on cooperation, which aims to implement joint programs in SMEs financial support in Kyiv, to involve European experience and resources, and to establish effective cooperation in matters of business development in the capital.

As part of the agreement the German-Ukrainian Fund (GUF) and the Kyiv City State Administration (KCSA) plan to implement a joint program to support Kyiv SMEs in financing. It will combine new UAH300 million GUF program to support SMEs and KSCA compensation of interest rates on loans provided through GUF partner banks. Development of the Cooperative Program and the KSCA and GUF took place with the participation of the Program USAID "Leadership in economic governance", which provided consulting support in developing a mechanism for its implementation.

“German-Ukrainian Fund through its new program offers low-cost funding with 17% rates. This allows us decrease it even to 9-10%, as well as to increase the total coverage of future SME loans to an average of UAH200 million”, says Gennady Plis, the First Deputy Mayor.

"Consolidation of government, financial institutions and organizations supported by donors is a practical step towards the promotion of small businesses. It is even more important today because each party participating in a joint program puts its share of funding. The aim is to facilitate access to funding for small businesses"- said Tamara Solyanik, Director of USAID "Leadership in economic governance".

It should be mentioned that such politics of cooperation are typical for European countries, where agencies for SME development or development banks in implementing their loan programs cooperate with municipalities, which at the expense of their budgets provide additional depreciation of interest rates on loans to SMEs registered in the respective territories.

Also agreement includes GUF support in conducting studies for KCSA. Fund plans to examine level of access of entrepreneurs to funds (including bank loans, grants, funds of credit unions, foundations, etc.). Fund’s experts will also study the situation with goods and services at Kyiv markets to define the priority areas of business activities. Among other advantages of cooperation with the GUF are timely updates of information on international experience in financial and credit support programs for SMEs, as well as helping with the organization of seminars, conferences, business meetings, etc.

Kyiv city administration currently pays more attention to the implementation of programs for small and medium businesses. Thus, there are UAH10 million for financial and credit support of small and medium businesses in Kyiv city budget in 2017, and in 2018 the amount will grow up to 20 million USD.

“Our goal is to help to develop SMEs in all regions of the country”, says Dr. Andriy Fetsun, the Head of the German-Ukrainian Fund. “It is important that Kyiv became our first partner in the development of SMEs. We hope that other Ukrainian cities will join cooperation”.

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