Kyiv, Ukraine, January 12, 2022—In order to improve access to finance and boost the growth of small and medium enterprises (SMEs), IFC has partnered with Ukraine's Bank Alliance. IFC's investment and advisory support will help the bank scale up lending to smaller businesses, increasing competitiveness, preserving and creating jobs, and accelerating Ukraine's economic growth.
SMEs are a key contributor to Ukraine's economy, accounting for 55 percent of gross domestic product (GDP) and almost 80 percent of total employment in 2020. Yet, SMEs are among the most financially vulnerable with many facing cash-flow disruptions attributed to the COVID-19 pandemic.
To address this financing gap, IFC has arranged an approximately $11 million loan to help Bank Alliance provide financing to Ukrainian SMEs with at least 50 percent of the loan proceeds earmarked for SMEs in the agricultural sector. IFC's investment comprises a $5 million loan for IFC's own account and an additional €5 million mobilized from Invest in Visions GmbH IIV Mikrofinanzfonds.
"IFC's financing will allow the bank to expand its range of credit products that will enable SMEs, especially in the agribusiness sector, to upgrade and invest in green technologies," said Yuliia Frolova, Chairman of the Board of Bank Alliance. "Thanks to this new partnership, our clients will also get access to instruments of international trade finance, contributing to improved international trade, key for Ukraine's economic development."
IFC has also established a trade-finance guarantee facility for Bank Alliance under IFC's Global Trade Finance Program (GTFP) to help the bank build partnerships with several major international banks, providing more efficient and cost-effective trade finance solutions to its private sector clients. The bank has also joined IFC's DigiLab Finance acceleration program to enhance its digital transformation strategy by improving the operating model and expanding the digital banking products and services for its customers.
"IFC's priority is to support entrepreneurship in the most vulnerable sectors and to mobilize private capital to minimize the impacts of the pandemic," said Jason Pellmar, IFC's Regional Manager for Ukraine, Belarus, and Moldova. "Through this new partnership, we aim to inspire confidence among other lenders, broadening the pool of finance available to SMEs in Ukraine."
IFC first partnered with Bank Alliance in 2018 to provide advisory services to strengthen the bank's institutional capacity and help introduce products for agricultural SMEs based on a financial instrument known as crop receipts. Through the expanded engagement, IFC will also support the bank to enhance its environmental, social, and governance practices in line with international standards.
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2021, IFC committed a record $31.5 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of the COVID-19 pandemic. For more information, visit www.ifc.org.
About Bank Alliance
JSC "BANK ALLIANCE" is a universal bank operating in Ukraine since 1992. With 30 branches in the country's largest cities, the bank offers a wide range of financial services to MSMEs, especially in agribusiness. Bank Alliance is one of the leaders in the international payments market, banking guarantee market and agribusiness lending in Ukraine. On Oct. 12, 2021, S&P Global Ratings affirmed its 'B-/B' long- and short-term issuer credit rating on Bank Alliance (the outlook is stable).
For more information about Invest in Visions GmbH IIV Mikrofinanzfonds, visit www.investinvisions.com/en/