In Ukraine, Credit Unions Are Key to a Sustainable Economic Recovery

Since Russia invaded Ukraine on 24 February, the financial security of millions is suddenly at risk. Also at risk is the solvency of the local, community-based credit unions that nearly half a million Ukrainians rely on for their financial well-being. In Ukraine, where there is no real microfinance sector, credit unions are the entities that fill that void – providing the alternative to a banking system that still leaves a vast number of citizens behind.  322 credit unions provide financial services, including savings and small business loans, to over 400,000 members throughout the country.

Mobilizing their communities

During a trip to Poland last month, I had the opportunity to learn firsthand about the tremendous mobilization effort that community-based institutions can provide, reaching well beyond financial services. In Rzeszow, a city just an hour from the Ukrainian border, I met face-to-face for over an hour with the CEO of a credit union based in Lviv, Ukraine. He explained that operations at his credit union and its branches have continued since the war, but with reduced hours, because in addition to their normal duties, his employees have also become volunteers—working to sort out and repackage needed supplies, or cooking food to help those who have fled the fighting in eastern Ukraine.

Credit union employees and members from all around Ukraine are doing what they can to help. In Western Ukraine, where tens of thousands of families have arrived fleeing the fighting in other parts of the country, credit unions are coordinating and joining humanitarian aid centers, providing support such as cooked meals and supplies for internally displaced people. In the areas hardest hit by the war, those credit unions which continue to operate are devoting staff time to help those in need. A credit union in Chernihiv Oblast, which was hit heavily by Russian attacks, was able to assist with the growing food shortage by coordinating between agricultural producers and the community to distribute food supplies.

As a leader of the Ukrainian credit union movement told us, “Credit unions have always been more than just financial institutions. We care about people, not money. In these difficult times for our country, we are all doing our best to help each other and our members." 

As President and CEO of World Council of Credit Unions, a position I have held less than one year, I cannot imagine getting a better real-life lesson on the important role credit unions can play as trusted, community-based institutions on which everyday people rely.

A sector at risk

Unfortunately, this sector, which is so crucial for many Ukrainians, is now at risk. Needing access to cash, many credit union members have had to pull out their savings. At the same time, small business owners, many of whom work in the agricultural sector, need loans to ensure they can begin planting crops during the spring season. Ukraine is facing a growing food shortage, and the lack of production also threatens global supply. This situation will only get worse if farmers cannot produce crops at normal levels this year. With less money in the credit unions and more demand for loans, liquidity shortfalls are becoming a major concern.

A call to action

World Council’s two member associations in Ukraine, the Ukrainian National Association of Savings and Credit Unions (UNASCU) and the All-Ukrainian Credit Union Association, have been sounding the alarm since early March. With USAID funding support, World Council has continued to disburse loans through a private liquidity facility for Ukrainian credit unions that lend primarily to agricultural producers. But more help is needed now and into the future.

We have many lessons as a development practitioner community on the important role that financial inclusion has in resilience and rebuilding of war-torn lives. In Ukraine and in the neighboring countries which are hosting refugees in unprecedented numbers, we must share these lessons and collaborate as a community and with our donor and investor partners. I am hopeful that we can utilize community networks, like our credit union systems in Poland, Romania, Moldova and across Europe to be part of the response together. There is a great opportunity here, a call to action, to use deep community-based networks such as credit unions to provide assistance during wartime and build a more sustainable future through the cooperative movement. 

Despite the immediacy of the war and his credit union’s efforts to help those who are displaced, the credit union CEO from Lviv, who is also the Board Chair for the All-Ukrainian Credit Union Association, keeps one goal front and center. “My task is to save the All-Ukrainian Credit Union Association,” he explained. “It is the association which unites 80 percent of credit unions here. It is a very important task to save it and have it overcome this period.”

Let us not grow numb

Ukraine is unfortunately not the only crisis where human suffering is acute, where food security and violence are life-threatening risks and where financial support translates into life or death. Let us not grow numb to any crisis. And let us not forget the important role that financial institutions play when they are focused on the underserved and most vulnerable, when they are agile and willing to take risks to serve their customers. 

We need to bolster those institutions that are focused on serving all citizens, particularly the most at-risk. In my new role, I see a new future for credit unions in Ukraine and their 400,000-plus member owners, who each deserve a better chance in life when this war is over.