Potential for Agricultural Finance in Ukraine
This study examines the demand for and supply of agricultural finance in Ukraine. Commissioned by Development Facility of the European Fund for Southeast Europe, the study was conducted in 2011 and included desk and field research. It aims to recommend viable solutions to facilitate the design of financial products and increase the supply of agricultural finance in the country. The paper states that currently, Ukrainian rural areas lack reliable and accessible financial products for agricultural clients. There is an estimated agrifinance gap of USD 8.7 billion in Ukraine. The current agrifinance supply of about USD 3.3 billion falls short of meeting overall demand, estimated at USD 12 billion. Despite the huge potential of Ukrainian agriculture, banks are currently focusing only on the largest players and are reluctant to invest in the necessary agronomy-based risk assessment and capacity. The study recommends that assistance for improved access to finance should be based on the following four principles:
- Keep project risk levels low to medium for the first projects;
- Apply a long term view in terms of expected impact;
- Seek partnerships with other players;
- Ensure strong technical assistance.