IFC increases financing for Ukrainian SMEs

The International Finance Corporation (IFC) is increasing financing for small and medium-sized businesses in Ukraine and for the development of the Ukrainian tech sector.

The IFC said this in a press release seen by Ukrinform.

"IFC today announced new funding to strengthen the resilience of Ukraine's tech sector and a risk-sharing facility to increase access to finance for the country's smaller businesses. The support is part of IFC's $2 billion Economic Resilience Action (ERA) program, launched last year to preserve economic activity and job creation amid Russia's invasion of Ukraine," the press release reads.

According to the IFC, Ukraine's tech sector has demonstrated remarkable resilience despite Russia's invasion of Ukraine, with the sector adding 180,000 jobs between 2017 and 2022, and 85 percent of Ukrainian developers working full-time. However, to maintain stable service delivery and continue expansion, the sector needs better access to capital.

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In response, IFC, alongside its partner fund Horizon Capital, invested $5 million in Miratech - a global IT services and consulting company that specializes in enterprise-level CX transformations, placing it at the forefront of its industry. The investment will help the company scale and create new jobs, ultimately enhancing the country's IT sector's resilience and competitiveness. The financing, provided from IFC's own account, builds on IFC's landmark $60 million investment in Horizon Capital aimed at supporting fast-growing businesses that need capital to fund expansion.

IFC will also support Ukraine's smaller and medium enterprises (SMEs), which have become increasingly vulnerable amid the deteriorating business environment. In 2021, they accounted for 99.97 percent of all businesses in Ukraine, generated around 60 percent of growth domestic product (GDP), and employed over 7 million people. During the second half of 2022, SMEs experienced significant losses, with only 6 percent operating at pre-invasion levels.

IFC is establishing EUR 20 million risk-sharing facility for each OTP Bank and OTP Leasing to support SMEs, especially those in agribusiness or owned by women. IFC will share half the risk on an aggregate portfolio of EUR 40 million extended to key segments of the Ukrainian economy. These are the first risk-sharing facilities in Ukraine under IFC's Small Loan Guarantee Program, supported by the European Commission, and will help preserve jobs, provide essential goods and services, restore supply chains, and generate exports and fiscal revenues.

"A strong private sector is key for Ukraine's economic revival. Ramping up access to finance for businesses is pivotal to counter the macroeconomic turbulence and supply chain disruptions currently hampering economic activity in the country. IFC is committed to ensuring access to credit and boosting innovation as the key preconditions for Ukraine's recovery," said Alfonso Garcia Mora, IFC's Vice President for Europe, Latin America and the Caribbean.