Content for the following post was provided by World Council’s Credit for Agriculture Producers’ (CAP) Project team, a USAID-funded activity.
Credit unions across Ukraine facing a major slowdown in business due to COVID-19 remain active and continue to learn by participating in a series of webinars conducted by World Council’s CAP Project team—focused on helping members get through this crisis.
After a government-imposed temporary shutdown of nearly three weeks, credit unions in Ukraine reopened April 2, but COVID-19 has severely impacted business.
A nationwide quarantine in place until at least May 11 has cost many credit union members their jobs and income. Many members also cannot physically access their credit unions due to a shutdown of most public transportation systems. The result has been a substantial increase in non-performing loans.
Most importantly, since many credit unions serve small agricultural producers who cannot sell their products at regular market prices due to the closure of many local food markets, there has also been a decline in cash savings’ deposits and loan repayments. The small- and medium-enterprises that serve the agricultural industry are also taking out fewer new loans—which typically grow during the spring season.
Due to those difficulties, credit union professionals need to develop new service skills to assist those members. The most recent CAP webinar focused on training credit union staffers to minimize conflicts with worried members, while still helping them achieve their goals and improve their sales after the quarantine expires.
Digital options being explored
Members who cannot physically reach their branch location cannot conduct transactions at all, because credit unions in Ukraine still are not equipped to offer digital services. But the crisis may cause that to change. The All-Ukrainian Association of Credit Unions, an affiliate member of the World Council, recently held a meeting with three digital payment providers that presented information to credit unions about online payments and loan services. The programs would allow members to make loan payments with a credit card—reducing the amount of non-performing loans. A fee would apply to each payment, with the individual credit union determining whether members would have to pay some or all of that added cost.
Implementing “5C” loan methodology
The CAP team will continue to assist credit unions through webinar trainings to help them deal with overcoming obstacles presented by the crisis. The next CAP webinar will focus on helping credit unions implement the “5C” loan methodology specifically developed for Ukraine by World Council. According to the methodology, credit unions will evaluate the solvency of a prospective borrower based on five factors—character, capital, capacity, condition and collateral.