Introduction of the Model Credit Union Building methodology allows Credit Unions to better serve their membersRead More
In Ukraine, only large agricultural producers have full access to financial investments in the agricultural sector; as a result, small and medium-sized farms and individual entrepreneurs generally remain outside the financial system and are unable to obtain affordable credit. In this context, credit unions (CUs) are the only source of funding for small farmers and agricultural producers. Yet, CUs in Ukraine need support to strengthen their capacity and meet members’ needs, especially since the CU sector has lacked reform for more than 25 years.
The Credit for Agriculture Producers (CAP) Project is a four-year project (2016-2020) funded by USAID and implemented by World Council for Credit Unions (WOCCU). The purpose of the project is to improve access to agricultural credit via CUs by improving their legal and regulatory framework, strengthening their two CU national associations, and building capacity of CUs to better serve their members and meet credit needs. To achieve its objectives, the CAP Project, with support of international credit union experts and volunteers, works closely with the National Commission on Regulation of Financial Services Markets (NCSRFSM) and the two credit union associations: The All-Ukrainian Credit Union Association (AUCUA) and Ukrainian National Association of Savings and Credit Unions (UNASCU).
In Q1 FY20, CAP signed an MOU with the National Bank of Ukraine (NBU), future Credit Union Regulator, that sets the direction of collaboration and technical assistance (TA) to the NBU through July 2020. A high-level workshop with WOCCU’s CEO and senior experts was successfully organized in early December to meet with NBU staff, and WOCCU CEO later met with the Chairman of the NBU and 1st Vice President, to discuss critical issues for CU market development in Ukraine, including ways WOCCU could support these challenges.
Concurrently, CAP remained committed to its work with the National Commission. Throughout FY19, CAP played an instrumental role in facilitating dialogue between the National Commission, Deposit Guarantee Fund (DGF), and NBU to ensure the proposed new norms would meet the requirements of all stakeholders. The new norms were registered by the Ministry of Justice in early December and published on December 13, 2019, successfully completing the process. The norms will take effect 90 days after publication, on March 12, 2020.
The Agricultural Lending Working Group (AGLWG), comprised of 23 partner CUs, continued to work during the quarter. In Q1 FY20, the group issued 1,146 new agricultural loans for a total of 8,315 loans to-date throughout the life of the project. Finally, CAP continued to encourage the industry associations to promote agrarian receipts among their associated members. One CU member of the All Ukrainian Credit Union Association (AUCUA) issued an agrarian receipt in October 2019.
In light of implementing new financial norms, CAP worked with individual CUs through strengthening the pilot for the Model Credit Union Building (MCUB) methodology, which gained relevance for the pilot partners and the entire market. In FY20 Q1, the business planning cycle was initiated, and as soon as the audited financial statements for 2019 are available, plans will be finalized and approved. In Q1, several CUs received individual expert week-long consultations and trainings to review their business and action plans, preparing them for the upcoming year and regulatory changes.