American Volunteers Boost Rural Lending in Ukraine
Ukraine’s growing number of private farmers and small-plot holders face difficulties accessing credit to start or expand their farming businesses. Most commercial banks avoid lending to small agricultural enterprises due to their inability to provide collateral. Credit unions are a useful and accessible financial tool for many farmers, especially small-scale agricultural producers cultivating smaller plots of land. However, many Ukrainian credit unions are reluctant to develop or expand agricultural lending programs because of a lack of understanding of the nuances of farm credit and agricultural borrowers.
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| Dora Turula (front left), a CNFA volunteer, with Dovira loan officers |
USAID's Farmer-to-Farmer Program provided volunteer assistance to Dovira, the largest credit union in Zaporizhya oblast, to improve its capacity to meet the financial needs of its rural members and, ultimately, to increase access to credit for Ukrainian farmers and agribusinesses.
Dora Turula, a CNFA volunteer, worked with Dovira’s loan officers on developing and introducing new agricultural lending products, and improving lending practices to the agricultural sector. Turula helped the credit union to establish a formal internal audit procedure, which complies with new Ukrainian regulations and to ensure that members’ equity is protected and competently administered.
In 2006, 421 farmers received $740,000 worth of loans through the Dovira credit union, an 180 percent increase over the previous year. In addition, Dovira introduced two innovative types of loans—with reduced interest rates and longer loan terms—targeted at agricultural producers. Finally, Dovira adopted a Lending Procedures Manual, which has standardized and ensures proper implementation of the credit union’s lending policies across its branches, and provides a framework for training credit personnel.
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