Soros Sponsors Ukrainian Credit Unions

Ukraine has launched a three-year program to extend microloans to small businesses and social programs via credit unions. To implement this, the Open Society Institute, a George Soros Foundation, is issuing a $200,000 grant. Fifteen Ukrainian credit unions, selected by the International Social Assistance Fund as a result of a tender, are to be furnished with additional capital in the form of return financial aid.

“$200,000, a seemingly small amount, will nonetheless make it possible for credit unions to boost their assets and win greater public trust,” President of the Ukrainian National Association of Credit Unions Petro Kozynets said. This has been confirmed by the experience of a pilot project implemented on the basis of three credit unions in Kyiv, Mariupol, and Kharkiv. The pilot project’s positive results showed that even a small amount of foreign financial resources can have a multiplier effect on the growth of a financial institution’s assets. So it can be foreseen, Mr. Kozynets thinks, that if a UAH 1 million in financial aid is granted, the assets of the credit unions involved in the project will increase sevenfold in three years, thus meeting the credit requirements of at least 80,000 people. Moreover, according to Mr. Kozynets, program implementation will help the association form a UAH 250,000 stabilization fund to keep the credit unions from bankruptcy at the initial stage.

“There is only one Soros, so it is unrealistic to extend this kind of aid to every credit union,” the association president said. It is expected to involve about fifty credit unions in the scheme in three years. As of the end of 2000, the association comprised 105 credit unions numbering almost 75,000 members and possessing assets of over UAH 17 billion. Last year they issued about 60,000 loans worth over UAH 40 million. As Mr. Kozynets pointed out, most in demand were consumer (60%) and business (35%) loans.