Europe and Central Asia
Europe and Central Asia
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Food Security and Agriculture
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Small Business and Financial Services
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Access to private capital is the key to economic growth and the lifeblood of business. What is true in more peaceful times is especially true for a country defending itself against a brutal invasion. Russia’s unprovoked war against Ukraine has severely disrupted livelihoods and businesses, including food production, which has hindered exports and forced many small businesses to relocate or close.

In a country where most workers have traditionally been employed by small and medium-sized enterprises (SMEs), the ongoing war has been devastating to the local economy. Ukraine’s GDP declined almost 30 percent in 2022, and while it has begun to stabilize since then, SMEs continue to struggle to access capital at affordable rates as they work to rebuild facilities.

DFC CEO Scott Nathan and representatives from Bank Lviv

Solution and Impact

Working in collaboration with the USAID mission in Ukraine, DFC has provided $35 million in loan portfolio guaranties to help Bank Lviv—a major commercial bank in Western Ukraine—provide critical capital to the country’s SMEs. DFC’s first loan guaranty program after the start of the war, for $15 million, has been fully utilized and resulted in almost 500 new loans to Ukrainian businesses. In 2023, DFC committed a second guaranty for $20 million, which is expected to provide financing to more than 12,000 microenterprises and 1,000 SMEs over five years.

Although they constitute a tiny fraction of the massive humanitarian and security assistance Ukraine requires to win the war, these loans are vital to enable small businesses grappling with the impact of a war-torn economy to continue to operate, employ workers, and provide vital goods and services.

Even before Russia’s 2022 invasion, Ukraine’s SMEs faced a significant financing shortfall, and Bank Lviv’s strategy was focused on increasing lending to micro, small, and medium-sized enterprises (MSMEs) in western Ukraine, where it maintains an extensive branch network. In recent years, the bank adopted a strong focus on lending to the agriculture sector, including many businesses that export grains, seeds, meats, and other staples to food-insecure countries in the Middle East and Africa. At the end of 2022, Bank Lviv loans to agricultural borrowers totaled 16.1 percent of all lending, up from 1.5 percent in 2017.

DFC’s loan portfolio guaranty will use technical assistance from USAID to help MSMEs access the financial system and advise on export market potential.

This project was profiled in 2024.

A Bank Lviv borrower smiling