Since the beginning of the war, the amount of financial support provided to Ukraine by international donors has already exceeded $50 billion. This includes non-repayable aid, loans on favourable terms, and grants. Among the donors are large international financial corporations, banks, and foundations. Earlier, Mind has already reported in detail on which organisations provided this support to Ukraine, for what purpose and on what terms. The International Finance Corporation (IFC) is also one of the donors. Lisa Kestner, IFC's Regional Manager for Ukraine and Moldova, explained to Mind how this assistance is allocated, what factors are analysed when making decisions about its provision, and how the use of funds is monitored.
What are the main conditions for revising cooperation with Ukraine during the war?
In the early days of russia’s invasion of Ukraine, IFC, like other international financial organizations and investors, needed to assess the situation. Amid the uncertainty, IFC, with its focus on the private sector, started to support its existing clients, providing working-capital financing, enabling continued access to fuel and other staples while keeping our trade lines open to support the import of critical supplies. Other donors like our sister organization the World Bank provided urgently needed budget support.
With russia’s invasion of Ukraine continuing, it became clear that the public sector and donors alone cannot keep Ukraine’s economy running. The private sector, generating up to 70 percent of GDP in 2021, is a lifeline for the country, preserving jobs, maintaining exports, and continuing to bring in tax revenues.
However, only a small part of international financing has been channeled to businesses so far. So, it needs urgent access to finance given massive underinvestment in the sector, the high credit risk, and the ongoing economic turbulence.
Governments, international development institutions like IFC, and commercial lenders need to come together to support Ukraine’s private sector.
In response, IFC has been working on a programme to scale up its interventions in Ukraine. The $2 billion Economic Resilience Action Programme (announced in December 2022) includes finance from IFC's own account, working alongside guarantees and concessional finance (or grants) from donors.
Their support is vital for de-risking private investment under current high-risk conditions. Last month, the Netherlands and Switzerland were the first to provide financial backing to IFC’s Ukraine programme. The Netherlands will provide $43 million to support the agricultural sector and ensure emergency liquidity for private companies in critical agri-related industries. Switzerland will provide $10 million to support small-scale farmers, who have been vital in feeding the population and safeguarding food security.
IFC expects to leverage these donor funds between 3 and 4 times, potentially supporting over $200 million of financing.
We call on other development partners to join our programme, helping us reinforce Ukraine’s private sector as a pillar of the country’s resilience.
For what main purposes does the IFC provide funds?
During russia’s invasion of Ukraine, IFC has been focused on addressing the immediate needs of the private sector and providing short-term liquidity to ensure access to and supply of critical goods and services, such as food and fuel. This includes $78 million in trade finance to enable critical imports and exports and over $46 million in trade transactions to support imports of Ukrainian grain, corn, sunflower seeds, and oil to Türkiye through Turkish banks.
We are also providing working capital for business preservation and reallocation.
In agribusiness, we are helping adjust business models, find alternative routes for exports, and develop farming recovery and financing programmes.
In addition, we are implementing advisory programmes for smaller farmers, such as the digitalization of crop receipts with financial institutions.
In partnership with the EU, we are supporting affected municipalities with €25 million to repair damaged homes and another €25 million to repurpose existing buildings to host internally displaced people.
In 2022, Ukraine’s export of IT services grew by 9.9 percent from a year earlier, bringing in more than $6 billion in revenue – surpassing the 2021 figure by $542 million. These numbers highlight the sector’s untapped potential. However, the ongoing insecurity and potential long-term instability are major deterrents that can significantly impact the service delivery.
Improved access to finance can help businesses adjust to new circumstances and continue to expand. IFC is ramping up efforts to attract new investors to the sector. IFC's $30 million investment in Horizon Capital in September 2022 helped the Fund achieve its first close in a challenging fundraising environment, encouraging investors to return to the market despite the ongoing crisis.
Building on IFC’s initial contribution, we signed an agreement to invest an additional $30 million in the Fund in April 2022. Our total commitment of $60 million – the largest so far – aims to help the Fund rapidly reach its target size of $250 million, and channel money to tech businesses in critical need of risk capital. Being among the first investors in the sector, IFC is now playing a crucial role in unlocking additional commitments from existing investors as well as in attracting new ones.
How was the assistance arranged before 2022?
Before February 2022, IFC had for decades helped Ukraine combat poverty and drive economic growth, work we are committed to ramping up in the years to come.
Ukraine’s agricultural sector has always been a priority for IFC, and we remain committed to supporting agricultural holdings and smaller farmers now. IFC has been providing liquidity support for large food producers (i.e., Nyva Pereyaslavschyny), and helping smaller farmers maintain access to finance. Since 2015, we’ve been working with the government of Ukraine to ensure the usage of crop receipts, allowing farmers to use future harvests as collateral to purchase seeds, seedlings, and fertilizers.
Supporting agri logistics, in 2017, we provided a $37 million loan to MV Cargo for a new grain terminal, which emerged to become one of the country’s largest grain terminals. Supporting financial markets, in 2021, IFC invested €30 million – with an equity-conversion option – in Ukrgasbank, one of Ukraine’s largest state-owned banks. We also helped modernize the country’s infrastructure, including ports, roads, and municipal transport.
How to be sure that the money is being used for the intended purpose?
We are watching the developments in Ukraine very closely. As a standard practice, IFC conducts integrity due diligence on its business clients and partners, a critical process to ensure they meet applicable IFC standards and operate in good conduct. IFC’s clients need to meet reporting requirements specified in loan agreements and IFC’s teams are monitoring our portfolio clients.
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