Ukraine's state-owned Oschadbank in collaboration with private equity fund Western NIS Enterprise Fund (WNISEF) and the U.S. government launched a low-interest finance program for social enterprises.
While
many small businesses are battling their way through Ukraine’s difficult
economic times and find it unattractive to take out high-interest-rate loans,
the project is aimed to give advantage to those who need the funds the most –
internally displaced people, wounded soldiers, those with special needs and
disadvantaged women.
Finance
Minister Natalie Jaresko, who used to be the CEO of WNISEF, says that the
program is meant to provide the necessary support for a growing number of
social enterprises in Ukraine.
“These are
companies that support social wellbeing and are not solely concentrated on
generating personal profit,” Jaresko said during a press conference on April 6.
“They find new ways of transforming society for the better and make life easier
for our citizens.”
About the program
The program
is providing a total of Hr 100 million with an annual interest rate varying
between 5-10 percent. The funds are expected to finance anywhere between 150
and 300 social enterprises. The size of the credit can vary anywhere between Hr
250,000 to Hr 2.5 million and applications are already being accepted.
The project
is financed by the United States Agency for International Development.
U.S.
Ambassador to Ukraine Geoffrey R. Pyatt says that support of such programs is
vital for Ukraine.
“I have met
with IDP communities… and the one impression which I recall in common from all
of those conversations is the sense of powerlessness,” Pyatt said. “This
project is a small effort to attempt to address that sense of powerlessness, to
give people the tools to move their lives forward.”
Oschadbank’s Chairman of the Board Andriy Pyshniy says that the
low-interest rate program will allow one to save tens of thousands of hryvnias
if one were to pay off loans at today’s standard 23-percent rate throughout a
period of two years.
“One can
agree, that in order to start your own business it costs a lot,” Pishniy said.
“And this is why today we can announce the start of this program.”
Pishniy
hopes that the government will continue backing similar projects and will start
lowering interest rates.
“I look at
this project of social entrepreneurship as another practical step and real work
in order to build a society with a completely different philosophy and
quality,” Pishniy said.
Two examples
of social entrepreneurship businesses that applied for the affordable loans are
charity shop Laska and Veterano Pizza.
Laska
Laska’s main
concept is to sell other people’s unnecessary merchandise and use the funds for
charity projects.
So far it
has provided Hr 149,300 to Tabletochki Fund, a charity organization that helps
severely sick children, and more than Hr 70,000 to Happy Paw, a shelter house
for homeless animals.
The idea was
initiated by Anna Uvarova and her colleagues.
“When we
started the project I did not know that it was a social enterprise, we just
found out about the concept of charity shops in Great Britain and the U.S., and
we wanted include Ukraine since back then in 2011 no such place existed.”
At the
moment there are two stores in Kyiv financially sustained by the savings of
Uvarova’s team during the past 3 years.
Instead of
saving up for years to get the charity shops launched, Uvarova says that the
loans will help to start similar businesses right away bringing help to the
community as well.
“This helps
people to be more conscious, that things that they don’t need can serve other
people, help social projects, sick children, nursing homes, IDPs,” Anna said.
Veterano Pizza
Another
business that emphasized on social entrepreneurship is Veterano Pizza.
Leonid
Ostaltsev, a war veteran who came back to Kyiv after fighting against Russian
aggression in the east, is the founder of the restaurant. At the moment the
29-year-old’s business employs six former soldiers but plans to increase that
number as he is expecting to receive financing from the program.
“In regards to social business as a whole in
our country, I think it is the obligation and responsibility of every
entrepreneur to help their country,” Ostaltsev said, pointing out that Ukraine
is overwhelmed with problems that need to be solved. “This is a unique opportunity
to be useful, create jobs and help those in society who have (many) problems.”
Pyatt said
that Veterano Pizza is a great example of a social enterprise.
“If I think
back on the past two years of Ukraine’s history the single word that I think
best characterizes the Ukrainian response is resilience,” Pyatt said.
Ostaltsev’s “personal story, his business is a perfect example of how Ukrainian
resilience is the recipe for you to ultimately to prevail.”
Pyatt on IDPs
During his
speech Pyatt emphasized on the need of helping the more than 1.5 million
internally displaced people in Ukraine because of Russia’s war in eastern
Ukraine..
“I was in
Rome, in the Vatican on (April 11),” Pyatt said. “And as I spoke to
counterparts and described the large number of refugees and displaced people
that Ukraine has been able to accommodate, there were expressions of surprise.”
He said this
is because most of the attention in Europe is concentrated on the refugee
crisis in the European Union, as more than 3 million refugees have fled Syria
because of its war.
“A large
explanation for Ukraine’s success in managing this (IDP) challenge is the
extraordinary strength of Ukraine’s civil society,” Pyatt said. “So this
project offers the prospect of latching on to those various phenomena and
driving forward the concept of social investment.”
