The head of the International Finance Corporation in Ukraine, Elena Voloshina, looks forward to the day when the corporation can shut down its office in Ukraine.
That’s because the presence or
absence of an IFC office in a country is a measure of that country’s success,
she says.
“And the best success will be when
IFC closes its office here,” Voloshina told the Kyiv Post in an interview
earlier this year. “We’re one of those interesting institutions whose success
is measured by when we get ourselves out of business, because that means that
the Ukrainian private sector does not need a development bank to support it,
and that it operates in a sustainable fashion on a purely commercial basis.”
But that day is not yet here, and
for now the IFC is continuing to focus mainly on agriculture.
“In agribusiness we continue to
support our existing clients, mostly with working capital, because a lot of
them have put their investments on hold, and also the banks do not provide a
lot of working capital and financing these days,” Voloshina said.
A member of the World Bank Group,
the IFC provides investment and asset management services strictly to the
private sector, with the goal of reducing poverty. So far, the financial
institution has invested over $3.2 billion in Ukraine over the past 23 years,
in a total of 90 projects.
Almost half of those projects were
concentrated on the agriculture sector, and the IFC plans to invest around $200
million in agribusiness this year as well. Last year, the financial
organization invested a total of $180 million across all sectors of Ukraine’s
economy.
Recent projects
“The clients that we’ve got are
really the jewels of Ukraine,” Voloshina said.
They include poultry producer MHP,
which belongs to Ukrainian oligarch Yuriy Kosiuk; Astarta Holding, an
agriculture and industrial holding belonging to Viktor Ivanchyk, whose fortune
is estimated at $80 million; Industrial Milk Company, which belongs to
multimillionaire Oleksander Petrov; Mriya Agroholding, which is now in the
liquidation process and is partly owned by Mykola Huta – now on the Interpol
wanted list; and gas
station chain Galnaftogaz.
The IFC also collaborates with banks
such as Megabank, Ukreximbank, Raiffeisen Bank Aval and OTP Bank.
Government progress
Voloshina is positive about
Ukraine’s post-revolutionary authorities, seeing them as a great improvement
over those in power until former President Viktor Yanukovych was ousted by the EuroMaidan
Revolution.
“Because we are an apolitical
institution, we work with any government, and we worked with the previous
government as well,” Voloshina said. “But this is like night and day, honestly
speaking.”
She said that since the revolution,
Ukraine’s government has been much more receptive in working with international
financial organizations. That is mainly because many of today’s politicians
came from the private sector and have international experience, and therefore
understand the needs of the private sector, she said.
“What this current government
managed to achieve over this year was quite amazing, given that they needed to
come up with and implement some very unpopular reforms,” Voloshina said.
“Reforms that have been delayed for twenty-something years.”
But despite her positive feedback,
she does say that the Ukrainian government is not keeping up the pace of change
necessary for the economy to develop.
“The country needs to concentrate on
reforms, do them faster, more efficiently, and more radically,” Voloshina said.
And most of these reforms have to take place in three sectors – energy,
agriculture and banking.
Who is to blame?
Voloshina doesn’t want to name those
responsible for delaying reforms, one reason being that she says she’s not in a
position to do so.
“The IFC is not really in the business of putting conditions to the
government,” Voloshina said. “We can give recommendations to the government,
how to improve the operations for the private sector, but we cannot impose our
advice.”
She said it was very difficult to
put conditions on the government, as the IFC is focused on the private sector
and doesn’t provide any money to the government.
They can put conditions on the
private sector, however. “For instance, if they don’t meet our requirements in
environmental and social standards, or if they don’t meet our corporate
governance requirements, then we wouldn’t give them money,” Voloshina said. “But
with the government it’s a bit of a more of a dialogue.”
“I would rather turn it positive and
say that we all need to work together – government, parliament, people,
non-government organizations, and international finance institutions,”
Voloshina said.
The focus should not only be on
parliament but on Ukrainian companies that need to certify their products to
international standards, she said. For some of her clients it took up to two
years to get prepared for certification. But once that mission is accomplished,
these companies can take their products to the global market, as an EU
certificate is in many cases an automatic pass into other markets as well.
But the government also needs to do
its job in terms of providing the proper institutional framework, she said.
That means not only concentrating on quota negotiations, but equipping the
country with proper certification offices and laboratories.
If that is done, more Ukrainian
sectors could repeat the successes seen in the dairy industry, Voloshina said.
“As we know in the case with dairy
companies, some of them received certification to export to Europe, and are now
actually exporting to China on the basis of the same certificate,” she said.
