Ukraine - Gromada Credit Union

Farmers get essential finance from cooperative

After the Soviet Union disbanded, Ukraine experienced a dramatic drop in economic output, and a majority of the population plunged into poverty. After many people lost their jobs, they began working as microentrepreneurs to survive. Throughout the recession in the 90s, the country experienced severe hyperinflation, but began to improve economically from 2000. Tough times struck again in 2008 when the economy dropped and unemployment soared from 3% to 9.4% in only nine months. Today 35% of the Ukraine population lives below the poverty line.

Supporting rural communities with more than finance
In 1996, four women started a cooperative with the aim of providing small consumer and trade loans to market traders. Unable to approach traditional banks, farmers also began to turn to the women for support with their agricultural projects. Today, the cooperative Gromada serves more than 5,000 members, in the rural seaside regions of Kherson and Mykolaiv. Gromada continues to support its members both financially and socially, through savings, loans, training, advisory services and youth programmes.

Emergency loan gets Alexander through the harvest time
Alexander Dodonov has now been farming for a decade, and the thought of taking out a loan to support his farm made him anxious. It was only after he found he could make the repayments that he grew confident and saw the benefits of being a cooperative member and microfinance borrower. Approaching traditional banks was never an option for Alexander, who says banks’ interest rates are higher, and loan conditions less flexible than those of Gromada Credit Union. Now, seven years on, Alexander is on his fifth loan cycle, and has used Gromada loans to run and expand his farming.

Alexander relies on three greenhouses to grow tomatoes, cucumbers and cauliflower, and an irrigation system. An unusually cold spring struck two years ago, meaning Alexander drew on more wood supplies than usual. Realizing he was short on fuel for the months ahead, Alexander applied for a short-term emergency loan with Gromada. The loan was approved and disbursed within two days; on the exact day he ran out of fuel. With the combination of his hard work, knowledge and loans from Gromada, Alexander has built up his farm and become a source of knowledge for his fellow members. “People come to me for advice because I have a good feel for what the plants need. I give tips on what seeds and fertilizers to buy, and where to get them,” Alexander said.

“But in future, I want to own a store where my fellow members can get what they need. As soon as I manage to save half the money to open a store, I will borrow the remaining half from Gromada.”

Supporting Ukraine’s agricultural entrepreneurs
Oikocredit opened its Ukraine office in 2005 after it saw the need to support Ukraine’s microentrepeneurs by financing credit cooperatives, microfinance institutions and agricultural farms. Today the strategy for Oikocredit in Ukraine remains the same: support microentrepreneurs via agricultural partners.

Gromada Credit Union was the first agricultural credit cooperative Oikocredit financed in Ukraine. To date, Gromada has received five loans from Oikocredit. The most recent local currency loan of UAH 3.5 million (around € 333,000) will be used to support the cultivation of produce including vegetables and grains, and purchase livestock.

 

 

Date last revised: 13-4-2012

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