KfW hopes to launch portfolio guarantee project for SMEs with National Development Institution this summer
German development bank KfW is preparing with the National Development Institution a project to provide portfolio guarantees to banks for further lending to small and medium-sized enterprises, targeting companies in frontline regions, with internally displaced persons and veterans, the head of KfW’s representative office in Ukraine, Lorenz Gessner, said, according to an Interfax-Ukraine correspondent.
"This is a portfolio guarantee, especially focused on small and medium-sized enterprises located on the front lines, IDPs and veterans, which we hope will start in the summer of this year (...) Currently these small and medium-sized enterprises typically either need huge collateral or don’t get loans at all," he said at the fourth Ukraine Resilience business forum held by the Luxembourg-Ukrainian Chamber of Commerce in Luxembourg last week.
According to him, this project should also help lower interest rates for these clients and reduce loss coverage reserves for banks.
Gessner noted that in the long term, the NDI, and this is reflected in its strategy, seeks to attract the local and international bond market for financing.
"We, KfW, as the German government, currently do not support any investments in the capital market. But we are trying to create the NDI institution to attract these funds in the future. To have a transparent and conscientious institution that can rely on resources from outside Ukraine and from Ukraine," the representative office head explained.
He recalled that KfW as a development institution has been supporting Ukraine for more than 30 years on behalf of the German government, and its partner for a long time was the German-Ukrainian Fund, on the basis of which the Enterprise Development Fund was later created, which from January 1 this year, according to a law passed last year, became the National Development Institution.
Gessner added that within the framework of the "Vision: EDF 2.0" initiative announced in 2024 at the Ukraine Recovery Conference in Berlin, with three stages of development of the EDF, which has now become the NDI, the first stage of institutional development is currently underway, at which an independent supervisory board has already been created and is developing a strategy for this institution.
At the second stage, the NDI is expected to undergo an assessment of compliance with EU requirements, which, if successful, will allow it to directly attract funds from the EU and significantly accelerate the development and deployment of Ukraine recovery programs. The third stage involves the NDI entering international financial markets to attract funds from private investors to finance programs for the recovery of the Ukrainian economy.
