Kyiv, Ukraine, June 8, 2007 — IFC,
the private sector arm of the World Bank Group, today released the results
of a survey on Ukraine’s leasing industry that highlight growth in the
sector and indicate expansion of the nation’s financial markets. The survey
reveals that challenges remain, including the relatively high cost of leasing,
which prevents some businesses from accessing this option to upgrade equipment
or expand production.
This study is the third annual survey
conducted by the IFC Ukraine Leasing Development Project, with support
from the Agency for International Business and Cooperation, part of the
Dutch Ministry of Economic Affairs. The results, which assessed performance
during the year 2005-2006, are based on responses from 60 leasing companies.
Findings indicate that demand for leasing
services as an alternative financial instrument has grown significantly
in Ukraine: the total value of the leasing portfolio expanded by
more than 108 percent, while the number of leasing companies in operation
increased by 20 percent. The leasing industry is stabilizing and supporting
an increasing number of jobs, long-term contracts are on the rise, and
industry employment grew 50 percent during the period.
Several factors are contributing to this
growth, such as increased interest in leasing from foreign-owned banks
entering the market, growing public awareness, rapid development of Ukraine’s
financial markets, and improved access to credit.
While the potential for growth remains
high, the survey finds that there are still many obstacles. Issues to be
addressed include changes in the tax code to make leasing a more viable
option for businesses, and the absence of credit bureaus and a well-developed
secondary asset market.
At a roundtable discussion to present
the findings, Ernst Mehrengs, IFC Project Manager, said, “Leasing is an
effective mechanism for the replacement of equipment, increasing sales
volumes of equipment producers, encouraging technological progress in the
design of equipment, and creating new employment opportunities.”
Mehrengs noted that the government’s
recent effort to amend the national tax code with incentives for leasing
is an additional step in the right direction. “If the draft of the amended
tax code is approved, leasing will become less expensive for the lessee,
thus increasing overall demand for leasing products and benefiting the
overall economy,” he said.
IFC, the private sector arm of the World
Bank Group, promotes open and competitive markets in developing countries.
IFC supports sustainable private sector companies and other partners
in generating productive jobs and delivering basic services, so that people
have opportunities to escape poverty and improve their lives. Through FY06,
IFC Financial Products has committed more than $56 billion in funding for
private sector investments and mobilized an additional $25 billion in syndications
for 3,531 companies in 140 developing countries. IFC Advisory Services
and donor partners have provided more than $1 billion in program support
to build small enterprises, to accelerate private participation in infrastructure,
to improve the business enabling environment, to increase access to finance,
and to strengthen environmental and social sustainability. For more information,
please visit www.ifc.org.
About the Agency for International
Business and Cooperation
The Agency for International Business
and Cooperation is part of the Dutch Ministry of Economic Affairs.
Its mission is to promote and encourage international business and
international cooperation. As a government agency and a partner with businesses
and public sector organizations, its goal is to help public and private
institutions achieve success in their international operations. A growing
number of organizations, government institutions, and companies have come
to rely on the agency for information about foreign markets, governments,
and trade and industry. It develops products and services that meet the
needs of its customers and clients. Information comes from its network
of Dutch and international organizations, which include international finance
institutions, the European Commission, embassies, chambers of commerce,
local business support offices, trade representative associations, and
other trade and industry groups. For more information, please visit