On April 3, GOLAW, together with the European Business Association, held an expert discussion “Business finance – let’s make it clear”, where representatives of the state, financial institutions and businesses exchanged their own experience in attracting funds for business development, and explained their vision of solving a number of issues.
During the event, the speakers talked about the business climate in Ukraine, about the possible funding sources and about those sectors of the economy that banks consider to be the most attractive for financing. According to experts, the main thing for business today is to remain honest and transparent in their work, as this can be a guarantee of obtaining a loan and establishing trustworthy relationship between the bank and the creditors.
According to Oleksandr Povshednyi, Deputy General Manager at ProCredit Bank, for those lenders who are “doing fine,” and who have a transparent business structure and a stable income, “banks are lining up”. Oleksandr emphasized that getting a loan is not a “fight between the borrower and the banker”, but a “shared cause,” where the client has to do everything possible to explain to the bank how his business is organized.
The speaker also noted that at the moment the bank is focusing on granting loans to farmers and Ukrainian manufacturers. The borrowing ranges from 500 thousand to 2 million dollars.
A similar opinion is shared by Deputy Chairman of the Board at Raiffeisen Bank Aval, Natalia Gurina. “There is a clear understanding: you either believe the owner or not. The bank and borrower do not live in two separate worlds. Therefore, my recommendation is – honesty and transparency, openness, readiness for change and co-operation “.
In addition, one of the topics of the event was the discussion of the latest legislative changes in financing green energy projects, which are becoming increasingly popular in the energy sector of the Ukrainian economy with every year.
GOLAW partner, Max Lebedev, noted that in 2017-2018 there were quite a lot of changes regarding the attraction of financing to the energy sector of Ukraine. Thus, as of today, the state guarantees to provide the companies with “green tariff” only until 2030. Projects planned for the current year, or for 2018 and 2019, will be realized only in 2023 as a best-case scenario. Firms will have literally 7 years to recoup the project and return a loan, which may be insufficient. Therefore, there are 2 possible scenarios: the state can extend the term of guarantee for the “green tariff”, or there will be a fall in its rates, which will negatively affect the projects that are not implemented in the specified 7 years.
No less important was the discussion on improving the position of Ukrainian companies in the international arena. According to Peter Justin O'Brien, Country director at the EuroCape Ukraine, it is extremely important for Ukraine to remove the withholding tax, since this can make the Ukrainian market more attractive to foreign investors.
Andrey Petrov, Head of financial and economic department at Wind Power LLC (DTEK group), has also pointed out that one of the factors that discourages foreign investors is the lack of guarantees of due compliance with the laws in Ukraine. “We have to prove that we follow a specific development direction and are ready to act in accordance with the adopted legislative norms”.
Brian Best, Management Partner, Investment Director at Dragon Capital, clings to a similar notion. He noted that the main task today is to prove that Ukraine can conduct a “civilized” and transparent business.
According to Denis Gutenko, Director of Department at Ministry of Economic Development and Trade of Ukraine, some changes are already taking place at the legislative level: “We have developed a strategy for the development of small and medium enterprises, and one of the main goals of the strategy is their financing.” Denis noted that “removal of barriers” and “provision of opportunities” for the development of enterprises are one of the priorities of the Ministry.
Speakers have also advised borrowers to always clearly explain to lenders why a particular project needs to attract financing. According to Roman Cherepakha, Investment Director at Horizon Capital, it is very important to always provide reasoning “why your project is better than others” and “why are you confident that you will succeed”.
As a result, all the speakers have come to the conclusion that the success of attracting additional investments and business development equally depends on both lenders and borrowers. Gebhard Rogenhofer, General Director at Syngenta LLC, said: “The Ukrainian economy and all the problems we have are our own responsibility. If as a business we do everything right – everything will be good “.
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