All credit unions in Ukraine have closed on government orders in response to the Covid-19 pandemic.
Banks and insurance companies have been allowed to remain open, but credit unions were forced to close because as they do not offer online financial services.
In a report on the situation, the World Council of Credit Unions higlights the poor state of digital infrastructure in the Ukrainian credit union industry.
It notes that more than half of Ukraine’s credit union members are 50 years of age or older, putting them in a higher risk category if they were to contract the virus.
Many credit union customers are farmers and small and medium enterprises, which have been left with no access to their accounts or to loans during the peak of the spring agricultural season – forcing them to use high-interest payday lenders, charging 500%-600% APR Woccu warns..
Meanwhile, credit unions are losing revenue each day the shutdown continues, and potentially losing members, which Woccu says could lead to capital and liquidity issues once the government allows them to reopen.
A transition of Ukraine’s credit union regulator has also resulted in a lack of effective advocacy during this crisis, says Woccu. The current regulator, the National Commission for State Regulation of Financial Services Markets,will not regulate the market after 31 June and is therefore unable to provide any advocacy services or liquidity support for credit unions during this time.
The National Bank of Ukraine is the future regulator for credit unions but is leading a macro level response to a possible financial crisis on the horizon.
Last week, Woccu conducted a webinar with representatives from more than 70 Ukrainian credit unions about how to operate in a safe and effective way with members once they do reopen.
Woccu says it will continue the dialogue with credit unions and encourage the regulator to advocate for the credit union market.