Ukrainian Credit Union Challenges Increase Amid Barrage of Russian Shelling
In the Zaporizhzhia Region of Ukraine, the houses of more than 10 employees and members of one credit union have been damaged or destroyed this month due to a substantial increase in shelling by the Russian military.
In the Dnipro Region, local authorities have asked business to close their offices and provide services remotely to minimize power consumption. It has caused at least one credit union to close for several days each week and adjust its hours when open.
These are common stories since Russia began ramping up attacks across Ukraine.
On October 10 and October 22, Russia launched its most extensive attacks on Ukraine in months, primarily targeting energy facilities. The geographic reach of these new strikes is very wide, impacting the Ukrainian regions of Kyiv, Volyn, Odesa. Khmelnytsky, Kirovohrad, Dnipro, Rivne, Mykolaiv and Zaporizhzhia.
As a result, 40% of Ukraine’s energy infrastructure is in ruins. Across much of Ukraine, rolling blackouts were introduced to stabilize the power grid.
With many of Ukraine’s credit unions located in areas where the energy infrastructure is now destroyed, many can only operate for a few hours each day.
Credit unions that have been able to remain open have also had to expand their operational expenses to purchase power generators. But many credit unions are no longer operating at all, as a result of Russia’s continued aggression.
Numbers of credit unions, members and assets declining
The All-Ukrainian Credit Union Association (AUCUA) was serving 63 active member credit unions on December 31, 2021. Ten of those credit unions had suspended operations by June 30, 2022. The Ukrainian National Association of Savings and Credit Unions (UNASCU) dropped from 53 active member credit unions to just 40 over that same six-month span. Those numbers are expected to decline even more due to this latest wave of attacks.
The financial implications of those closures are stark for the Ukrainian credit union market. Membership dropped 16% nationwide through June 30. Assets have taken an even greater hit, declining 28%.
Both AUCUA and UNASCU continue to work with the National Bank of Ukraine, the country’s credit union regulator, to mitigate the burden on credit unions that are still operating, so they can survive the continued onslaught of Russian attacks.
World Council of Credit Unions, through its International Advocacy team and its USAID-funded Credit for Agriculture Producers (CAP) Project, continue to advise both of its member credit union associations on how to handle this crisis.