Rising Demand for Microloans in Ukraine: Trends and Challenges in the Financial Sector
In the first half of 2023, the Ukrainian microcredit market experienced significant changes.
According to data from the analytical platform Opentdatabot, Ukrainians signed over 4.39 million microloan agreements during this period — an 8% increase compared to the same period last year.
Approximately 730,000 loans are issued monthly, demonstrating steady demand among the population.The total volume of microcredits in the country exceeds 26.4 billion hryvnias, reflecting an 8% growth year-over-year.
The average size of a single loan rose to 6,029 UAH, which is 9% higher than the previous year.
It is also notable that during the first half of the year, Ukrainian citizens’ debt to microfinance organizations surpassed 24.29 billion hryvnias.At the same time, despite the increased demand, the number of licensed financial companies providing microloans has decreased.
As of early July 2023, there were 303 licensed entities operating in Ukraine — a 25% reduction from the previous year, with the number halved since the full-scale invasion began.
The sector faces challenges related to maintaining stability and regulation, especially given the rise in loan volumes and debt levels.For Ukraine’s financial sector, the key issues include not only responding to changing consumer demand but also preventing negative consequences of over-lending.
With ongoing trends, further growth in microcredit demand is expected, emphasizing the need for regulators to strengthen oversight and develop mechanisms to protect consumers from potential debt problems.