Helping Ukrainian Exporters Find New Markets Abroad

Chocolate for All: Exporting Ukrainian Products

The Zhytomyr Confectionary Factory, or ZhL as it is known, has been churning out chocolates for 70 years. But even at seven decades old, the company is still going strong, selling its candy briskly in Ukraine and looking for new markets abroad.

To keep up with demand, ZhL modernized its operations nearly ten years ago, building 28 production lines that now carry 200 types of boxed chocolates and sweets, cereal bars and even sugar-free products for diabetic patients through the production process. To do so, the company turned to Ukreximbank, a state-owned lender, for help. ZhL got a US$ 10 million loan as part of the World Bank-funded Export Development project.

In addition to upgrading the factory works, the company focused on exports. Tetyana Gorobets, ZhL’s CEO, says that thanks to the loan, the company increased its production volume to 80,000 tons a year. “In 2013, our annual turnover totaled over 930 million (Ukrainian) hryvnias (over US$100 million),” she says. “At present, the export share in total production is about 35 percent. We are exporting to 26 countries all over the world, to Germany, Israel, USA, China, Kazakhstan and Mongolia, among others.”

To offer loans for companies focused on exports, like ZhL, the World Bank and its private sector lending arm, the International Finance Corporation, joined forces with the State Export-Import Bank of Ukraine, or Ukreximbank. Together, they are helping Ukrainian exporters recover from the 2008 financial crisis, boost production and create jobs for people like Tetyana Kalmbakh, a production floor manager at ZhL, which employs about 1,500 people.

“I’ve been working at the factory for ten years and the last two years I manage the production shop floor,” says Tetyana Kalmbakh. “Every year we find better conditions and it’s more interesting to work here. Thanks to the new equipment we got now, we can introduce new technologies. Our produce is becoming tastier and of higher quality. I’m very pleased to see our sweets sold in shops and know that they’re exported abroad.”

The project has provided US$225 million in loans to more than 50 companies so far. These companies, located across all of Ukraine’s regions, represent industries ranging from farming and food processing to packaging and machine building.

“We’ve been cooperating with the World Bank Group since 1995. And I can say that Ukreximbank developed, as our cooperation grew stronger. Looking back at our joint success, we’ve managed to provide medium and long-term finances to the real economy – something that remains scarce in our country,” says Sergiy Khudiyash, Chief at Ukreximbank’s Department for International Financial Institutions Programs. “These companies have export share in their production of over 90 percent. Thanks to this they earn hard currency and boost state coffers,” he adds.

As Ukraine moves towards closer ties with the EU, businesses hope to expand their ties, and their exports, westwards. Economic integration and economic growth, as many in Ukraine say, go hand-in-hand.