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Financing land privatization is issue No 1 – Kozachenko

It would cost at least 15bn dollars to launch the process and give big, medium and small market players access to it.

Financing land privatization is issue No 1 – Kozachenko
Leonid Kozachenko
Photo: Max Levin

The president of the Ukrainian Agrarian Confederation, Leonid Kozachenko, has said that all those who want to be involved in the land market, except for large holdings, raise one question today: where to get the money to buy land and how to finance the privatization process. He was speaking at a roundtable discussion entitled "Battle for land. In search of compromise" hosted by Gorshenin Institute.

"Not a single Ukrainian bank can issue a loan on favourable terms for 5-10 years. All programmes that were proposed by the World Bank and foreign banks, if they are put together, will only enable 5% of entities that want to participate in privatization at most to receive these resources. And this financing will be very expensive, even despite government subsidies that cover only a small part of what is needed. If you take a loan for 10 years at 25% per annum and are sure that you will be compensated for 20% of the cost, will you take it? And what is the payback period of this financial resource? Therefore, issue No 1 is the financing of the privatization process," Kozachenko said.

According to him, the only resource that could solve this problem is state-owned farmland which the authorities now want to transfer to the communities.

"These should be blocks of 2,000, 5,000, 20,000 ha each. This is the best land that the state has selected for itself, and it will be sold for a price that is twice as high as for the land of small owners. And it is this land that will grow in value if there is a liberal market. According to experts, the price will increase 3-4 times. Its cost, according to some estimates, can reach $15bn. To start the process and provide access to it for large, medium and small market players, you need at least $15bn. Because if we create the best financing tool - a mortgage land bank - and it will receive a resource at 1% per annum for at least 10 years and will issue loans at 2% per annum to any market participants, everyone will be interested in receiving financing here and not abroad," he added.

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