The Western NIS Enterprise Fund is a not-for-profit corporation formed to promote the development of the private sector and the policies and practices conducive to such development of the Western NIS region, which consists of Ukraine, Belarus and Moldova. The United States Congress has authorized appropriations of $150 million of which, $141.7 million has been committed by the United States Agency as of September 2003. The Fund’s primary purpose is promoting the development of the private sector and the policies and practices conducive to such development of the Western NIS region, which consists of Ukraine, Belarus and Moldova. As of September 30, 2004, The Fund had total outstanding investment commitments of $53.5 million (approximately UAH 278 million) in small and medium-sized Ukrainian and Moldavian companies in variety of sectors ranging from transportation to food processing. Under financial services portfolio, WNISEF has these following investments: Equity and debt investment of total $9 million in ProCredit Bank, equity and debt investment of total $1 million in ProCredit Bank Moldova, equity investment of $7 million in International Mortgage Bank, and equity investment of $1.6 million in Moldova Agroindbank.

The proposed IFC investment consists of up to $7 million in form of senior loan.

7.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	7.0
Equity

* These investment figures are indicative

The location of this project is Kyiv, Ukraine.

This is an environmental and social review category C project.
Location of environmental documents in locally affected community

Project Development Impact: The development impact of this project should be positive in many respects. - This project will provide a world class model for mortgage origination and servicing that can be used as an objective standard for the rest of the market to follow. - This project will stimulate a higher level of competition in the primary market which can only benefit the market as a whole. Consumers will have more choices, lower prices and better customer service. The lenders will bring their craft to a higher level of performance and productivity. Finally, long term investors will realize a higher level of confidence and more readily seek mortgage products in securitized form, benefiting the development of the capital markets. - This project and its positive effects on other primary market participants will stimulate new home building, causing existing construction firms to offer affordable products perhaps of improved quality, while stimulating new entrants into the construction sector. The flow-through effects of this on employment in both the professional trades and in the unskilled labour forces should be quite significant. The increased level of homeownership engendered by all the forces described above and the increased expenditures stemming from new homeowners on improvements to their new homes will act as a catalyst in development of downstream industries and the economy of Ukraine at large. IFC’s Role The primary mortgage market of Ukraine needs to be bolstered. The mortgage market needs to be competitive and consumers need to have choices. Both consumers and participating institutions will benefit from new competition. This competition will be an antidote for the relatively low level of transparency currently found in many banking firms in Ukraine today. IFC’s most obvious role is to foster this competition. In addition, bringing this new primary market originator and mortgage loan servicer will introduce a world class model for other participants to emulate. IFC by virtue of its world wide experience and staff expertise is best positioned to champion and help sponsor the introduction of a world-class competitor to this emerging mortgage market. The proposed investment fits well within IFC's strategy and the overall Bank Group strategy for Ukraine as this will be the first attempt to establish a specialized housing finance institution in the country, with the intentions of providing alternative source of funding to purchase residential real estate and further deepening Ukraine's financial sector.