24 January 2025

Unlocking growth through catalytic technical assistance

The lessons from Ukraine's Agricultural crop receipt programme are explored by Callum Thomas, Kyrylo Mukhomedzyanov and Christian Brändli

In the world of development finance, the success of private sector investments hinges on more than just funding— they require the support of sound macroeconomic policies, effective regulations, and strong institutional capacity. Without a robust enabling environment that is conducive to unlocking private sector flows, external investments often face challenges in achieving their full potential. This has been particularly evident in Ukraine's agricultural sector, where efforts to transform financing for small and medium-sized enterprises (SMEs) highlight the critical role of catalytic technical assistance (TA) in creating the conditions for private capital to flow and thrive.

Callum ThomasRecent OECD work has focused on distinguishing between the mobilisation and catalysation of private finance through technical assistance (OECD DAC Working Party on Development Finance Statistics, 2023). Mobilisation refers to direct interventions typically targeting a ring-fenced project, where a clear causal link exists between TA activities and private investment, such as public-private partnership transaction advisory services for example. In contrast, catalysation involves indirect macro-level support, including capacity building and policy or regulatory reforms, which enhances the enabling environment and encourages greater private finance flows without a direct causal link.

Since 2015, the International Finance Corporation (IFC), in partnership with Switzerland's State Secretariat for Economic Affairs (SECO), has worked to modernise Ukraine's agricultural finance landscape through an ambitious crop receipt program. This initiative has provided farmers with a much-needed financial lifeline, enabling access to credit markets by addressing a long-standing barrier: insufficient collateral (IFC, 2020). The program's foundation was laid in 2012 with the introduction of the Law on Crop Receipts, which allowed farmers to use future harvests as collateral for loans. This legal framework, along with the creation of the Crop Receipts Register, proved instrumental in unlocking over $1 billion in financing between 2015 and 2020 (and over $2.1 billion by the end of 2024), facilitating investments that strengthened Ukraine's agricultural SMEs.

Kyrylo Mukhomedzyanov Recognising the need for further progress, the IFC and SECO launched the Ukraine Agriculture Capital Markets Development (UACMD) Project in 2020, expanding the scope of crop receipts to include livestock and primary processing while reducing transaction costs. These efforts not only improved access to finance for smaller farms, but also enhanced the sector's financial resilience. A pivotal milestone came in 2024, when the Law on Agrarian Notes was adopted, introducing electronic crop receipts (with the new name of agrarian notes) as digital tradable securities recorded in a central depository. This innovation streamlined financing processes, increased security, and paved the way for future integration with capital markets. Complemented by capacity-building efforts for farmers, creditors, and policymakers, these reforms catalysed systemic change, embedding resilience and fostering a more robust enabling environment for private finance in Ukraine's agricultural sector.

The success of Ukraine's crop receipt program was built on the foundations of modernized laws, reduction of transaction costs, targeted capacity-building for local authorities and market players, and broad public awareness campaigns to ease the adoption of new legislation. These efforts, coupled with the introduction of innovative tools like agrarian notes, not only addressed immediate financing barriers and positioned agricultural SMEs as drivers of economic growth and resilience in Ukraine, but also laid the groundwork for a thriving, scalable private sector investment ecosystem.

Ukraine's experience underscores the transformative power of macro-level catalytic technical assistance in driving sustainable private sector growth – which is precisely at the heart of a forthcoming OECD paper titled: 'The Role of Technical Assistance in Catalysing Private Sector Capital'. The paper sets out to identify the key structural challenges and analyse the unique potential of scaling macro-level catalytic TA in developing countries, in aims to drive systemic change through enhancing regulatory frameworks, strengthening institutional capacity and supporting macro-level market reforms. It also provides a set of policy recommendations, emphasising the need for stronger alignment between donors and DFIs, clearer accountability structures and improved metrics to better capture the systemic impact of TA.

Christian BrändliFor donors, development finance institutions (DFIs), and multilateral development banks (MDBs), Ukraine's crop receipt program highlights the importance of prioritising technical assistance that supports systemic structural reforms. By aligning interventions with local priorities and focusing on building robust investment ecosystems, development actors can promote sustainable, long-term growth. The program offers a practical blueprint for leveraging catalytic technical assistance to address systemic barriers and unlock the transformative potential of private finance.

Ukraine's crop receipt program serves as a powerful example for other nations, illustrating how targeted technical assistance can effectively address systemic barriers and mobilise private finance for sustainable development. This approach aligns with OECD recommendations outlined within the forthcoming paper, and embodies the objectives of the OECD Community of Practice on Private Finance for Sustainable Development (CoP-PF4SD). The upcoming CoP-PF4SD Conference, set to be held over the 4th and 5th of February in Paris, offers a unique opportunity for development finance experts to share insights, learn from successful initiatives like Ukraine's crop receipt program, and align efforts to create robust investment ecosystems aimed at unlocking greater amounts of private finance where it is needed most.

Callum Thomas is a Junior Policy Analyst at OECD.

Kyrylo Mukhomedzyanov is Project Lead at IFC.

Christian Brändli is Deputy Head of Private Sector Development at SECO.

The organisations represented in this article will be speaking at a conference on blended finance on 4 and 5 February in Paris. It is being hosted by the OECD in partnership with Environmental Finance. See the agenda here.

To register email events@fieldgibsonmedia.com