logo_headerTuesday, July 5, 2022

Ukrainians borrowed record $1.8 billion in microloans in 2021

December 6, 2021 5:49 pmby Alexander Query
Microloans may be fast and easy to get but their interest rates are high and add up quickly. (Pixabay)

Ukrainian households borrowed roughly $1.8 billion (Hr 49 billion) in microloans between January and October 2021, according to Opendatabot. That’s $10 million more than in all of 2020.

The average loan amounted to $165 (Hr 4,500). These kinds of small loans are heavily advertised on Ukrainian TV channels, promising easy money for borrowers to make ends meet or buy expensive gadgets.

About 85% of these kinds of loan agreements are reached online. The market is exploding: in 2021, about 1.2 million loans were issued per month, compared to 983,000 in 2019. 

However, despite their convenience, interest rates on microloans can add up to a staggering 510% per year on average, according to a study by the United States Agency for International Development. Borrowers often overlook this fact, thinking they can pay the money back quickly. 

As a result, the total debt for overdue microloans has increased by 5% to $570 million in the first nine months of 2021. 

Alexander Query
Author: Alexander Query

Alexander Query is a business reporter at the Kyiv Independent. He is the former business editor at the Kyiv Post. He worked as a TV correspondent and an anchorman at UATV in Ukraine, and received a BA in modern literature from La Sorbonne, in Paris.

Tags: Loan