Verkhovna Rada of Ukraine Approves the Establishment of the National Development Institution Based on the BDF

The Verkhovna Rada of Ukraine has approved draft law No. 11238 “On the National Development Institution” (NDI), developed with the participation of the Ministry of Finance of Ukraine (including the Reform Project Office), the Business Development Fund (BDF), the German Development Bank KfW, and consultants from Deloitte, and agreed upon with the World Bank and the European Union. A total of 280 Members of Parliament voted in favor of the decision.

The draft law, in particular, provides for the establishment of a financial institution with a special status — the National Development Institution — based on the BDF. The NDI will operate as a “second-tier” institution, on a non-profit basis. Its mission will be to ensure access to affordable financing for small and medium-sized enterprises (SMEs) through partner banks. The institution will have autonomous governance, adapted regulation by the National Bank of Ukraine, and the authority to administer state business support programs.

The law also opens the way for direct cooperation between the NDI and the EU, enabling the attraction of financing from European programs for Ukrainian businesses.

“The BDF, which, among other things, implements the state program ‘Affordable Loans 5-7-9%’—a program that has proven effective in promoting economic resilience and growth—has become a platform for launching the National Development Institution and for Ukraine’s further integration into the European financial ecosystem. The law adopted today by the Verkhovna Rada also paves the way for direct cooperation between the National Development Institution and the EU, enabling the attraction of financing from European programs for Ukrainian entrepreneurs,” emphasized Yurii Draganchuk, Deputy Minister of Finance of Ukraine for European Integration.

According to Andriy Hapon, Chairperson of the Management Board of the BDF, the establishment of the NDI is a strategic step that unites the efforts of the government, parliament, and international partners to build a modern financial support system for entrepreneurship.

“The adoption of the law on the NDI is not just a reform on paper — it marks a new stage in the financial support system for SMEs in Ukraine.

The National Development Institution is designed to become a central element of the financial infrastructure for recovery, combining state policy, international partnerships, and real opportunities for Ukrainian businesses. The NDI’s operational model will follow the practices of the German Development Bank KfW, combining institutional autonomy with close cooperation with the government,” he emphasized.

Lorenz Gessner, Head of the KfW Office in Ukraine, noted that the adoption of the draft law and the establishment of the NDI are being implemented within the framework of the “Vision: BDF 2.0” initiative — part of the German government’s support package for the development of a modern and sustainable SME support infrastructure in Ukraine.

“The ‘Vision: BDF 2.0’ initiative provides for three stages of BDF development.

At the first stage, the Fund will be transformed into a sustainable, reliable, and independent institution capable of attracting and implementing international and state SME support projects in line with the world’s best standards. During this stage, the BDF’s corporate governance will be reformed, and a supervisory board will be established with the participation of government representatives.

At the second stage, the Fund is expected to undergo an EU compliance assessment, which, if successful, will allow it to directly attract EU funding and significantly accelerate the development and deployment of Ukraine’s recovery programs, making the BDF one of Ukraine’s leaders in European integration.

Finally, at the third stage, the Fund aims to enter international financial markets to attract private investment for financing programs supporting the recovery of the Ukrainian economy,” said Gessner.

It should be recalled that during the Ukraine Recovery Conference (URC 2025) held in Rome in June 2025, the BDF signed a grant agreement with KfW worth EUR 40.5 million, as well as received USD 100 million in financing from the World Bank to support targeted business groups.

The launch of the “Vision: BDF 2.0” initiative was jointly announced by the Governments of Ukraine and Germany in June 2024, during the URC 2024 Conference.

The Business Development Fund (BDF) is a state financial institution whose mission is to support the financing of micro, small, and medium-sized enterprises (MSMEs) in Ukraine on affordable terms.

The BDF provides entrepreneurs with access to financial resources, support services, and program assistance, fostering private sector growth, job creation, and enhanced competitiveness of Ukraine’s economy through the implementation of a range of state programs that have proven effective in promoting economic resilience and growth, including the programs “Affordable Loans 5-7-9%”, “Affordable Factoring”, and others.