National cashback: how the state supports national producers

In 2024, Ukraine introduced a new state initiative - the National Cashback program. The purpose of this program is to stimulate the consumption of domestic products and support national producers in conditions of economic crisis and war.

The essence of the program is that Ukrainians can receive 10% of the cost of purchased goods produced in Ukraine. In our article we will consider in detail the main aspects of the program, conditions, prospects and impact on the economy.

Launch of the program and first results

The “National Cashback” program was announced at the beginning of 2024, when President Vladimir Zelensky in February announced the launch of a new support initiative under the slogan “Buy Ukrainian”. The official start of the program took place on October 11, 2024, although beta testing lasted from September 2. Since that time, the program has received significant attention among citizens and businesses.

According to the Ministry of Economy, during the first month of beta testing, more than 1.2 million Ukrainians opened special bank cards to receive cashback, and accruals reached almost 3 million hryvnia. The main participants in the program were 11 banks, including PrivatBank, monobank, Ukrgasbank, Sberbank and others.

Yulia Sviridenko, First Deputy Prime Minister and Minister of Economy, also noted that during the beta testing period from September 2 to October 15, Ukrainians issued more than 2 million cards: “More than a million users are already seeing cashback in DIA.” 11 banks, hundreds of retailers and thousands of manufacturers have joined us. We are confident in the operation of the system after all testing and settings are completed,” she emphasized.

How the program works

To participate in the National Cashback program, you must complete several steps. First of all, citizens must register through the “Action” application, choosing one of the partner banks that provide the opportunity to open a special cashback card. After registration, you can use this card to pay for purchases in stores that have joined the program for goods produced in Ukraine. The system automatically accrues cashback in the amount of 10% of the cost of registered Ukrainian goods.

The key point of the program is that it only includes certain goods and services. Cashback does not apply to excisable goods such as alcohol and tobacco. At the same time, the cashback amount is limited: the minimum amount is 2 hryvnia per month, the maximum is 3,000 hryvnia.

Benefits for consumers

One of the main benefits for consumers is the ability to receive financial compensation for purchases. Although the maximum cashback amount is 3,000 hryvnia per month, most Ukrainians receive much smaller payments. However, even small amounts can be useful for additional expenses, such as replenishing a mobile account, paying utilities or even supporting APU.

In addition, the program helps reduce the financial burden on families who spend a large portion of their income on food. According to the Center for Economic Strategy, these are the families who will benefit most from the cashback program, since they will be able to partially offset rising food prices.

Conditions of participation for manufacturers and sellers

In order to become a participant in the program, national producers must register on the “Action” portal and submit an application for inclusion in the List of Ukrainian producers. Their products must be registered in a special list of Ukrainian products. This allows consumers to clearly see which items are eligible for cashback.

Merchants, in turn, must also apply to join the program through Action. However, it should be noted that the program is only available to large retail chains operating on a common tax system. The program does not apply to simplified entrepreneurs (FEs) and markets, which significantly limits its coverage.

Technical aspects and challenges

One of the key benefits of the program is its technical integration with the government Action application. After each purchase of Ukrainian goods, consumers can see the cashback amount, which is credited the next day. However, as beta testing showed, the system did not always work smoothly. In September, cashback was accrued with delays and sometimes was not reflected at all, which caused criticism from users.

However, there were concerns about the security and transfer of personal data of consumers. However, Deputy Minister of Economy Nadezhda Bigun emphasized that participation in the program is safe: “There is no reason to worry that this information will be used for other purposes,” she assured.

In addition, most of the technical problems were resolved in October. Now most users receive cashback on time. The program has also added a barcode scanner function, which allows you to check whether a product is eligible for the cashback program, which greatly simplifies the shopping process.

In particular, Minister of Digital Transformation Mikhail Fedorov, announcing on October 15 the launch of a barcode scanner in Action, explained: “You simply open Action, scan the barcode and find out whether it falls under the program. If yes, cashback will be credited; if not, the system will notify you about it.”

Criticism of the program

Despite its potential benefits, the National Cashback program has faced criticism. Some experts believe the program is too complex to administer and could create an additional financial burden on the state budget. According to government estimates, it is planned to spend UAH 3 billion on the implementation of the program in 2024, and in 2025 this amount may increase to UAH 6 billion.

In addition, some analysts point out that the program may distort competitive conditions in the market because it works only through large retail chains, leaving small businesses out of the game. This could lead to an increase in the influence of large chains and a weakening of the positions of small sellers and manufacturers.

“The cashback mechanism, implemented only through retail chains, distorts the conditions of competition in the market and enhances the market advantage of large retailers, harming small producers and sellers,” says a joint statement issued by a number of think tanks named after the President and Prime Minister. minister and other high-ranking officials.

Prospects for the program

Despite criticism, the National Cashback program has the potential to positively impact the Ukrainian economy. In particular, it can stimulate the consumption of domestic goods, which will contribute to the growth of domestic production and the creation of new jobs. In addition, increased demand for Ukrainian products could reduce the need for imports and improve the country's trade balance.

According to Gleb Vyshlinsky, executive director of the Center for Economic Strategy, the program can be especially useful for companies competing with foreign manufacturers, for example, in the food industry. If demand for Ukrainian goods increases, this could lead to higher incomes for domestic enterprises and higher wages for workers.

The National Cashback program is an interesting initiative that supports Ukrainian producers and consumers. Despite technical difficulties and criticism from experts, the program has already shown the first positive results. Its success will depend on the government's continued efforts to improve administration mechanisms and attract more participants. Time will tell whether National Cashback can become a powerful tool to support the Ukrainian economy.