KIEV -- Ukraine started distributing certificates Thursday to speed the transfer of state property to private hands, a measure officials hope will kick-start a long-delayed mass privatization campaign.


By the end of the year, the government hopes to turn around Ukraine's woeful privatization record, selling off 8,000 medium and large firms -- mostly by exchanging certificates for shares. Small businesses will also be shifted to private owners.


"This is going to be a transitional year for Ukraine. If we follow through with the president's vision, I believe we can make this happen," Yury Yekhanurov, the energetic head of the State Property Fund, said in an interview.


"Our biggest challenge is going to be overcoming the inertia of people who don't want changes," he said.


President Leonid Kuchma, the driving force behind privatization and other economic reforms, has said he favors foreign investment in large firms. He wants to cut the size of the military-industrial complex and privatize oil refineries.


In three years of independence, Ukraine has privatized less than 10 percent of the state sector. The Ukrainian Stock Exchange currently trades shares of only two companies.


Yekhanurov said that figure would soon increase 100-fold. "Then people will understand we're serious," he said.


Handing out 46 million certificates -- Kiev's answer to the Russian privatization voucher -- would make the process more accessible to the average Ukrainian, Yekhanurov said.


Some 6 million Ukrainians have already invested money in special privatization bank accounts, which the certificates replace. He said they would not obtain the paper version.


No one doubts, however, that educating Ukrainians about capitalism and privatization will take time.


On Thursday morning, only three pensioners were queuing for certificates, which cannot be traded, at a Kiev savings bank.


"I heard about the certificates on the radio. I don't know how to use it, but my children and grandchildren know what to do," said Mykhailo Mohyla, 72.


Another man was rebuffed when he tried to pay 22,700 karbovanets (20 cents) for a certificate for his recently deceased wife.


The third was turned back because he had already used his bank account to invest in one of a growing number of trust companies advertised on television.


"The trust told me I could get dividends, but I don't even know what that is or where to get them," Petro Myronenko said.


"Now the bank tells me I can't have a certificate. I live in a country where I'm always being fooled," he sighed.


The certificates have a face value of 1.05 million karbovanets but the government plans to increase the nominal value of each certificate to about 45 million. Yekhanurov said the next step was setting up new centers to help potential shareholders invest their certificates and holding regular auctions for small businesses.


Western officials praise Kiev's new attitude to privatization. "This is a sea change," said Robert Foresman, head of the International Finance Corporation's Kiev office, which advises the government on small-scale privatization.