AKIPRESS.COM - The International Finance Corporation, a member of the World Bank Group, is providing a $65 million loan to XacBank to support the expansion of access to finance for more than 44,000 micro, small and medium enterprises (MSMEs), to create jobs and promote economic diversification in Mongolia, the IFC reports.
The move marks the first syndicated loan to a Mongolian commercial bank. IFC’s funding consists of $5 million from IFC’s own-account and $60 million syndicated from five development financial institutions including DEG – Deutsche Entwicklungs- und Investitionsgesellschaft mbH, Proparco, FMO – the Netherlands Development Finance Company, Swiss Investment Fund for Emerging Markets (SIFEM) and FinnFund, with the aim of providing over 38,000 more loans to micro enterprises and over 6,700 extra loans to small and medium sized businesses.
“Mongolia’s micro, small and medium sized enterprises now account for about 50 percent of the country’s jobs,” said Randall Riopelle, IFC’s Country Manager for China, Mongolia and Korea. “But the majority of these enterprises struggle to access the financing they need to grow and create more jobs, leaving a significant financing gap, estimated at $1.29 billion or about 11 percent of GDP.”
“This financing further demonstrates the confidence of IFC and other global lenders in XacBank and comes at an opportune time with the local financial sector in need of foreign direct investments to boost the improving economic growth” said Tsevegjav Gumenjav, CEO of XacBank. “We believe this funding will directly fill much-needed financing gaps for local companies, positively impact creation jobs and aid stability of local economic development.”
“We estimate this investment will support XacBank to help the country’s micro, small and medium sized enterprises create up to 23,000 jobs in the next five years and diversify Mongolia’s resources-led economy,” said Rufat Alimardanov, IFC’s Resident Representative in Mongolia. “Through the project, IFC will mobilize an additional $12 from international investors for every $1 of IFC’s own account investment in Mongolia, contributing to the country’s economic recovery.”
IFC started its partnership with XacBank in 1999 by providing advisory services to assist its transformation from a non-government organization’s microfinance project into a commercial bank.