Finnfund, a Finnish development finance institution, has announced a significant investment in XacBank, one of Mongolia’s leading banks. The investment, a senior loan facility worth 10 million US dollars, aims to promote green growth and provide much-needed funding to micro, small, and medium enterprises (MSMEs) in Mongolia, particularly those owned by women. This loan is part of a larger, IFC-led syndicated loan package totalling 90 million US dollars, and it is eligible for the 2X Challenge, an initiative focused on gender investment.
XacBank plans to allocate 30% of the loan for green initiatives, such as renewable energy projects and energy-efficient technologies. The remaining 70% will be directed towards MSMEs, with 71% of that amount earmarked specifically for women-owned businesses. XacBank has made it a priority to support female entrepreneurs by offering targeted loans and financial services designed to help them overcome challenges in accessing credit, thus enabling them to scale their businesses.
This is not the first time XacBank has worked with Finnfund. The bank has been part of Finnfund’s debt portfolio since 2019. “We are happy to continue our cooperation with a well-run responsible lender in Mongolia with focus on important segments like MSMEs and women entrepreneurs as well as commitment to on-lending towards loan products with purpose to energy-efficient end usage, all of which are well aligned with Finnfund’s priorities,” said Antti Partanen, Investment Manager at Finnfund.
In addition to Finnfund’s support, the loan package has been bolstered by a performance-based incentive from the International Finance Corporation (IFC), which is a member of the World Bank Group. IFC is also the implementing partner for the Women Entrepreneurs Opportunity Facility (WEOF), a partnership between IFC and Goldman Sachs’ 10,000 Women, as well as the Women Entrepreneurs Finance Initiative (We-Fi).
Founded in 2001, XacBank has established a robust network of 73 retail branches and two business service branches across Mongolia. The bank is known for its commitment to sustainability and social responsibility and continues to play a vital role in financing Mongolia’s green transition.