Ulaanbaatar, Mongolia, May 20, 2002—The International Finance Corporation—the private sector lending arm of the World Bank Group—is providing a US$400,000 loan to Mongolia’s XacBank, marking IFC’s first investment in Mongolia’s financial sector and demonstrating its commitment to developing the banking sector. The loan will also help to bring badly needed credit to the country’s microentrepreneurs and small and medium enterprises (SMEs).
“IFC sees an urgent need to strengthen Mongolia’s financial institutions to support private sector development and provide small businesses and micro enterprises with access to banking services,” said World Bank President James Wolfensohn at the signing ceremony in Ulaanbaatar. “We also support XacBank’s strategy to reach the poor and under-served communities in Mongolia.”
The Golden Fund for Development (X.A.C. LLC) was established in May 1999 as Mongolia’s first micro-credit company and the country’s first non-bank financial institution with a grant from the United Nations Development Programme. In 2001, X.A.C. LLC merged with Goviin Ekhlel, a non-bank financial institution founded in December 1999, which specializes in SME, herder, and cooperative lending. Goviin Ekhlel was established with financing from USAID and the United States Embassy in Mongolia. The merged institution, which received its banking license in December 2001, offers credit and other banking services to SMEs and micro enterprises. XacBank has 21 branches throughout Mongolia.
IFC’s cooperation with XacBank began with technical assistance in mid-2000. The Netherlands Ministry of Foreign Affairs made $125,000 available through its SME trust fund. This technical assistance was focused on the strengthening of XacBank through improved management and governance to enable it to access funding sources. By this investment, IFC hopes to promote best practices to foster the growth of microfinance borrowers and SMEs in Mongolia.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956 through the close of the last fiscal year on June 30, 2001, IFC committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.
3 billion.
