Ulaanbaatar, Mongolia, November 10, 2020–About 15,000 micro, rural and women entrepreneurs in the next three years are set to benefit from an innovative Mongolia Tugrik (MNT) denominated loan facility for Transcapital LLC, a leading non-bank financial institution in Mongolia, arranged by IFC, a member of the World Bank Group.
The move is part of IFC's strategic efforts to boost resilience in the country's financial sector amid COVID-19. The facility includes a 3-year loan of about MNT 8.4 billion (about $3 million) from IFC's own account and a syndicated loan of about MNT 25.2 billion (about $9 million) from Impact Investment funds including Invest in Visions GmbH (this transaction arranged by German research agency Agents for Impact GmbH and Co. KG), the Microfinance Initiative for Asia by BlueOrchard Finance Ltd, ACTIAM, and Developing World Markets.
"Micro, small and medium sized enterprises are the backbone of the Mongolian economy, providing over 50 percent of all jobs. They are also the ones hardest hit by the impact of COVID-19," said Altanzul Zorigt, CEO, Transcapital. "IFC's innovative financing will allow us to expand our support to Mongolian micro and small enterprises while contributing to the nation's effort to rebound from COVID-19 effect."
In Mongolia, about 90 percent of micro, small and medium sized enterprises (MSMEs) do not have regular access to bank lending, with the financing gap estimated at $1.29 billion. The lingering negative effects of the pandemic, including decreasing global demand and commodity price, may put more pressure on the resource-rich economy and its businesses.
"This innovative investment will address some of the challenges faced by Mongolian businesses, especially micro and women-owned enterprises in rural and semi urban areas," said Rufat Alimardanov, IFC's Resident Representative for Mongolia. "This marks the first time IFC has invested in a non-banking financial institution in Mongolia and it's also our first local currency syndication in Mongolia. The financing signals our strong commitment to helping Mongolian enterprises in the recovery and rebuilding process in the wake of COVID-19."
IFC is increasing its support to the Mongolian financial sector to strengthen its stability, expand the range and availability of financial products, and improve access to financial services for small and medium enterprises. Earlier this year, IFC signed agreements with the regulator and banking association to jointly develop value chain finance. IFC has also increased the tradeline limits for its partner banks in Mongolia earlier this year, as part of IFC's responses to supporting its partners to tackle with COVID pandemic.
About IFC
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2020, we invested $22 billion in private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org.
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About Transcapital
Transcapital, the largest non-bank financial institution in Mongolia with 35 branches located around the country, has provided microfinance services since 2001. Through strong local and international partnership, we have been able to focus on the development of MSMEs in semi-urban and rural locations, helping them to create jobs and new opportunities in their businesses and livelihoods. We offer not only financial access to our clients, but also support them with financial advisory and training.
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