‘Backbone of the economy’: New money to rescue struggling businesses
About 15,000 entrepreneurs are set to benefit from a new lending facility over the next three years .
The tugrik-denominated facility is being arranged for Transcapital LLC, a leading non-bank financial institution in Mongolia, by IFC, a member of the World Bank Group. It is part of 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 other investment funds.
"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 of 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."
In Mongolia, about 90 percent of micro, small and medium sized enterprises 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 prices, are putting 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.”
Earlier this year, IFC signed agreements with the regulator and banking association to jointly develop value chain finance and it has also increased the tradeline limits for its partner banks in Mongolia.
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