ADB, Xacbank Sign $50 Million Deal to Boost Climate and MSME Financing in Mongolia

ULAANBAATAR, MONGOLIA (3 December 2024) — The Asian Development Bank (ADB) and XacBank Joint Stock Company (XacBank) have signed a $50 million financing package to enhance financing for climate action and to support micro, small, and medium-sized enterprises (MSME) in Mongolia.

The package includes $40 million from ADB and a $10 million concessional loan from the Canadian Climate and Nature Fund for the Private Sector in Asia (CANPA). At least 70% the financing package will be dedicated to climate mitigation and adaptation projects, with the remainder allocated to multisector MSME finance, including lending to women-owned and women-led businesses.

"A strong green finance market is essential to fostering a sustainable economy that supports Mongolia's net zero goals," said ADB Vice-President for Market Solutions Bhargav Dasgupta. "As Asia and the Pacific’s climate bank, ADB is partnering with XacBank to improve the livelihoods of people who run these crucial businesses and to support broad economic growth, while helping Mongolia to build resilience against climate impacts."

Green finance is increasingly important in Mongolia, which faces significant climate vulnerabilities and high greenhouse gas emissions. The local green loan market is still developing, with green loans representing only a small percentage of total bank loans. The Mongolian government aims to expand this market by 2030, highlighting the need for private sector involvement to meet these and other climate targets.

MSMEs are vital to the Mongolian economy, making up over 70% of registered businesses and employing a considerable share of the workforce. Even so, they often struggle to access credit, especially for investments that meet green standards. Expanding their access to climate-friendly and inclusive financing can help enhance the resilience of this key strategic sector and drive sustainable and inclusive growth in Mongolia. ADB will assist XacBank in promoting gender equality including by offering new banking products for women entrepreneurs.

“At XacBank, we are dedicated to advancing sustainable finance and supporting businesses that contribute to Mongolia’s climate resilience,” said XacBank’s Chief Executive Officer Tsevegjav Gumenjav. “This partnership with ADB allows us to offer long-term, affordable financing options that will empower more green businesses and MSMEs to thrive, contributing to a sustainable and inclusive economy for Mongolia.”

Established in 2024, CANPA is a trust fund managed by ADB, supported by a commitment of Can$360 million from the Government of Canada. The fund builds on the success of the two previous funds, namely the Canadian Climate Fund for the Private Sector in Asia II (CFPS II) and its predecessor CFPS. CANPA aims to support private-sector projects in Asia and the Pacific that focus on climate and nature-based solutions, while also promoting gender equality. This financing package marks the first commitment under CANPA.

Established in 2001, XacBank is one of Mongolia’s leading banks, with a strong commitment to sustainable finance and MSME development. XacBank operates across all 21 provinces, serving over 1 million customers through its 72 branches.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 69 members—49 from the region.