EBRD stimulating growth of small agricultural companies in Mongolia

• EBRD lending up to US$ 20 million for Mongolian agricultural MSMEs
• Loan to Khan Bank will strengthen MSME resilience, promote green investment
• Project will boost Mongolia’s food security and MSME competitiveness

The European Bank for Reconstruction and Development (EBRD) is helping to strengthen the resilience of Mongolia’s agribusiness sector with a loan of up to US$ 20 million (€16.8 million) to Khan Bank, the country’s largest private financial institution, for on-lending to micro, small and medium-sized enterprises (MSMEs) operating in the agricultural sector.

The loan will help Khan Bank to expand its lending to MSMEs in rural areas, improve its climate-risk management and promote green investment among small domestic businesses. At least 15 per cent of the funds are expected to be channelled to supporting environmentally sustainable projects in the agricultural sector, targeting climate-change mitigation and improving the climate resilience of local agribusiness firms.

This is the EBRD’s first financing facility in Mongolia and Central Asia earmarked for use in the agribusiness sector. By partnering with the EBRD, Khan Bank will commit to scaling up climate-smart financing and expanding access to finance for underserved rural agribusinesses. The project will also aim to contribute to Mongolia’s national sustainable-finance roadmap.

The country’s agricultural sector contributes more than 7 per cent of gross domestic product and employs a significant share of the population in rural areas.

These new funds and advanced financial products will help to make Mongolia’s agribusiness firms more resilient, as the sector can be adversely affected by extreme weather, pasture degradation, outdated infrastructure and weak logistics. The aim is also to provide better access to finance for herders and small processing companies operating in remote rural locations.

The project will also benefit from technical assistance available under the EBRD's Advice for Small Businesses programme, supported financially by the European Union.

The EBRD has invested almost €2.55 billion in Mongolia’s economy through 160 projects to date. Around 90 per cent of this funding has been used to support private-sector companies.