Local currency loan to XacLeasing
The EBRD is further supporting small and medium-sized enterprises (SMEs) in Mongolia by providing a loan in Mongolian tugrik – equivalent to US$ 3 million – to XacLeasing Mongolia, a leading provider of diversified leasing services in the country.
Leasing is a growing sector in Mongolia, where it represents an important alternative to bank lending for SMEs in need of finance. Although SMEs account for 90 per cent of all registered businesses in Mongolia, they have limited access to long-term financing due to lack of collateral and credit history.
Under the EBRD’s SME Local Currency Programme, the Bank’s funds will be on-lent to SMEs with a particular focus on machinery, commercial vehicles and medical appliances.
The financing will also support the business development plan of XacLeasing in the SME sector and help to diversify its sources of funding, while reducing foreign currency risk.
Noel Edison, Director for Insurance and Financial Services at the EBRD, said: “Partnering with XacLeasing will increase the availability of much-needed long-term funding in local currency for SMEs that are underserved by bank finance. SMEs are the backbone of the economy and they contribute to most employment and economic growth in Mongolia.”
Tsevegjav Gumenjav, CEO of XacLeasing, commented: “The fact that this is the EBRD’s second local currency loan to XacLeasing shows that the leasing sector in Mongolia has performed exceptionally well over the past years, experiencing tremendous growth, and that leasing is a promising alternative solution to financing needs. The EBRD’s financing will not only help us to increase our leasing to SMEs, but will also help our clients avoid foreign exchange risk.”
The EBRD is a leading institutional investor in Mongolia, with over €1.4 billion invested in 93 projects in the country to date. The Bank’s investments aim to make the local economy more competitive, integrated and resilient.