ADB and XacBank Launch $50M Green Finance Initiative to Support Climate Action and MSME Growth in Mongolia

The Mongolian government aims to expand this market by 2030, requiring private sector investment to achieve these goals.

The Asian Development Bank (ADB) and XacBank Joint Stock Company have entered into a $50 million financing partnership aimed at advancing climate action and bolstering micro, small, and medium-sized enterprises (MSMEs) in Mongolia. This move supports sustainable development, gender equality, and Mongolia’s path toward achieving net-zero emissions.

The financing package includes:

$40 million from ADB.

$10 million concessional loan from the Canadian Climate and Nature Fund for the Private Sector in Asia (CANPA).

Allocation Breakdown:

70% of funds will go toward climate mitigation and adaptation projects.

The remainder will support multisector MSMEs, with a focus on women-owned and women-led businesses.

ADB Vice-President for Market Solutions Bhargav Dasgupta emphasized the importance of fostering a robust green finance market in Mongolia to meet its climate and economic resilience goals:

"As Asia and the Pacific’s climate bank, ADB is partnering with XacBank to improve the livelihoods of people who run crucial businesses and to support broad economic growth, while helping Mongolia to build resilience against climate impacts."

Green Finance and MSME Challenges in Mongolia

Mongolia’s green finance sector is underdeveloped, with green loans constituting only a small portion of total bank loans. The Mongolian government aims to expand this market by 2030, requiring private sector investment to achieve these goals.

MSME Contributions and Hurdles:

• MSMEs account for over 70% of registered businesses and are a significant source of employment.
• However, many face credit access barriers, particularly for green investments.

By improving access to affordable, climate-friendly financing, the initiative will support sustainable business growth and help MSMEs contribute to Mongolia's climate resilience.

Promoting Gender Equality and Inclusive Growth

ADB and XacBank will introduce new gender-focused financial products, empowering women entrepreneurs and strengthening women-owned businesses across the country.

XacBank CEO Tsevegjav Gumenjav highlighted the transformative potential of the partnership:

"This collaboration allows us to offer long-term, affordable financing options that empower green businesses and MSMEs to thrive, contributing to a sustainable and inclusive economy for Mongolia."

About CANPA and XacBank

CANPA, launched in 2024, is an ADB-managed trust fund backed by a Can$360 million commitment from the Government of Canada. It supports private-sector projects in Asia and the Pacific, focusing on climate solutions, nature-based projects, and gender equality. The ADB-XacBank financing package represents CANPA’s first commitment.

XacBank, established in 2001, is a leading Mongolian bank with a strong focus on sustainable finance and MSME development. It operates in all 21 provinces, serving over 1 million customers through 72 branches.

Looking Ahead

The ADB-XacBank partnership is poised to accelerate Mongolia’s progress toward a greener economy by driving investment in renewable energy, climate resilience, and inclusive financial solutions, ensuring that businesses and individuals alike benefit from sustainable economic growth.