Project

Mongolian Green Credit Fund (MGCF)

At a Glance

Start Date Q2 2017
Funding Source National Finance Vehicle
Approved Budget USD 50 000 000
Status Active
Thematic Area
  • Cross Cutting

Project Rationale

The Mongolian Green Credit Fund (MGCF), “Private sector initiative for a public purpose” type fund, will help the Government of Mongolia to achieve the targets set in the National Green Development Policy and its declared Nationally Determined Contributions. The goals for the MGCF program are to i) provide medium and long-term credit resources, ii) provide lower cost credit resources so as to lower interest rate to the end-borrowers, iii) offer a risk sharing facility to participating banks, and iv) support project pipeline development. Ultimately, the MGCF will also contribute to wider access to finance for segments of the economy that are under addressed, resulting in a healthier and sustainable environment, the creation of employment opportunities and a wider diversification of the economy.

Building on 2015-2016 work

The MBA along with other key stakeholders such as Ministry of Environment and Tourism (MET), IFC and FMO, worked to introduce green and inclusive lending practices and strategies in the Mongolian banking sector that resulted in the launch of the Mongolian Sustainable Finance (ToC) Principles and Sector guidelines (mining, manufacturing, construction, agriculture) in January 2015.

On November 27, 2015, MBA in cooperation with XAC bank, MET, the Bank of Mongolia (BoM), UB City Mayor’s office, the National Chamber of Commerce and Industry (MNCCI), IFC, FMO, UNEP-FI and PAGE jointly organized the 3rd Mongolian Sustainable Finance Forum 2015 in Ulaanbaatar. Discussions during the Forum focused on the implementation progress of the Mongolian Sustainable Finance (ToC) Principles and also aimed to initiate discussions on (1) how the private and public sector could collaborate on developing a green financing framework to support green growth in Mongolia and to invest in clean, green and environmentally friendly projects, and (2) to discuss a collaborative approach to enhance the implementation of sustainable finance and green economy in Mongolia in the coming years. As a result of Sustainable Forum, GGGI had an initial discussion with IFC to support MBA to develop the Green Credit Fund.

Planned Results

GGGI supported to developed a detailed MGCF Business Plan proposing the fund’s legal status and operational structure. Pipeline project development are ongoing i) energy efficiency targeting 15 Designated Entities identified under the Law on Energy Conservation ii) selected sub-sector assessment and pipeline project development under GCF Readiness program.

Readiness and Preparatory Program was approved by Green Climate Fund to work on market demand assessment and pipeline project development of (i) energy efficiency heating and small-scale renewable energy in Ger district, (ii) green and affordable housing and (iii) urban sanitation and waste management from September 2017 for 12months. GGGI keeps working on this readiness activities with a view to incorporate the MGCF and start full operations by Q3 2018.

As for fund establishment/launching, Memorandum of Understanding on MGCF establishment was signed among Ministry of Finance (MoF), MET, MBA and GGGI at the Mongolian Sustainable Finance Forum in September 2017. Consequently, the first MGCF steering committee was held in November 2017 among MoF, MET, MBA, GCF and GGGI to finalize a fund structure and government initial contribution. In December 2017, XAC Bank agreed to become to Accredited Entity to request funding to GCF. In Q1 2018, GGGI leads to complete Funding Proposal to submit to GCF via XAC bank. Final launching of the Fund is expected in Q3 2018.

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