In a joint transaction, XacBank will be providing a local currency loan equivalent to $4.8m to Suu Milk, with 65% of the risk on the loan being assumed by the EBRD under a risk-sharing facility signed between the two financial institutions.
The funds will be used to finance the expansion of production capacity and the renewal of Suu Milk’s transport fleet, including the acquisition of new delivery trucks to serve more than 2,500 nomadic herders across Mongolia.
Also, new ice cream, dairy production and packaging equipment will widen its range of products, extend shelf life and raise food-safety standards.
It is expected the improvements will lead to reductions in the consumption of energy and water. Suu Milk said it is also committed to adapting its operational policies and practices to provide new employment opportunities for women.
Technical assistance funded by the European Union helped Suu Milk improve its accounting and financial reporting practices and enhance the company’s marketing.
Suu Milk, founded in 1958, sources milk supplies from 19 collection points in the country and has more than 420 employees.
In Mongolia, the EBRD works to help build a diverse economy by developing the private sector and supporting infrastructure improvements.
The bank has invested more than €1.84bn ($2.18bn) in 116 projects in the country since it started operations there in 2006.