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ADB, Mongolia Sign Agreements to Support Ger Areas Development and Deepen Financial Services
ULAANBAATAR, MONGOLIA – The Asian Development Bank (ADB) and Mongolia’s Ministry of Finance today signed two grants to improve urban services in Ulaanbaatar’s ger areas and to improve financial services for the low income households.
“The new ADB project will be the single largest investment to create jobs and improve livelihoods in Ulaanbaatar’s rapidly expanding ger areas. The grant to the Financial Regulatory Commission will help improve the performance of savings and credit cooperatives and provide modern financial education. Both grants will help Mongolians to ensure a more secure and prosperous future,” said Robert Schoellhammer, who signed the agreements on behalf of ADB.
Mr. S. Bayartsogt, Minister of Finance, signed the agreements at State House in Ulaanbaatar on behalf of the Ministry of Finance.
The grant for the Ulaanbaatar Urban Services and Ger Areas Development Investment Program and the grant for Promoting Inclusive Financial Services for the Poor, for $1.5 million and $2.5 million respectively, are financed by the Japanese Fund for Poverty Reduction (JFPR), a facility that the Government of Japan uses to channel funding to developing Asia through ADB.
Mr. Takenori Shimizu, Ambassador Extraordinary and Plenipotentiary of Japan to Mongolia and Mr. Himomichi Miyashita, the First Secretary, witnessed the signing.
Ger areas house 60% of the population of Ulaanbaatar. However, the lack of urban planning, services and basic infrastructure -- such as water, sanitation, heating systems and roads -- is a real problem, severely damaging the environment, threatening the health of Ulaanbaatar citizens, and causing a high level of congestion in the city center. The situation is also constraining the economic growth of ger areas.
The grant will be used to prepare a set of projects to provide basic urban infrastructure in ger areas - mainly water, wastewater and heating - while improving urban services and urban planning. The program will focus on the development of existing subcenters in ger areas to provide more job opportunities and livelihood services.
Low-income households in Mongolia find it hard to access savings, credit, and insurance services because information or suitable financial products are not available to them. The latest national household survey revealed that only 31% of households and 13% of poor households use formal financial services. Savings and credit cooperatives, under new legislation passed in December 2011, have the potential to serve these families and improve their livelihoods.
The grant for Promoting Inclusive Financial Services for the Poor will help improve and expand savings and credit services for low income households, especially in rural areas. It will ensure savings and credit cooperatives grow responsibly under strong regulation by the Financial Regulatory Commission. Financial education in the form of TV dramas will also be introduced. New evaluation methods, including mobile phone call-in systems, will be used to track project results.
Mongolia joined ADB in 1991. Since then, the country has received 44 loans totaling $774.7 million. In addition, 12 Asian Development Fund (ADF) grant projects, totaling $172.2 million, were approved from 2007, when Mongolia became eligible for ADF grant financing. ADB’s goal is to help the government implement major elements of its development strategy, accelerate private sector-led growth, and reduce disparities in development between rural and urban areas. To date, six technical assistance grants worth $6.2 million have been provided the JFPR and administered by the ADB. Another 16 JFPR grant projects worth $31.49 million have been approved by ADB, making Mongolia the country with the most approved JFPR grant projects among ADB Developing Member Countries.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members -- 48 from the region.