Project Name Promoting Inclusive Financial Services for the Poor
Project Number 44112-012
Country Mongolia
Project Status Approved
Project Type / Modality of Assistance Grant
Source of Funding / Amount
Grant 9152-MON: Promoting Inclusive Financial Services for the Poor
Japan Fund for Poverty Reduction US$ 2.50 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Partnerships
Sector / Subsector

Finance - Inclusive finance

Gender Equity and Mainstreaming Gender equity
Description

Component A

This component will improve the basic understanding of household financial management and available financial services. A selective national baseline survey will assess financial literacy. Financial regulators will use this and other information to identify key messages for the public. The messages are expected to include the need for regular cash savings; selective use of credit and borrowing; ways of choosing between alternative options for savings, loans, and other services; information on what financial agreements mean; and what to do in cases of financial trouble and stress. These messages will be commuicated by means of Mongolian drama series. A pilot o 6 episodes will be produced and presented on selected televesion stations and tested for effectiveness of message delivery and impact on financial behaviour. If the results are positive, the 6 episodes and an additional 25 episodes will be broadcast on national television from November to March during the evening, with an accompanying text-in system to test viewing rates and message delivery with small incentive payments for answers. After the project is completed, FRC has agreed to continue the series using its own funds, and Bank of Mongolia (BOM) will consider contributing to the broadcast and production cossts. If radio proves to be a more effective medium to reach poor households after the initial randomnized evaluation, project efforts will shift this to media.

Component B

This component will improve the basic understanding of household financial management and available financial services. A selective national baseline survey will assess financial literacy. Financial regulators will use this and other information to identify key messages for the public. The messages are expected to include the need for regular cash savings; selective use of credit and borrowing; ways of choosing between alternative options for savings, loans, and other services; information on what financial agreements mean; and what to do in cases of financial trouble and stress. These messages will be communicated by means of a Mongolian drama series. A pilot of 6 episodes will be produced and presented on selected television stations and tested for effectiveness of message delivery and impact on financial behavior. If the results are positive, the 6 episodes and an additional 24 episodes will be broadcast on national television from November to March during the evening, with an accompanying text-in system to test viewing rates and message delivery with small incentive payments for answers. After the project is completed, FRC has agreed to continue the series using its own funds, and Bank of Mongolia (BONI) will consider contributing to the broadcast and production costs. If radio proves to be a more effective medium to reach poor households after the initial randomnized evaluation, project efforts will shift to this media.

Component C

This component will improve capacity for efficient project implementation, support management and coordination by FRC, and provide for rigorous and timely evaluation of results. FRC will assign staff to implement the project and perform the following functions under this component: (i) oversee the JFPR grant and budget; (ii) ensure completion and submission of required annual audit reports; (iii) select consultants, complete procurement, and finalize required subcontracts and oversee their implementation; (iv) ensure

monitoring and evaluation activities, including financial audits; (v) ensure that Mongolia Confederation of Credit Unions and Mongolia Cooperative Training and Information Center activities are undertaken, and stakeholder exchanges are established; (vi) coordinate with the project steering committee, SCCs, local governments, BOM, and other stakeholders; and (vii) incorporate project achievements, activities, and lessons into ongoing, government-funded work of FRC, the Mongolia Confederation of Credit Unions, and the Mongolia Cooperative Training and Information Center. Government counterpart contributions will include staff, office space, local transport and logistics, and meeting activities.

Project Rationale and Linkage to Country/Regional Strategy The current CPS, extended for one year beyond expiry, provides for implementation of the two major pillars of the Government?s strategy: (i) stable broad-based growth and (ii) inclusive social development. Country assistance under the first pillar includes opening economic opportunities in rural areas. The second pillar involves increases in economic opportunities and raising and stabilizing incomes, reducing unemployment, and improving education and living conditions. Under Strategy 2020, poverty reduction via inclusive economic growth is the first agenda. Good governance and capacity building, private sector development, and gender equity are three of the four drivers of change. Finance sector development is one of the five core areas of change. The proposed JFPR touches upon all these priorities.
Impact Increased number of poor and vulnerable nonpoor households (male and female household heads) in Mongolia have access to financial services
Project Outcome
Description of Outcome Increased number of poor and vulnerable nonpoor (male and female) become members of savings and credit cooperatives
Progress Toward Outcome A national IT company was selected to develop SCC accounting software in March 2015. Total 5 regulations have been drafted and 5 regulations have been revised. New regulation on Prudential Ratio was approved and effective since Jan 29, 2014. Drafted and revised regulations have been discussed with the involvement of 348 elected and board members from 136 SCCs in 5 regional areas from November through June 2014. This discussion covered 96.5% of all SCCs. The regulatory consultant hired. Inspectors and officers of microfinance department are working on analysis of comments collected from the regional discussion and finalizing the regulations for confirmation. The regulatory advisor s recommendations discussed amongst all the stakeholders. On-site supervision conducted for 25 SCCs in total and risk based supervision inspection done for 28 SCCs in total as well as the consultancy services provided.
Implementation Progress
Description of Project Outputs

1. SCC regulatory and supervision system updated to meet new legal requirements and market conditions

2. SCC field operations validate

3. Basic financial education messages effectively coimmunicated to the public

4. Impact of SCC capacity training options and basic financial education evaluated

Status of Implementation Progress (Outputs, Activities, and Issues)

FRC has organized 5 regional discussions on regulations with international consultants' inputs on such issues as stabilization fund, regulation and supervision system. In total, 348 board and elected members from 136 SCCs have participated and actively involved to the revisions of the regulations. Regulatory consultant made her recommendations and The regulatory advisor's proposal discussed amongst the stakeholders. Finalized revisions into Stabilization fund regulation with inputs from Regulatory advisor approved by FRC in December 2014. General regulation will be presented for confirmation in February 2015.

Revised on-site and off-site supervision requirements and instructions after consolidated inputs from regional discussions will be approved FRC high management in November 2014.

SCCs prepared the financial report for 2013 year end and quarterly reports of 2014 in compliance with the newly approved regulation on prudential ratio. FRC inspectors reviewed the reports and provided necessary comments and advices.

Second assessment has started in June and completed by November covering 95.7% of all SCCs. Consolidated reports and comparative statements introduced to PSC in December 2014. Final report will be introduced to the FRC in February, 2015

M&E team is developing the methodology to assess the effectiveness of SCC capacity building training.

Data for this indicator was collected from respondents who participated in the financial education survey. 749 respondents took part in the survey.

TV series with 24 episodes total lasts of 840 minutes completed in December 2014.

Broadcasting started in January 2015 via Edutainment channel all over the country. The pre and post Drama survey results were completed. The unified report will be developed after endline survey is completed around early April. Baseline survey data collection and data entry was completed. The report is drafted in Mongolian and will be finalized both in English and Mongolian by the early February. English and Mongolian reports will be produced. The TV drama became the 2nd most watched TV show through Education TV channel, one of the most popular TV channels nationwide.

Financial education functional tests have been developed and finalized. The software was developed, tested and finalized. Text-in message survey has started. The full survey includes 6 short surveys.

SCC test results are compiled. Training test results will be incorporated in SCC assessment report.

Data collection from SCCs will be conducted starting in February 2015.

Financial education baseline survey is completed and draft report is finished in Mongolian.

Geographical Location Mongolia, specific areas TBD
Safeguard Categories
Environment C
Involuntary Resettlement C
Indigenous Peoples C
Summary of Environmental and Social Aspects
Environmental Aspects No impact. No further action is required.
Involuntary Resettlement No impact. No further action is required.
Indigenous Peoples Not applicable
Stakeholder Communication, Participation, and Consultation
During Project Design Extensive consultations with stakeholders. Consultant did survey of 300 rural households to determine issues in SCC operations and financial educatoin. Multiple rounds of discussions took place in three regions, and with SCCs, regulators, MOCCU, MCTIC, the NCA, and relevant government bodies.
During Project Implementation Parliament passed new SCC law end January 2012 after which project was signed. Ongoing consultations with SCCs and their members nationwide, along with MOCCU and MCTIC, is part of the project activities. Recruited consultants are working extensively with the EA and IAs to achive the project's highly sucessful outcome. On the financial education, the project team uses the world bank survey and conducted a field survey to determine fiscal literacy level of people living in Ulaanbaatar and rural areas.
Business Opportunities
Consulting Services Individual consultants will be selected and engaged by ADB in accordance with the guidelines on the use of Consultants.
Procurement Procurement under the project will be conducted in accordance with ADB's Procurement Guidelines (2012, as amended from time to time). Goods, services, and works estimated to cost the equivalent of less than $100,000 will be procured by ADB's shopping procedure. Goods and services with an estimated value of less than $500,000 and works with an estimated value of less than $1,000,000 will be procured using national competitive bidding. Items costing less than $1,000 may be directly purchased from the supplier.
Responsible ADB Officer Enerelt Enkhbold
Responsible ADB Department East Asia Department
Responsible ADB Division Mongolia Resident Mission
Executing Agencies
Financial Regulatory Commission of MongoliaINFO@FRC.MMGovernment House IY, Baga Toiruu-6,
Ulaanbaatar-46
Mongolia
Timetable
Concept Clearance 20 Apr 2010
Fact Finding 30 Jun 2010 to 07 Jul 2010
MRM -
Approval 17 Dec 2010
Last Review Mission -
PDS Creation Date 14 Apr 2010
Last PDS Update 27 Mar 2015

Grant 9152-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
17 Dec 2010 17 Jan 2012 17 Jan 2012 17 Jan 2015 17 Jan 2016 -
Financing Plan Grant Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 2.91 Cumulative Contract Awards
ADB 0.00 17 Dec 2010 0.00 2.25 90%
Counterpart 0.41 Cumulative Disbursements
Cofinancing 2.50 17 Dec 2010 0.00 2.17 87%

This project data sheet was generated from http://www.adb.org/projects/44112-012/main on 05 September 2015