Mongolia: Supporting Micro, Small, and Medium-sized Enterprises in the Ger Areas of Ulaanbaatar during COVID-19 Crisis

Sovereign Project | 45007-012

The transaction technical assistance (TA) will (i) assess capacity, needs, and opportunities for micro, small, and medium-sized enterprises (MSMEs) to access finance; (ii) organize and conduct gender-responsive capacity building workshops and trainings; (iii) provide equipment to develop and expand business opportunities for MSMEs.

The TA will not result to a change in the design and monitoring framework of the ongoing multitranche financing facility (MFF) for the Ulaanbaatar Urban Services and Ger Areas Development Investment Program and its tranches. The TA will enhance the quality of outputs without any change to the targeted results indicators. In particular, it will facilitate the delivery of outputs 2 and 4 under the MFF program.

Project Name Supporting Micro, Small, and Medium-sized Enterprises in the Ger Areas of Ulaanbaatar during COVID-19 Crisis
Project Number 45007-012
Country Mongolia
Project Status Active
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 6715-MON: Supporting Micro, Small, and Medium-sized Enterprises in the Ger Areas of Ulaanbaatar during COVID-19 Crisis
Technical Assistance Special Fund US$ 300,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Industry and trade / Small and medium enterprise development

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The transaction technical assistance (TA) will (i) assess capacity, needs, and opportunities for micro, small, and medium-sized enterprises (MSMEs) to access finance; (ii) organize and conduct gender-responsive capacity building workshops and trainings; (iii) provide equipment to develop and expand business opportunities for MSMEs.

The TA will not result to a change in the design and monitoring framework of the ongoing multitranche financing facility (MFF) for the Ulaanbaatar Urban Services and Ger Areas Development Investment Program and its tranches. The TA will enhance the quality of outputs without any change to the targeted results indicators. In particular, it will facilitate the delivery of outputs 2 and 4 under the MFF program.

Project Rationale and Linkage to Country/Regional Strategy

The government has undertaken various measures to improve access to finance for MSMEs. For example, a small and medium-sized enterprise (SME) development agency has been established for the implementation of SME policies, and promoting better targeted and more transparent funding to SMEs. In addition, the government has launched other measures such as establishment of the credit guarantee and employment creation funds to improve MSMEs' access to finance, and initiated training programs and advisory services for MSMEs capacity building. However, it is reported that the benefits of these support measures have not yet effectively reached the MSMEs nor have these measures been efficient and effective to MSMEs' development. International institutions also have worked closely with the government and provided support targeting at MSMEs. For example, the Asian Development Bank (ADB) has recently provided three loans to improve the availability of financing with longer tenor to MSMEs through financial institutions.

Pandemic impacts. The outbreak of the coronavirus disease (COVID-19) has negatively impacted Mongolian businesses, particularly MSMEs. A survey conducted by ADB's East Asia Department between April and May 2020 among MSMEs in Ulaanbaatar and nine other provinces, indicates that COVID-19 pandemic has disproportionally impacted MSMEs in Mongolia compared to the larger businesses, with the MSMEs in urban areas having been negatively affected to a higher degree. Smaller and informal businesses face key challenges due to the COVID-19 pandemic travel restrictions and lockdowns, including cash shortages, difficulties in making investment and financing decisions, and difficulties in paying employees, resulting in layoffs. Since MSMEs generate about 70% of employment in Mongolia, disruption in their businesses can lead to losses of income for households relying heavily on wages and personal businesses, intensifying the impact of COVID-19 on households, especially from poor and vulnerable populations. In response, the government has brought forward a series of economic stimulus measures to accelerate the post COVID-19 recovery, some of which are relevant to MSMEs.

Providing timely support to MSMEs is therefore critical for not only reducing income inequality and unemployment, enhancing social stability, and strengthening private sector; but also aligning with the government's initiatives to accelerate the post COVID-19 recovery and improve social resilience. Improving financial literacy of MSMEs, providing information on concessional financing, and providing equipment for business development and expansion are identified as key, yet low-hanging fruits for MSMEs development. In addition, as the upgrading of Selbe and Bayankhoshuu subcenters under tranche 1 is almost complete, new business opportunities will be created to attract and accommodate influx of population. With the support from this transaction TA, MSMEs are expected to quickly seize those emerging opportunities and play a vital role in maintaining a robust function of subcenters by providing services to residents and creating economies in the post COVID-19 recovery period. In the long run, this TA is expected to make MSMEs adaptive and prepared for the wider transformation and urbanization of ger areas, including all subcenters under the other tranches of the MFF program, synergizing with existing and future urban development work.

Impact
Project Outcome
Description of Outcome
Progress Toward Outcome
Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Ulaanbaatar
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design During project design, the TA team held close consultation with the program management office of the MFF for the Ulaanbaatar Urban Services and Ger Areas Development Investment Program.
During Project Implementation During project implementation, the TA team will maintain close coordination with relevant stakeholders and ensure the quality of deliverables and their relevance to the ongoing MFF program.
Business Opportunities
Consulting Services A consulting firm was engaged to carry out TA implementation activities in accordance with ADB Procurement Policy (2017, as amended from time to time) and its associated procurement staff instructions.
Procurement Procurement of goods shall be undertaken by the consultant recruited under the TA and shall be carried out in accordance with the ADB Procurement Policy (2017, as amended from time to time) and its associated procurement staff instructions.
Responsible ADB Officer Chen, Jinqiang
Responsible ADB Department East Asia Department
Responsible ADB Division Urban and Social Sectors Division, EARD
Executing Agencies
Ulaanbaatar Municipal Government
Sukhbaatar Square-11
Ulaanbaatar-46, Mongolia
Timetable
Concept Clearance -
Fact Finding -
MRM -
Approval 11 Feb 2021
Last Review Mission -
Last PDS Update 28 Sep 2021

TA 6715-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
11 Feb 2021 - 11 Feb 2021 28 Feb 2022 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
300,000.00 0.00 0.00 0.00 0.00 0.00 300,000.00 15 Oct 2021 12,000.00

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Safeguard Documents See also: Safeguards
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Evaluation Documents See also: Independent Evaluation

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Related Publications

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Tenders

Tender Title Type Status Posting Date Deadline
MSME Development Consulting Firm Firm - Consulting Closed 17 Feb 2021 03 Mar 2021

Contracts Awarded

Contract Title Approval Number Contract Date Contractor | Address Executing Agency Total Contract Amount (US$) Contract Amount Financed by ADB (US$)
Capacity Development Technical Assistance 6715 20 May 2021 B.F.A.S LLC (MONGOLIA) in association with Independent Research Institute of Mongolia (MONGOLIA) | Jamyan Street 2, Chandmani Center, Suite Ulaanbaatar 1420 Mongolia Ulaanbaatar Municipal Government 285,000.00

Procurement Plan

None currently available.