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Mongolia: Unleashing the Private Sector to Drive Inclusive Growth in Eastern Mongolia

Sovereign (Public) Project | 53029-001 Status: Approved

This proposed knowledge and support technical assistance (TA) seeks to support the Government of Mongolia with the preparation of an evidence-based regional private sector development policy document and the capacity building of rural private sector. The TA is aligned with the 2019-2021 Country Partnership Strategy for Mongolia and included in the country operations business plan, 2019-2021. The proposed TA will assist Mongolia in formulating an effective private sector development strategy for the eastern region of Mongolia under the Mongolia Sustainable Development Vision 2030 (SDV) and the Mongolia Regional Development Concept (MRDC).

Project Details

Project Officer
Enerelt Enkhbold East Asia Department Request for information
Country
  • Mongolia
Sector
  • Agriculture, natural resources and rural development
 
Project Name Unleashing the Private Sector to Drive Inclusive Growth in Eastern Mongolia
Project Number 53029-001
Country Mongolia
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 9751-MON: Unleashing the Private Sector to Drive Inclusive Growth in Eastern Mongolia
Technical Assistance Special Fund US$ 600,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Knowledge solutions
Partnerships
Private sector development
Sector / Subsector

Agriculture, natural resources and rural development / Agricultural policy, institutional and capacity development

Public sector management / Economic affairs management

Gender Equity and Mainstreaming Some gender elements
Description This proposed knowledge and support technical assistance (TA) seeks to support the Government of Mongolia with the preparation of an evidence-based regional private sector development policy document and the capacity building of rural private sector. The TA is aligned with the 2019-2021 Country Partnership Strategy for Mongolia and included in the country operations business plan, 2019-2021. The proposed TA will assist Mongolia in formulating an effective private sector development strategy for the eastern region of Mongolia under the Mongolia Sustainable Development Vision 2030 (SDV) and the Mongolia Regional Development Concept (MRDC).
Project Rationale and Linkage to Country/Regional Strategy

The Parliament of Mongolia approved the MRDC in 2001, which was intended to be implemented over three stages: (i) 2001-2005; (ii) 2005-2010; and (iii) post-2010. The objective of the MRDC is to reduce increased population density in a small number of economic and political centres, promote industrialization, and enhance socio-economic equality between urban and rural areas through optimal utilization of the country's lands, natural resources, crop farming, livestock, and intelligence capacity. Accordingly, the Government of Mongolia established regional secretary offices in five regions: (i) the western region; (ii) the Khangai region; (iii) the central region; (iv) the Ulaanbaatar region; and (v) the eastern region.

The Cabinet Secretariat and the National Development Agency (NDA) are responsible for long-term planning of regional development and facilitating coordination among 21 aimags or provinces. In a 2018 NDA assessment of MRDC implementation, it concluded that the progress rate is only 30-40% for the first two stages, and eight regional economic centres were not developed as planned in the RDCM. The Cabinet Secretariat and NDA is currently working to update the RDCM and relevant policy and regulatory documents because the current RDCM is outdated in comparison to the current development needs of Mongolia and the amount of time elapsed since its approval in 2001.

The implementation of actions to be taken under RDCM was hindered largely by frequent changes of Mongolia's Government and fiscal constraints. Regional secretary offices in five regions were abolished in 2013 due to state budget cuts. Mongolia did not prepare any evidence-based regional development policy prior to the Western Mongolia Private Sector Development Policy supported by the ADB TA9066-MON: Fostering Value-Added Activities in Western Mongolia TA which was completed in 2018. Moreover, the current RDCM emphasized the selection of one aimag center as a single pillar of each region in rural areas, and each rural region was chaired by a particular pillar aimag's governor. This institutional arrangement for regional development reduced incentives and accountability of aimags to coordinate with each other.

The Government of Mongolia requested ADB to support private sector development in the eastern region of Mongolia comprised of the three aimags - Dornod, Khentii, and Sukhbaatar, as a follow-up to the success of ADB's previous support in western Mongolia. Eastern Mongolia's economy is heavily dependent on only three sectors: mining, animal husbandry, and services. Although the three eastern aimags have considerable untapped resources of minerals, animals, fish, and crop farming, the region's contribution to Mongolia's economy is minimal. For instance, eastern Mongolia produces little more than 5% of national gross domestic product, yet accounted for 18.3% of its land area and over 15% of its livestock.

The three eastern aimags are among the most underdeveloped and isolated. The poverty rate in eastern Mongolia stood at 43.9% vis- -vis the national level of 29.6% in 2016. The region's unemployment rate was 7.3% in Q3 2018, higher than the national average of 6.9%. Population density is low in eastern Mongolia at 0.7. Despite these challenges, there are some positives as the 2018 aimag economic competitiveness assessment ranked Dornod, Khentii, and Sukhbaatar 9th, 11th, and 13th out of 21 aimags, respectively for infrastructure development.

The economic potential of the eastern region offer opportunities for economic growth under the right policies and institutions. This will require an increased focus on (i) the development of infrastructure, (ii) the technical expertise required by the private sector, and (iii) good governance. It will be important in the TA to identify and categorize priority sectors of the region's economy, formulate the proper method to exploit untapped local resources, and promote information-sharing and coordination among aimags. A proper private sector development policy needs to be designed based on empirical evidence. However, the aimag governments lack the specialist human resources and financial capacity needed to support private sector development. Their ability to prepare a regional private sector development strategy and to plan and evaluate its implementation is insufficient.

Impact The Objectives of The Mongolia Sustainable Development Vision 2030 And the Mongolia Regional Development Concept
Project Outcome
Description of Outcome Readiness for value-added activities in private sector development in the three eastern aimags (provinces) enhanced
Progress Toward Outcome
Implementation Progress
Description of Project Outputs

The aimags' economic competitiveness and potential assessed

The eastern Mongolia private sector development strategy formulated

Regional agribusiness cluster model(s) designed

Coordination and information sharing for economic development among the three eastern aimags strengthened

Status of Implementation Progress (Outputs, Activities, and Issues)
Geographical Location Eastern Aymag, Hentiy Aymag, Suhbaatar Aymag
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design
During Project Implementation
Responsible ADB Officer Enerelt Enkhbold
Responsible ADB Department East Asia Department
Responsible ADB Division Mongolia Resident Mission
Executing Agencies
Cabinet Secretariat
Ulaanbaatar, Mongolia
Timetable
Concept Clearance 17 Apr 2019
Fact Finding 13 May 2019 to 13 May 2019
MRM -
Approval 28 Jun 2019
Last Review Mission -
Last PDS Update 01 Jul 2019

TA 9751-MON

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
28 Jun 2019 - - 31 Dec 2021 - -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
600,000.00 0.00 25,000.00 0.00 0.00 0.00 625,000.00 28 Jun 2019 0.00

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Tenders

Tender Title Type Status Posting Date Deadline
Natural resource economist Individual - Consulting Closed 10 Jul 2019 16 Jul 2019
Rural development specialist (team leader) Individual - Consulting Closed 10 Jul 2019 16 Jul 2019

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.