Project Data Sheet

Project Data Sheets (PDS) contain summary information on the project or program: Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

PDS Creation Date 14 Apr 2010
PDS Updated as of 30 Jul 2015

Project Name Promoting Inclusive Financial Services for the Poor
Country Mongolia
Project/Program Number 44112-012
Status Approved
Geographical Location Mongolia, specific areas TBD
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
Sector Finance
Subsector Inclusive finance
Strategic Agendas Inclusive economic growth (IEG)
Drivers of Change Gender equity and mainstreaming (GEM)
Governance and capacity development (GCD)
Partnerships (PAR)
Gender Equity and Mainstreaming Categories Category 1: Gender equity (GEN)

Financing

Type/Modality of Assistance Approval Number Source of Funding Approved Amount (thousand)
Grant9152Japan Fund for Poverty Reduction2,500
TOTAL US$ 2,500

Safeguard Categories

For more information about the safeguard categories, please see http://www.adb.org/site/safeguards/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

The Project was designed with inputs from development partners and interactively with FRC, MOCCU, MCTIC, and the MNCA as well as a wide range of stakeholders including the public. Consultations took place during missions and consultant visits in April and May 2009, December 2009, March 2010, June and July 2010. These consultations included visits to rural areas as well as the capital to solicit views on SCCs, deepening financial services to poor households, and the level of education and understanding of basic financial concepts. A national consultant separately conducted focus groups and individual interviews in four aimags with over 200 people on financial education and SCC operations. Stakeholders were asked about their personal and organizational experience, along with perceived needs. Specific stakeholders consulted during the one year preparation period were: (i) FRC, BOM, and MOF as financial regulators and policymakers for the Government, the Department of Small and Middle Enterprise Support, and the Ministry of Education's offices for distance education; (ii) MOCCU, MCTIC, and the MNCA as the tertiary organizations for cooperatives and savings and credit cooperatives; (iii) Xac Bank as (a) franchisor and delegated supervisor for selected SCCs, and (b) implementer of a small financial education project for girls savings; (iv) selected Parliamentarians; (v) selected rural and urban SCCs; (vi) international and national NGOs with education, small and medium-sized enterprise (SME) development, and microcredit programs, and those involved in public education; and (vii) local schools and cooperative department trainers. There was broad support for project outputs and approach, and a general view that this project would deepen access to financial services along with responsible financial planning by poor households.

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.

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.

Development 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 Towards 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.

Outputs and 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.
Status of Development Objectives
Status of Operation / Construction
Material Changes

Business Opportunities

Date of First Listing 2010 Apr 23
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.
Procurement and Consulting Notices
http://www.adb.org/projects/44112-012/business-opportunities

Timetable

Concept Clearance 20 Apr 2010
Fact-finding 30 Jun 2010 to 07 Jul 2010
Management Review Meeting
Approval 17 Dec 2010

Milestones

Approval No. Approval Signing Effectivity Closing
Original Revised Actual
Grant 9152 17 Dec 2010 17 Jan 2012 17 Jan 2012 17 Jan 2015 17 Jan 2016

Utilization

Date Approval Number ADB (US$ thousand) Others (US$ thousand) Net Percentage
Cumulative Contract Awards
27 Aug 2015 Grant 9152 2,226 0 89.00%
Cumulative Disbursements
27 Aug 2015 Grant 9152 2,105 0 84.00%

Status of Covenants

Covenants are categorized under the following categories—audited accounts, safeguards, social, sector, financial, economic, and others. Covenant compliance is rated by category by applying the following criteria: (i) Satisfactory—all covenants in the category are being complied with, with a maximum of one exception allowed, (ii) Partly Satisfactory—a maximum of two covenants in the category are not being complied with, (iii) Unsatisfactory—three or more covenants in the category are not being complied with. As per the 2011 Public Communications Policy, covenant compliance ratings for Project Financial Statements apply only to projects whose invitation for negotiation falls after 2 April 2012.

Approval No. Category
Sector Social Financial Economic Others Safeguards Project Financial Statements
Grant 9152 Satisfactory Satisfactory

Contacts and Update Details

Responsible ADB Officer Enerelt Enkhbold (eenkhbold@adb.org)
Responsible ADB Department East Asia Department
Responsible ADB Divisions Mongolia Resident Mission
Executing Agencies Financial Regulatory Commission of Mongolia

Links

Project Website http://www.adb.org/projects/44112-012/main
List of Project Documents http://www.adb.org/projects/44112-012/documents