EBRD supports Mongolia’s micro and small businesses with local currency loans

The FINANCIAL -- EBRD lending programme boosts MSMEs’ access to scarce local currency finance in Early Transition Countries thanks to international donors.
The people of Mongolia are very attached to its long history and many of their old traditions are still very much alive. Gulmaira Akim is so proud of its folklore that she created a business out of it. Her micro enterprise produces handcrafts and souvenirs based on ancient designs.
“I started working during my university, when I used to sell traditional fabrics to tourists and pay for my studies,” she explained.  “Then, in 2006 I got married and I started producing small goods such as purses and ornaments together with my husband”.
Today Ms Akim employs dozens of people, mostly women, in the rural Nalaikh province where her workshop is based. When she receives large orders she reaches out to more embroiderers who work from home.
“For me it is important to give back to the community and employ elderly people or women with no formal education,” she said.
Mongolia’s wealth derives mostly from under its rich soil, through a large mining sector. Most finance and business operations are concentrated in the capital Ulaanbaatar, home to half of the country’s population.
So micro and small businesses such as Ms Akim’s are key for the development of rural areas as well as contributing to diversifying the economy and expanding the private sector.
But without adequate financial support, micro, small and medium-sized enterprises (MSMEs) would not be able to survive, let alone thrive.
On the other hand, Mongolian financial institutions are often not in a position to assume more risk and provide tailored products for this segment of potential clients.
One of the issues of lending to MSMEs is the high level of dollarisation, which, according to the latest Transition Report 2015-16, is significantly higher in the region where the EBRD invests than in other emerging market economies.
Loans denominated in foreign exchange expose small companies to the risks of depreciating local currencies. That is why the EBRD and its donors, including the Early Transition Countries (ETC)  Fund*, the Swiss Secretariat for Economic Affairs SECO and the US Department of Treasury, are partnering to extend local currency loans to local participating banks to lend to MSMEs in local currency at affordable interest rates.
This special Local Currency Programme, which provides long-term EBRD finance to small businesses through local partner financial institutions, is active in Armenia, Georgia, Kyrgyz Republic, Moldova, Mongolia and Tajikistan.
The EBRD financing is combined with policy dialogue with national governments to improve domestic financial intermediation in local currencies, with the lending now replicated by other International Financial Institutions.
Through the Programme, partner banks have an opportunity not only to reach out to underserved markets but also to develop the skills required to manage foreign exchange risk.
So far, around 300 thousand micro and small companies in the six countries have been able to borrow a total of around US$ 325 million thanks to the donors.
Thanks to the Programme, Ms Akim obtained a loan of 10 million Mongolian Tugrik (worth about US$ 5,000) through XacBank. She used it to upgrade her sewing machines, EBRD said.
“As a result of this improvement, the quality of our product is higher and we could better meet our clients’ needs, so our sales boosted,” she said. Thanks to the loan she secured a Fairtrade shop in Ulaanbaatar as a fixed client.
Now she has many fewer worries about repaying her loan. And, for a change, the depreciation of the tugrik against the US dollar is a blessing for her business, since most buyers are foreigners visiting her stunning country, happy to buy relatively inexpensive and beautiful souvenirs.



Post a Comment

Facebook page

Powered by Blogger.


Advertising in Mongolia An Culture Editorial of the Mongolianviews education Environmental protection Famous Mongolians Foreigners in Mongolia Inner Mongolia Ivanhoe Mines Mongolia agriculture Mongolia analysis Mongolia and Australia Mongolia and Belorussia Mongolia and Cambodia Mongolia and Canada Mongolia and central Asia Mongolia and China Mongolia and Cuba Mongolia and EU Mongolia and Germany Mongolia and Hongkong Mongolia and Hungary Mongolia and India Mongolia and Inner Mongolia Mongolia and Iran Mongolia and Italy Mongolia and Japan Mongolia and Kazakhstan Mongolia and Korea Mongolia and Kuwait Mongolia and Malaysia Mongolia and Nato Mongolia and North Korean Mongolia and Poland Mongolia and Russia Mongolia and Singapore Mongolia and South Korea Mongolia and Taiwan Mongolia and the world Mongolia and Tibet Mongolia and Turkey Mongolia and UK Mongolia and Ukraine Mongolia and UN Mongolia and USA Mongolia and Vietnam Mongolia Banking Mongolia civic society Mongolia crime Mongolia diplomacy Mongolia Economy Mongolia Education Mongolia Energy Mongolia Finance Mongolia Health Mongolia History Mongolia holiday Mongolia in international media Mongolia Industries Mongolia Joke Mongolia law Mongolia LGBT Mongolia medical Mongolia military Mongolia Mining Mongolia Mining Developments Mongolia Mortgage Mongolia natural disaster Mongolia Petroleum Mongolia public announcements Mongolia railways Mongolia Religion Mongolia society Mongolia Sports Mongolia Stamp Mongolia telecommunication Mongolia tourism Mongolia Urbanization Mongolia Wild Life Mongolian Agriculture Mongolian Archeology Mongolian Food Mongolian Gay Mongolian Government news Mongolian History Mongolian Military Mongolian Mining Development Mongolian Movie Mongolian News Mongolian Parliament Mongolian Political news Mongolian Press Mongolian Songs Mongolian Women Mongolian Youth Mongolians abroad Moninfo Opinion Oyu Tolgoi Investment Agreement Photo news Press Release Rio Tinto Tavan Tolgoi coal mine Ulaanbaatar development Weird expatriates in Mongolia

Blog Archive


Live Traffic