The U.S. Agency for International Development (USAID) and Development Solutions NGO launched the Reach Project to support small and medium sized enterprises (SMEs), on Wednesday at Best Western Premier Tuushin Hotel.
The main goal of the project is to improve and scale access to credit for SMEs, by assisting them to find appropriate financial products for their specific needs and helping them qualify for loans. The project will be implemented for two years, and the U.S. government is implementing the project to improve Mongolia’s economic growth.
U.S. Ambassador to Mongolia Jennifer Zimdahl Galt presented opening remarks at the project’s launch ceremony.
“SMEs make up 20 percent of Mongolia’s GDP, but they don’t have efficient financial resources. Around 75 percent of SMEs operating in Mongolia are interested in taking out loans, but they are facing many difficulties to take any loans, for example collateral assets shortage. Around 85 percent of total businesses are SMEs, but when they want to take out loans, they don’t meet criteria of commercial banks. Only 17 percent of total loans issued go to SMEs. We will provide real support to small business through the Reach Project to meet their demand,” said Ambassador Galt.
“Reach proposes to achieve this ambitious goal by matching potential borrowers and their needs with appropriate lenders and production inputs. It will help client SMEs qualify for these loans by making available specific technical assistance – this could include preparing a solid business plan, setting up accounting systems derived from international financial institutions, improving financial or back-office operation systems, or perhaps simply helping borrowers understand the lending documentation that can vary from bank to bank,” she added.
The project is also partnering with the government of Mongolia’s Credit Guarantee Fund, which can provide credit guarantees of up to 60 percent of individual loan amounts to SMEs, and the Ministry of Industry.
“We believe that the project will bring real results in supporting domestic SMEs,” stressed Reach project manager B.Khishigsuren.
In addition to Ulaanbaatar, the project will be implemented in Bayan-Ulgii, Dornod, Dundgovi and Selenge provinces to facilitate 500 loans worth 25 million USD.
The project launch event was attended by representatives from embassies of the U.S., Japan and the Republic of Korea, the European Union, resident delegates from international organizations, and representatives from the Industry Ministry and Credit Guarantee Fund.