By Anton Usov

This week the European Bank for Reconstruction and Development (EBRD) marks 15 years since the start of its operations in Mongolia and establishment of its resident office in Ulaanbaatar. During this time the EBRD has invested US$ 2.1 billion in various sectors of the national economy. Ninety-three per cent of the Bank’s loans were extended to private companies, making the EBRD the largest lender to Mongolia’s private sector out of the international financial institutions (IFIs).

In Mongolia the EBRD is helping to promote the country’s resilience by supporting non-extractive sectors of the economy, providing better access to finance and improving energy supply. The Bank is also working to improve the sustainability of infrastructure services through greater efficiency, commercialisation and green technologies.

After providing its first loan to XacBank in 2006, the EBRD significantly expanded its work with local financial institutions such as Khan Bank, XacBank (including its subsidiary XacLeasing) and Transcapital through its Trade Facilitation Programme, small and medium-sized enterprise (SME) and energy efficiency lending facilities and risk-sharing schemes. To date, almost 190,000 loans worth more than US$ 535 million of EBRD funds have been provided to local micro and small businesses.

In early 2021 the EBRD and the Bank of Mongolia set up a long-term dollar-tugrik (MNT) swap facility to increase the availability of local currency financing to Mongolian businesses affected by the coronavirus pandemic. The swap helped the EBRD secure reliable access to MNT liquidity and to provide local currency loans both directly and through local banks to companies in such sectors as agribusiness, building materials, light manufacturing and services, as well as to SMEs which employ over 40 per cent of the country’s population.

A lot has been done to promote sustainable infrastructure and green municipal solutions, both in the country’s capital Ulaanbaatar and beyond. The city, with a population of 1.4 million, became the first municipality in Asia to join the EBRD’s Green Cities programme and is now addressing environmental and infrastructure challenges. As part of the Ulaanbaatar Green City Action Plan, the city is improving its waste management. This work is supported by the Republic of Korea and the European Union (EU).

A major step towards improved regional integration and international trade between Mongolia, China and Russia is the reconstruction of a 202-km road between Mongolia’s capital and Darkhan, the third-largest city in Mongolia and 100 km south of the border with Russia.

The promotion of renewable energy is another area where the Bank has been active in Mongolia. The EBRD has financially supported the construction of the Sainshand, Salkhit and Tsogttsetsii wind farms. These facilities are today helping to reduce the country’s carbon emissions and provide a better energy mix.

Mongolia’s mining sector is a major contributor to the national GDP. The EBRD has been working with international and local mining companies such as Rio Tinto, Energy Resources, Kincora Copper and Erdene Resource Development to promote sustainable mining in line with best international corporate and environmental standards.

The Bank’s efforts to support non-extractive industries in Mongolia gave a major boost to local agribusiness producers such as the juice manufacturer Vitafit, beverage producers APU and MCS, the food producer Teso Group and the country’s leading dairy company Suu Milk. With the help of the EBRD, Suu Milk is renewing its transport fleet, serving more than 2,500 nomadic herders across Mongolia.

For 15 years the Bank has also been supporting the country’s traditional industries such as the

production of cashmere with loans to the local manufacturers Gobi and Ezio Foradori. The cashmere sector is one of Mongolia’s key industries; the country is the largest supplier of cashmere wool in the world, accounting for 30 per cent of global production.

EBRD funds have also helped to develop other modern production facilities for clients such as Mongolia’s leading pharmaceutical conglomerate Monos Group and the leading local logistics company Terra Express.

Almost 600 micro, small and medium-sized enterprises in Mongolia, including those in remote rural areas, have participated in various advisory projects supported by the EU and implemented by the EBRD. More than half of them are women-led businesses. These projects have helped create almost 5,000 new jobs, increased their efficiency and productivity and widened product range.

EBRD Head of Mongolia, Hannes Takacs,said: “The EBRD is very proud to have contributed to the development of so many good projects in Mongolia. Our work of making the country’s economy greener, more diversified, sustainable, inclusive and digital, is far from complete. These are the challenges we look forward to tackling.”

To date, the EBRD has invested more than US$ 1.85 billion in Mongolia’s economy through 116 projects.