On 18 September, the OECD, together with the EU and the government of Mongolia, organised a virtual peer-review session to assess recent reforms aimed at easing access to finance for micro, small, and medium enterprises (MSMEs) in the country.
The event was an opportunity to discuss an OECD Peer Review Note on access to finance in Mongolia, to introduce recommendations and OECD good practices, and to exchange views with international experts and regional peers. The peer review is the outcome of a joint project, during which workshops were organised in Mongolia to take stock of the country’s progress in implementing policy recommendations first provided by the OECD in 2016. The webinar is part of a series of events organised as part of the EU Central Asia Invest programme.
The webinar was opened by H.E. Professor Aleksander Surdej, Ambassador and Permanent Representative of Poland to the OECD and Chair of the OECD Eurasia Competitiveness Roundtable. The COVID-19 crisis highlighted the Mongolia’s need for economic diversification, by hitting both the export and commodity channels, in particular MSMEs which are key for diversification. Mr Ankhbayar Nyamdorj, State Secretary of the Ministry of Foreign Affairs, then detailed the recent substantive progress its government has achieved in diversifying its economy by supporting SMEs, which now generate 25% of GDP and 53% of employment. Finally, H.E. Mr Traian Hristea, Ambassador and Head of the EU Delegation to Mongolia, welcomed the joint EU-OECD work with the government which allows to respond to these challenges, and underlined the EU support to Mongolia.
Access to finance remains the most important obstacle for firm growth. Mr Erdenesaikhan Yadamsuren, Head of the newly-established SME Agency of Mongolia, provided on the implementation of measures to improve access to finance for MSMEs. They have benefitted from the introduction of legal and regulatory reforms, pertaining to their definition, and access to diversified financing sources. Their operational environment has also been eased, through the digitisation of administrative procedures, the establishment of a one-stop-shop, and the monitoring of detailed SME data at the national statistical office.
Mr Arnault Prêtet (OECD) presented the main findings of the OECD Peer Review Note pertaining to SME data collection, administrative procedures, financial literacy, and the operations of public financial instruments, such as the SME Development Fund and the Mongolian Credit Guarantee Fund (MCGF). Substantial progress has been made, with the introduction of a new SME law and SME definition and the expansion of the guarantee offer. However, more needs to be done in relation to governance and loan appraisal processes. Mongolia’s recovery package includes financial and digital measures that can benefit SMEs.
In her role as lead reviewer, Ms Martyna Wieczorek, Senior Expert at the Department of SMEs at the Ministry of Economic Development of Poland, discussed the benefits for Mongolia of a single and targeted SME definition, which helps ensure clarity and consistency of policies and support programmes, as well as better data to enable policymakers to understand SME dynamics. Mr Mikheil Khidureli, CEO of Enterprise Georgia, presented innovative SME funding mechanisms used in Georgia, such as interest rate co-financing, collateral guarantee schemes, and micro grants competition. Finally, Ms Isabelle Lebo, Head of international partnerships at Bpifrance, discussed the implementation of credit guarantees and public financing of SMEs, highlighting the successful collaboration with the MCGF.
The poll and open discussion offered an opportunity to exchange views and experiences of the different measures implemented by Mongolia, OECD, and Eurasia partner countries to support access to finance. Mr Giacomo Gianetto (ADB) highlighted the recent progress made by the MCGF with ADB support in regard to the recommendations. An instant poll run with participants highlighted that implementing credit guarantees and digitalising procedures for loans and guarantees were seen to be the most useful reforms for helping SMEs weather the crisis, while support to internationalisation would help them grow further in the longer-term.
The session was concluded by Mr Ganbold Ulziisaikhan, Deputy Director of the Foreign Trade and Economic Co-operation Department at the Ministry of Foreign Affairs of Mongolia, and H.E. Professor Surdej, emphasising Mongolia’s readiness to implement ambitious reform programmes, in particular on trade policy and SME development internationalisation. Moving forward, the OECD confirmed its readiness to continue its successful co-operation with Mongolia on recovery planning, the legal environment for business and longer-term reforms.