Mr. Johannes Von Franz, Programme Director - Regional Economic, GTZ Mongolia

1. Bringing Loan Guarantee Services toBringing Loan Guarantee Services to
MongoliaMongoliaMongoliaMongolia
M li I t t S it 2010Mongolia Investment Summit 2010
London, UK
25 November 201025 November 2010
Johannes von FranzJohannes von Franz
GTZ Mongolia
25.11.2010 Seite 1

2. DefinitionDefinitionDefinitionDefinition
Loan Guarantee (LG)
A type of insurance against
d f lt id d b ditdefault provided by a credit
guarantee association or other
institution to a lending institution
25.11.2010 Seite 2Page 225.11.2010

3. Objectives of LG ServicesObjectives of LG ServicesObjectives of LG ServicesObjectives of LG Services
Access to finance for SME
Reduction of transaction costsReduction of transaction costs
(biggest impact)
R d ti f lReduction of losses
Reduction of interest rates
25.11.2010 Seite 3Page 325.11.2010

4. SME Development in MongoliaSME Development in MongoliaSME Development in MongoliaSME Development in Mongolia
Increases between 2000 and 2009 in Mongolia:
GDP 11 times
Number of registered enterprises 3 timesNumber of registered enterprises 3 times
Number of active enterprises 1.5 times
(from 20 014 to 35 290)(from 20,014 to 35,290)
25.11.2010 Seite 4Page 425.11.2010

5. Obstacles for SME growthObstacles for SME growthObstacles for SME growthObstacles for SME growth
SSurvey results 2004 and 2009:
High interest rates 85% 79%High interest rates 85% 79%
Loan term too short 80% 63%
Collateral 59% 58%
Bureaucracy 35% 26%y
No problems 1% 1%
25.11.2010 Seite 5Page 5
Sources: GTZ Surveys
25.11.2010

6. GTZ LG FundGTZ LG FundGTZ LG FundGTZ LG Fund
Regional Economic Development Programme
LGF set up 2006
Target group: SME
Partner Banks: Khan Bank Khas BankPartner Banks: Khan Bank, Khas Bank,
Golomt Bank, Trade and Development , State
Bank Savings BankBank, Savings Bank
Target Area: Darkhan, Erdenet, Zavkhan
Aimag
25.11.2010 Seite 6Page 6
Aimag
25.11.2010

7. GTZ LG FundGTZ LG FundGTZ LG FundGTZ LG Fund
Guarantee volume $ 0.7 m
Maximum guarantee 50% of up to MNT 50 mMaximum guarantee 50% of up to MNT 50 m
Average loan MNT 17.4 m
25.11.2010 Seite 7Page 725.11.2010

8. GTZ LG FundGTZ LG FundGTZ LG FundGTZ LG Fund
Number of clients 132
Total loan sum MNT 2.3 bnTotal loan sum MNT 2.3 bn
Outstanding loans MNT 1.1 bn
A t t d MNT 449Amount guaranteed MNT 449 m
Bad loans 0.3%
In arrears 2.5%
25.11.2010 Seite 8Page 825.11.2010

9. Other existing LG SchemesOther existing LG SchemesOther existing LG SchemesOther existing LG Schemes
Organization coverage volume target group clients
Mercy Corps (USAID) 11 aimags $ 1 5 m herders 1550Mercy Corps (USAID) 11 aimags $ 1.5 m herders 1550
UNDP 4 aimags $ 0.1 m MSME 100
MNCCI all aimags $ 0 5 m eco efficiency 8MNCCI all aimags $ 0.5 m eco-efficiency 8
25.11.2010 Seite 9Page 925.11.2010

10. LG InstitutionLG InstitutionLG InstitutionLG Institution
“C dit G t F d”“Credit Guarantee Fund”
Founded 2010
NBFI (Non-Banking Financial Institution)
LLCLLC
Non-Profit
License issued by FRC
25.11.2010 Seite 10Page 1025.11.2010

11. LGI Founding MembersLGI Founding MembersLGI Founding MembersLGI Founding Members
GovernmentGovernment
Ministry of Food, Agriculture and Light Industry
Ministry of FinanceMinistry of Finance
Private Sector
C f CMongolian National Chamber of Commerce and
Industry
B kBanks
Mongolian Bankers Association
25.11.2010 Seite 11Page 11
International Donors
25.11.2010

12. LG InstitutionLG InstitutionLG InstitutionLG Institution
Capital investment pledgedg
Government MNT 1.5 bn
Banks 0.02% of outstanding loan
portfolio (= MNT 0.5 bn)
MNCCI MNT 0.4 bn
Mercy Corps $ 1 mMercy Corps $ 1 m
World Bank $ 1 m
GTZ $ 1
25.11.2010 Seite 12Page 12
GTZ $ 1 m
25.11.2010

13. LG InstitutionLG InstitutionLG InstitutionLG Institution
Country wide operation
Focus on SMEFocus on SME
Maximum guarantee 80% of up to MNT100 m
C t t b tCounter guarantee by government
25.11.2010 Seite 13Page 1325.11.2010

14. Th k f tt tiTh k f tt tiThank you for your attentionThank you for your attention
25.11.2010 Seite 14