Validation Report: Rural Finance Project (Mongolia)

This report by the Asian Development Bank (ADB) validates the Project Completion Report (PCR) of the rural finance project in Mongolia.

The project, partly financed by ADB, supported development of a system of community-based savings and credit unions (SCUs) intended to increase access of the rural poor to formal financial services and stimulate development of the financial sector over the short to medium term. The project was prematurely terminated by ADB. The report validates PCR’s evaluation of the project on parameters such as design and implementation, achievement of targets, relevance of the project, effectiveness and efficiency in achieving outcomes, sustainability and impact.

The PCR and the validation report rate the overall performance of the project as unsatisfactory. Lessons and recommendations include:

• Firm regulatory, legal and supervisory foundation has to be laid down before embarking on promotion of financing institutions;
• Capacity of ADB staff to manage changing project circumstances needs to be enhanced;
• ADB should not initiate project termination unless all other options have been exhausted;
• ADB should follow up with the Government on the status of legislations regarding SCUs.