HONG KONG & MONGOLIA | 23 JULY - 3 AUGUST, 2012
In July 2012, participants on the 28th Global Leaders Programme (GLP) traveled to Mongolia to develop an initial blueprint for the first ever impact investment fund to be set up in the country. Leveraging global executive talent, this groundbreaking GLP delivered a detailed framework for TenGer Financial Group, a regional family of companies including XacBank, XacLeasing, TenGer Capital, TenGer Solutions and TenGer Insurance, built to provide equitable access to broad and inclusive financial services.
Mongolia is one of the fastest growing economies in the world and until recently, has been sitting quietly on an abundance of untapped natural resources. The opportunities to capitalise on the country’s natural resource wealth present both tremendous growth potential as well as problems faced by many rapidly developing nations: how to balance a short-term boom with comparable improvements in public infrastructure, support for other more sustainable domestic industries and more importantly, greater universal access to basic needs for its people, all of which are necessary to sustain long-term growth.
Since 1990, Mongolia has transitioned to a free market economy and democratic system. The private sector accounts for 70% of GDP. The country faces a range of challenges including a landlocked and limited domestic market, a poorly diversified economy that is heavily reliant on export of raw commodities and a harsh climate with limited infrastructure across its vast territory.
With almost 40 percent of the country’s population concentrated in Mongolia’s capital, Ulaanbaatar’s streets are packed with vehicles, and traffic jams are a chronic problem. During winters, air pollution is a major concern, due to the burning of raw coal for household heating. Ulaanbaatar is the capital with the worst air quality in the world.
29.8% of the population live below the poverty line and 9% of the population is unemployed. Poverty adversely impacts children in particular and 80% of Mongolian children are experiencing deprivation of some kind.
Poor transport links, inadequate sanitation provisions and rising food costs have also affected access to basic needs. In the capital's sprawling Ger District, where almost 50% of the population lives, households lack access to basic sanitation, running water and heating facilities.
PROF. HIDEAKE TAKAHASHI
Professor, Keio University
CEO, DBS Bank (Hong Kong)
Co-Founder and President, TC Capital
Former Chairman of the Incorporated Trustees of the Islamic Community Fund of Hong Kong
GIFT IN MONGOLIA
The GLP uses real-world field projects to hone the practical skills needed to manage diverse teams in unfamiliar situations. Through meetings with partners, investors, community and business leaders, and through frank and open discussions, participants are invited to question their assumptions, learn to navigate conflicting and contradictory views, and to transform concepts and theories into realities on the ground.
The key challenge was to work with socially-minded TenGer Financial Group (TFG) on a set of recommendations for the creation of Mongolia’s first impact investment fund. The fund will be aimed at nurturing the growth of domestic SMEs in order to diversify Mongolia’s current mining-focused economy while enabling the healthy and sustainable development of the society as a whole.
"The timing of this fund is critical in the development of Mongolia, as it seeks to balance wealth created by mining activity with social and environmental consequences”, says Amar Hanibal, Managing Director at TenGer Financial Group. “In this respect, our organisation is well positioned to pioneer the fund in Mongolia given the fact that TenGer Financial Group and XacBank were built on a unique balance of social and financial priorities.”
The proposal focused on small-to-medium sized enterprises (SMEs) in key sectors such as agriculture, healthcare, affordable housing, vocational training and waste management in addition to certain mining services and is expected to have significant impact on the country’s economic and social development, while also providing healthy returns to investors. This has started an important discussion in Mongolia about the role of foreign investment, the primary beneficiaries and how to ensure that the unique opportunity currently facing the country is not wasted, but maximised for the benefit of its people.
Below are a few slides from the recommendations developed by participants.
The 28th GLP culminated in a final forum held in Ulaanbaatar. It was a full house with representatives from the mining and financial sectors, NGOs, aspiring domestic entrepreneurs, and other stakeholders.