Promoting a dynamic economy

Mercy Corps supports rural Mongolian communities and families with economic, civil society, and natural resource management programmes. Since 1999, Mercy Corps has established a strong reputation that stretches from the Altai mountains to the west of the country, across the vast Gobi region, and into the broad Steppe in the east. We work collaboratively with local governments and agencies, businesses, business associations and local civil society organisations to ensure a robust economy and engaged community that respect Mongolian traditions.

Mongolia's Economic Constraints

Mongolia's transition from a Soviet style political system and state-based economy towards a market-oriented democracy has not always been a smooth one, nor have the benefits of the new system reached everyone evenly. Indeed, the 2011 Human Development Report by UNDP notes that "inequalities have negated all growth in GDP since 2000."

The limitations and challenges are environmental and chronic, including sparse and dispersed rural populations, harsh weather, vast distances, poor transportation, few trained technical experts, limited access to affordable credit, sporadic provision of government services all impact the ability of rural Mongolians to create and sustain vibrant local economies and engaged communities.

The picture has been changing, in part through Mercy Corps' contributions. And the situation is about to change again, due to new mining wealth and a host of new laws that decentralize decision and fiscal responsibility.

When Mercy Corps began work in Mongolia in 1999, local economies were primarily made up of rural herders producing subsistence quantities of limited agricultural products. With no access to real-time pricing information, rural herders often capitulated to outside traders, selling their goods for far less than their real value. And with no access to commercial credit and decent business training opportunities, even savvy rural herders could not make their agribusinesses turn a decent profit.
Mercy Corps has created self-sustaining projects and institutions that contribute to dynamic economic and market exchange now and in the future. Among these are the XacBank, the NGO Media for Business, and the Livestock Early Warning System. For example, in 2001, along with the United Nations Development Programme, Mercy Corps established its own commercial financial services provider, XacBank. Initially a microcredit lender aimed at rural Gobi businesses, XacBank has become one of the main commercial financial service providers across Mongolia.

Mercy Corps Economic Development Activities

Mercy Corps develops, diversifies and strengthens rural businesses critical to Mongolia's rural economy by helping individuals, families and communities to become more self-sufficient and more connected to national and international markets. We enable rural entrepreneurs to access business skills development, information, and necessary financial services. We support herder groups to expand or diversify their business activities and help develop herder cooperatives. We provide vital and essential continuing education for professional veterinarians and veterinary technicians. We support rural business to add value and expand their businesses, increasing revenue and creating much-needed jobs.

Mercy Corps' current economic development portfolio includes:

• the US Department of Agriculture-funded Rural Agribusiness Support Programme (RASP),
• the Swiss Development and Cooperation Agency-funded Market Opportunities for Rural Entrepreneurs (MORE),
• the US Agency for International Development-funded Farmer to Farmer, and
• the UK-based Adventurists-funded Support To Rural Business Expansion And Market Linkage Projects (Mongol Rally/Derby).

These economic development activities are implemented in 17 aimags including: Arhangai, Bayanhongor, Bayan-Ulgii, Dundgovi, Dornogovi, Dornod, Govi-Altai, Govi-Sumber, Hentii, Hovd, Huvsgul, Suhbaatar, Tuv, Uvurhangai, Umnugovi, Uvs, and Zavhan.

To date, Mercy Corps has assisted tens of thousands of rural businesses with business plan development, good business practices of accounting, and has provided more than 2,641 businesses with access to MNT 9.5 billion (£8 million) in commercial loans through the USDA-funded Loan Guarantee Mechanism. Since 1999, Mercy Corps activities have reached an estimated 80,000 herders and rural entrepreneurs with technical, business and financial assistance.

Rural Agribusiness Support Project
The RASP and MORE projects were designed as complementary activities. While USDA-funded RASP project focuses primarily on the supply (production and processing) side, the MORE project is focused on the demand (marketing and market linkages) side. Since 2008, the RASP project has implemented the following activities:

• Value-Chain Development: Mercy Corps seeks to promote, expand and strengthen value chains from agricultural and livestock producers to processors and consumers.
• Market Access and Expansion: We create new market opportunities for local producers by linking them to larger regional and urban markets.
• Food Safety: Mercy Corps programmes help raise awareness of food safety issues, and improve food product testing to increase the availability of safer products.
• Sector Support for Agribusiness Development: Through our efforts to improve critical input suppliers, community groups, marketing and technology information, we support the rural agribusiness sector.
• Animal Health: We support the veterinary sector through continuing education, provision of world-class equipment and their use, and build the capacity of government and private veterinarians that contribute to improving the quality and standards of livestock.
• Local Economic Development Plans: Working in Tripartite Partnerships, Mercy Corps supports participatory planning so that rural soums create long-term (10 years) plans for local development. By the end of 2011, nearly 100 soums will have created their long-term plans. By June 2011, soum leadership have secured £11 million in investments.

Photo: Thatcher Cook for Mercy Corps
• Loan Guarantee Mechanism: Mercy Corps helps herders and rural businesses identify new opportunities, assess risks, compare costs against income, and define their investment needs. Since 2004, Mercy Corps has enabled herders and rural businesses to obtain commercial loans by providing them with additional cash collateral. Our LGM has supported business creation and business expansion opportunities to thousands of rural entrepreneurs, contributing to greater local economic activity and job creation year after year, and boasts a 97.3% repayment rate.

Marketing Opportunities for Rural Entrepreneurs
With funding from the Swiss Agency for Development and Cooperation, the MORE project has three integrated activities, which work in coordination with the RASP project described above.

• Business Development Service (BDS): Mercy Corps offers herders and rural entrepreneurs access to training and technical assistance by helping pay the fees of local consultants and continuing to offer start-up subsidies where needed. BDS providers also extend Mercy Corps ability to monitor loan re-payment of collatoralized loans.
• Extended Producer Groups (EPGs):: Made up primarily herders and herder groups, Mercy Corps works to mobilize, train, and support these nascent economic entities to produce higher quality items and link them to more lucrative markets in aimag centers, Ulaanbaatar, and beyond.
• Competitive Outsourcing of Government Services (COGS): Mercy Corps first piloted its Tripartite Partnership model of government-business-civil society representation in open tender efforts in the USAID-funded TAN project from 2003-2008. Under the Swiss MORE project, we have expanded the number of local open tender efforts, creating a tested methodology to more than 43 soums for 58 tenders.

Farmer-to-Farmer
This short-term activity, funded by USAID through Wiedemann Associates, links Mongolia’s largely small- and medium-sized meat and milk producers with US counterparts who bring experience in adding value to production, improving marketing techniques, and focusing attention to food safety standards. US volunteers spend3-6 weeks in country, working intesively with competitvely selected producers, and offering insights more widely in training seminars.

Mongol Rally/Derby
Since 2007, the Adventurists-funded Mongol Rally (vehicles) and Mongol Derby (horses) have worked to promote community mobilization and economic development in rural Mongolia. Specifically, these efforts help to improve the quality of life and community integration of vulnerable people, including people with disabilities, and youth.

In 2010, 46 civil society organisations and 82 informal community groups received MNT 151 million (£113,250) to implement programme activities in 13 aimags. The aimag-level Labour and Social Welfare Departments contributed MNT 31.7 million to support these activities. More than half of all activities include and address issues of people with disabilities. This year's effort is more targeted. Mercy Corps has selected 17 CSOs and 37 community groups in ten aimags have been selected to date.

Governance and Participation Activities

Mercy Corps empowers rural families and communities to participate in public sector decision-making from the local to the national level, enhancing the ability of these communities to make informed economic and social decisions at the local, regional and national level. Mercy Corps helps to promote accountability, transparency, and broader participation in local governance through public private partnerships.
Our current portfolio of governance and participation programmes include two project funded by USAID — the Social Safety Nets and FIELD-2, although public procurement and participatory economic planning in our economic programmes promote both governance and participation across rural Mongolia.

Social Safety Nets
To provide support to Mongolia’s most vulnerable rural families in the wake of the global economic crisis, USAID funds Mercy Corps’ implementation of this one-year, multi-faceted activity. The three key programme objectives are to improve the social inclusion of marginal households by increasing access to social and community support networks; improve economic inclusion of marginal households by enhancing their marketable skills and, to increase employment among marginal household members through an Employer Support Mechanism.

Through psycho-social training, vocational skills building, community action and job fairs, the Social Safety Nets project has helped an estimated 4000 people begin the long process of rebuilding their lives and livelihoods. In addition, this project enabled the care and early childhood education of 300 very young Mongolians who might otherwise have gone without contact, socialization and improved nutrition that the project's kindergarden activity ensured.

Mercy Corps enjoys excellent and ongoing cooperation with a variety of official partners, including Aimag Labour and Social Welfare Departments, Civic Registration and Information Agencies, Urban Planning and Land Authorization Agencies, Soum Governor offices, Social Security Offices and Citizens Representative Hurals. Other key partners are the vocational training centers, the National Training and Vocational Education Agency, local businesses, and a network of CSOs.

Fostering an Inclusive Environment for Local Disabled (FIELD)
In July 2011, Mercy Corps Mongolia began Implement the second phase of the FIELD programme. The underlying principal of the FIELD project is to promote more positive attitudes about PWDs and their abilities and potential to be equal members of society through awareness-raising campaigns and a series of trainings on the UN Convention on the Rights of PWDs, the social model of disability, inclusive education, and the principles of accessibility.
Success in FIELD I, which was implemented in Ulaanbaatar and three aimags (Uvurhangai, Arhangai, Dundgovi) meant an improved the capacity of 11 Disabled People’s Organisations (DPOs) to provide services for PWDs and work more collaboratively with each other and with government and private sector stakeholders. These DPOs learned to advocate on priority PWD issues, to manage projects, and to design their activities in a more strategic way. More than 13,000 PWDs directly benefitted from the FIELD project and experienced improvement in their quality of life.
FIELD II will sustain the momentum of action, concentrating our efforts and those of our partners on ensuring the new National Standards for Accessible Construction are widely recognized and utilized. Mercy Corps will implement FIELD II is Uvs, Bayanhongor, Uvurhangai, Dundgovi, Arhangai and the Bayangol district of Ulaanbaatar.

Natural Resource Management in a Fragile Environment

Mercy Corps’ Livestock Early Warning System (LEWS) was first begun with USAID funding under the name of Gobi Forage. Today, the collection and mapping of data related to forage growth is funded by the World Bank’s Sustainable Livelihoods Project and carried out in partnership with Texas A&M University. Monthly maps that show current and forecast forage growth can be found at http://glews.tamu.edu/mongolia. By the end of 2012, the LEWS effort will be transferred and fully incorporated into the Government of Mongolia’s Ministry of Nature and Environment where the service will be sustained.