Credit Unions Take Their Message to the Mongolian Steppes

ULAANBAATAR, Mongolia -If Genghis Khan was alive today, he might deposit his pillage in his local credit union thanks to a joint project between the Canadian Co-operative Association (CCA) and the Asian Development Bank (ADB). The project, agreed to in November, extends an ongoing CCA project. Four pilot rural provinces or aimags in the Eastern, Central and Western parts have been selected as the target for expanding the rapidly growing Mongolian credit union movement. The aimags are Arkhangai, Dundgovi, Zavkhan and Sukhbaatar where 294,400 people – about 12% – of the Mongolian population live. What are some of the challenges facing the seven-person development team of Canadians and Mongolians headed by Canadian Ingrid Fischer? The area has a 15% unemployment rate, and the percentage of households living below the poverty line in is 38%, compared to 36%nationally – the typical household income is 40,000 to 50,000 Mongolian Togrogs (US$ 35-45) per month. The main income-generating resources are animal raw materials such as cashmere, wool, meat, hides. According to CCA Spokesperson, Kathleen Speake, “The harsh environmental conditions make the dependency on livestock very risky, as shown by the huge losses of livestock during the dzuds (very harsh winters) of 1999-2002. Animal raw materials have seasonal fluctuations, and income of herders fluctuates accordingly. The herders have income only six months of the year, but have expenditures for the full year.” Barter or trade is often used in place of cash transactions. Another problem is a simple transportation issue. Although Project Head Ingrid Fischer can live a fairly normal life in Ulaanbaatar, getting to her target groups means long days of travel over primitive roads or no roads. Air travel even if it were allowed under the terms of the agreement with the ADB is sparse. Fisher and her group are prepared for the communication problems that might arise across cultural and language barriers. Speake says, “We have ensured an adequate budget for interpretation and have also selected high quality interpreters, and where possible, interpreters with practical understanding of the sector. All of our team members are experienced in working through interpretation, and understand the skills required to make the transfer of knowledge effective. We are also able to brief team members well because we know Mongolia well.” Cross-cultural brokers and local consultants are in place and will help overcome some of the barriers. Fischer speaks German (one of the local languages) and Mongolian. Credit unions have been known in Mongolia since 1997, but less so in rural areas. The concept is better developed in cities. Fischer arrived after the Democratic Coalition Union (DCU) unseated Mongolian People’s Revolutionary Party (MPRP). A period of rapid privatization followed starting with livestock which went from collective farms to small private units. “A major shift occurred in livelihoods for households. The rise in unemployment was a shock across urban and rural communities. Across the country, the number of herding households doubled as the livestock sector absorbed the labor displaced from the public sector. The informal sector flourished. State marketing networks collapsed and subsidies and incentives for those living in rural areas was abolished. People were faced with economic insecurity due to unemployment and distant markets. The effects of natural disasters such as drought and harsh weather worsened the over-concentration of grazing as numbers of herders and livestock increased,” Speake said. After the transfer of power, there was a crisis in the banking sector which meant salaries, pensions and allowances were paid late. People, according to Speake, had “to dispose of their assets and were forced into debt. Throughout the 1990s, an increasing income inequality appeared and grew. Widespread economic, social and political transitions resulted in changing kinship and social networks. Economic insecurity had led to widespread social malaise, increase in alcohol abuse, domestic violence, crime, and marital breakdown.” These de-stabilizing factors are what member-owned, community based organizations, such as CCA want to address. The skills needed for working on such a project are varied. Fischer has worked extensively with grassroots savings and credit cooperatives as well as with the emerging worker coop sector. At one point she had a “normal” job as general manager from North Peace Savings and Credit Union (BC), but international work is not new to her. Fischer has been involved in CCA projects in Zambia, Zimbabwe, South Africa, Sri Lanka, Costa Rica, Nicaragua, China, Indonesia and Mongolia. Ingrid holds an MBA from Heriot-Watt University in Edinburgh. Other CCA staff persons on the team have international development experience, language skills, and degrees in subjects like international commerce, international development, accounting and finance, and business administration. Some people on the project will go to Mongolia for shorter periods of time to complete a specific assignment such as training. Although the western world might think of Mongolia as primitive, there are many highly educated local consultants on the project – one has a B.A. in Finance and Economics from the Institute of National Economy in Irkutsk, Russia, another holds an M.A. in International Development from the International University of Japan, and still a third has a M.A. in Economics from the University of Illinois. There are more than 400 savings and credit unions (SCUS) operational in Mongolia. The largest concentration exists in the Zakhan aimag with 45 SCUs in operation. SCU common bond groups include teachers, firefighters, local administrators, doctors and construction workers. “The largest SCU is Moncord, which works in Ulaanbaatar and has a membership of 1,000 people, with assets of MNT 1,000,000,000,” Speake said. – [email protected]