“Pilot study on microfinance for livestock and its related industries in Mongolia” is a 1 year-long research study funded and co-conducted by Japan Bank for International Cooperation (JBIC) and Achid Consulting experts. A team of 29 financial experts and technical assistants have participated in the project which extended over 25 soums of Dornod, Selenge, Umnugobi, Zavkhan, and Gobi-Altai. The main purpose of the study was to design microfinance institutions (MFIs) prototype financial services based on livestock and its related industries. Moreover, the study plays vital role in potentially increasing income of the rural populace and to focus on sustainable process of the herding and farming industry through precisely defining the microfinance need and to study potential improvement in microfinance mechanism.
In the research process, both primary and secondary sources were utilized where the former weighs more in this study. As the primary research method, questionnaire, interview, and group workshops were utilized to collect the necessary information on 4 major variables of study:
- socioeconomic and poverty situation in rural areas
- livestock industry
- microfinance demand in rural areas
- microfinance supply
In order to increase the questionnaire reliability and minimize the margin of error, probability sampling was utilized as well as the sample size was maximized to the full potential of the research. 3 different questionnaires/interview questions were designed for 3 major sample groups:
- processors, trader, and other service providers;
- informal finance providers
Following the data compiling, professional data analysts conducted statistical analysis and extracted the key findings and deduced the results which were then introduced at 4 workshops/ seminar with relevant ministries, agencies, international organizations and multiple financial institutions including major banks and insurance companies. With the help of the workshops, it was necessary for the major players of the financial sector to exchange opinions and understand the gap between supply and demand sides of finance market, as well as, to make an effort to close this gap by designing rural need-based financial products.
As a final stage, all the findings from the survey and recommendations from the workshops were integrated into a prototype of loan products, savings, leasing, and livestock insurance that best serves the need of the rural livestock business. Such prototypes for financial services and products were then again recommended to the financial service providers.
The scope of this study is broad and complex as it dives deep into all aspects of the rural community including the regulatory framework, socioeconomic condition, as well as the financial market with the help of complex primary research methodology coupled with secondary resources. As a whole, it is all round research which seeks systematic solutions to increase inclusive financial services for the poor and to potentially improve their livelihood.