A one year long pilot study on Microfinance for livestock and its related industries in Mongolia.
In 2003, Achid Consulting conducted a pilot study on Microfinance for livestock and its related industries in Mongolia. This 1 year-long research study was funded by Japan Bank for International Cooperation (JBIC). The was led by Ms.Haruko Awano and Mr.Azegami Naoya with 14 financial experts from Japan and Mongolia and 15 technical staffs have participated in this project which extended over 25 soums of Dornod, Selenge, Umnugobi, Zavkhan, and Gobi-Altai. The main purpose of the study was to make recommendations of new financial services for livestock and its related industries to microfinance institutions (MFIs). Also, to increase income of the rural populace and to focus on sustainable process of the herding and farming industry through precisely defining the microfinance service need and to study potential improvement in microfinance mechanism. Additionally, the legal framework on microfinance was studied as it is essential to be familiar with the legal and regulatory environment of Mongolia, which entails understanding of the business of lending and other financial services, as well as people working in the microfinance sector.
“As a whole, it is all round research which fosters systematic answer to inclusive financial services for the poor and to improve their livelihood. ”
In order to efficiently conduct this research, both primary and secondary sources were utilized out of which 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 and microfinance supply. Our team dedicated significant effort to construct the survey questions so that the questionnaire reliability is maximized and margin of error is minimized. 3 different questionnaires and interview questions were designed for 3 major sample groups of herders; processors, trader, and other service providers; and 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 of financial products, as well as, to make an effort to close this gap by designing rural need-based financial products.
Finally, all the findings from survey and recommendations from the workshops were processed 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.
To sum up, the scope of the study was broad and complex as it dives deep into all aspects of the rural community including the legal institution, socioeconomic condition, as well as the financial market with the help of complex primary research methodology. As a whole, it is all round research which fosters systematic answer to inclusive financial services for the poor and to improve their livelihood.