Pilot Study on Microfinance for Livestock and its Related Industries in Mongolia

In Mongolia, microfinance (MF) services were rapidly expanding in the urban areas and commercial sectors. This did not meet the needs of rural areas where people in poverty relied mainly on livestock farming.  Based on existing references and field surveys, IC Net analyzed the current state of livestock farming, the possibility for expanding the industry, the issues facing the industry, and the needs of the rural population for financial services, and proposed new financial products.

Holding participatory rural appraisal workshops, IC Net analyzed the industry by 1) dividing the products into meat, leather, cashmere, wool, and dairy produce, 2) clarifying the processing procedures for each product and mapped major factories, and 3) extracting issues on markets, distribution, technology, and finance. In the study on financial services, IC Net gathered information on existing MF institutions, and conducted detailed research on demand for financial products by social analysis, and participatory market research methods. IC Net proposed as new products a loan linked to savings to reduce risks to loans for livestock farmers as well as livestock insurance, a loan with future income from livestock as collateral, use of a seasonal mobile bank and local agents to cut trading costs, small-scale lease products for livestock and its processing, and climate-derivative-type livestock insurance.