Turning poverty into prosperity

Turning poverty into prosperity.

Sain uu (Hello) I would like to share a couple of stories today of how credit unions in Mongolia are helping to turn poverty into prosperity through co-operative action.   First some background…

Mongolia only started to develop a market economy in 1990-1991 after it pulled away from the USSR.  It has been a slow and complicated process, made significantly harder by the global recessions which saw a significant drop in copper prices.  Unemployment is trending downwards but is still in the double digits, inflation is shooting up it is now over 11% and expected to increase.  This has put significant pressure on interest rates which are also very high.  When rates are quoted here they are quoted on a monthly basis, not annually. For more info on Mongolia try this site http://www.worldbank.org/en/country/mongolia

As you can see the need is great, fortunately the solution is also great.  Credit unions are helping to create jobs and opportunities, whether it’s providing loans to start a business or helping member to save for the future, credit unions in Mongolia are making a difference.  

First I would like to introduce you Sambuuyam. We went to see Sambuuyam at his office, it is set above two of his businesses an unexpected combination of a karaoke club and a car wash.  Sambuuyam also owns a construction company, an agricultural company, and plans are under way to add a manufacturing arm to the construction company, he is also hoping to add two stories to his existing building, providing a restaurant and apartments.    My first question is why such a diverse set of companies, his answer reflects the reality that is Mongolia.  As the market economy expands and the city grows there are opportunities for small business to fill the gaps in the economy…but Sambuuyam hasn’t always been a businessman.  In order to take the first step into the new market economy he had to get a loan, and that is where the CU came in.  Now Sambuuyam  employs 40 – 60 employees who support over 200 family members.  He pays them very good wages and is developing “social programs” to assist his employees if they get sick or need help in other ways.

The second person I would like you to meet is Tungalay.  Tungalay rents a stall in the market to sell beauty supplies.  The credit union lent her the money to get started at “a fair rate” she wasn’t able to qualify with the banks, Tungalay like so many others falls into the “unbankable” category.  If you don’t have collateral you can’t borrow money, which means that you have to work for minimum wages…which in Mongolia is legally set at 130 USD a month, and there just isn’t enough to save and build your net worth, so that you can become bankable…it’s a vicious circle.  We ask  Tungalay what difference the CU has made in her life, she tells us that now she can afford the son’s school fees and she is looking forward to expanding her business, soon she may be able to hire an employee, her life she tells us is much better now.