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IN A small but neat traditional round house called “ger” lives Tsevelmaa, a 72-year old woman, with her two young orphaned grandchildren. Despite her age, she lives an active and passionate life and makes a living by selling a traditional dumpling tea at the market.

Three years ago she received a small loan of about US$200 from an Asian Development Bank (ADB)-funded ger area improvement project to improve her situation. Each month she earns about US$25 in elderly pension and US$30 in monthly orphanage allowance for her grandsons and uses about US$6 for loan repayment. With the loan, she bought a new felt cover for her ger and refurbished it.

Sangay Penjor, then the ADB project officer, almost shed a tear seeing Tsevelmaa standing and elaborately painting the wooden roof sticks of her ger on a sunny autumn day. She would pull one wooden stick a time and paint it and insert it back as dismantling the whole ger. “I may not have much time to live. At least, I should leave these two children with a good shelter,” said Tsevelmaa.

Having no collateral, she pledged her piece of land to get this loan. The grant project pioneered the practice of accepting land ownership license as legitimate collateral at a time when many poor households could not access commercial banks due to lack of collateral and the value of land being little.

Forty five percent of Mongolia’s population lives in suburban ger districts and half are poor. Three groups stand out among the poor: subsistence, semi-nomadic herder households, urban migrants, and the aged and disabled. Along with the uneducated, the aged generally have been unable to access opportunities in the market economy and were not able to accumulate savings. The social security system is unable to provide the aged and disabled with a reasonable standard of living.

A total of 1800 households in 10 Mongolian cities including 70 in Darkhan borrowed from US$100 up to US$1,000 to improve their existing houses or buy new ones. “Many of them had never received so much money in their lives at one time and were very excited”, said Ms. D. Myagmar, the project coordinator, who witnessed the non-bank financial institutions’ launching their first loan.

The project not only provides modest loans to low-income families but also provides training to reduce housing-related costs for the poor in ger areas. Tsevelmaa, for example, received training in making a fuel briquette from cheap and readily available materials so that she can reduce the cost of heating and cooking. She also learned how to pickle vegetables under the project.

Mongolia’s massive rural to urban migration has resulted in a proliferation of un-serviced ger districts surrounding major cities, putting pressure on basic services in the outskirts of Ulaanbaatar and other cities. By 2000, the urban population of 1.4 million accounted for 58% of the national population with 60% of it living in ger areas and 40% in apartment buildings.

Mr. Shagdarsuren, a migrant from Uvs province, has built a 3-bedroom house and borrowed US$1000, one fourth of the total cost, from the project. Before, he lived in a ger for 10 years. He repairs old cars and his family income is about US$200 per month. He pays back to the bank about US$30 each month. Eventually he plans to replace his wooden fence with a concrete one.

For Byambajav, also a western province migrant, a loan was a necessity. He took a loan of US$300 to repair the roof of his house after it had been damaged by a violent storm in 2004. He desperately needed the money as living with his four children and his sick wife in a house with rain leaking through the roof was difficult. But the banks would not lend such a small amount. He heard about the project from the local government. The project staff came to examine his house and immediately concluded a loan agreement. Now, Byambajav has a metal roof above his house he has no fear of rain and snow.

Urban infrastructure and services in Mongolia are rundown and in urgent need of repair and improvement. For example, at the end of 2000, only 40% of the urban population had access to piped water, 39% to district heating, and 35% to piped hot water. Conditions are worse in the ger areas on the urban periphery in most cities and towns. Because of their location, services in the ger areas are minimal and even more costly. Over half the population of Ulaanbaatar and at least half of the population of provincial capitals live in these areas.

Two new bathhouses with affordable prices were built in Tsevelmaa and Shagdarsuren’s neighborhood. Unlike the traditional bathhouses, they intermittently use an efficient solar and electric power and heat water instantly when necessary. The traditional bathhouses were largely inefficient as it burns the same large amount of coal all day long to keep the water hot no matter whether there are two customers or twenty. Also the bathhouses consume half of the water due to modern equipment.

Urban poverty to in Mongolia is mainly due to lack of sufficient and stable income. However, lack of access to social and municipal services particularly heating, water and sanitation and inadequate housing aggravate poverty in ger areas. The Asian Development Bank is one of the main sources of external assistance for the sector, having provided loans and grants for basic urban services improvements, housing sector finance, living environment improvement in the ger areas, and land registration. The housing finance and basic urban services project focus on upgrading and developing urban infrastructure including water supply, sanitation and better roads in ger areas while the ger area grant project on housing related poverty.

The urban poor have inadequate housing and limited access to urban services including sanitation and safe drinking water. Not until an artesian well water kiosk was built under an ADB housing project had the Bag 7, where Byambajav lives, had water kiosks in close proximity and the residents had to fetch water from a long distance. To make it worse, the water supply was not regular and transported from somewhere else only on certain days of the week creating long queues even on cold winter days. Diseases caused by unhygienic water were common among the residents who saved water in containers for several days.

Tsevelmaa will soon pay off her loan. “I don’t want to leave my two kids in debt,” she said. She would like to borrow again to improve her fence. Although the microcredit project is completed in August 2007, the revolving credit fund will be transferred to the Government’s Housing Development Fund once the institutional arrangements are in place to ensure the project sustainability. Then many residents like Tsevelmaa can continue improving their houses and lives. The money they borrowed may seem little to some people but the modest size loans coupled with their perseverance and hard work indeed helped them improve their lives.

Tsevelmaa, Shagdarsuren and Byambajav inspired many others like them in their neighborhood to improve their living environment and lives. That is an indirect yet an important impact of the project.

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