Of the almost 100 countries that World Vision is working in, 48 countries now have integrated micro-enterprise development into their community development programmes to achieve maximum development impact. This also ensures the work can be sustained when World Vision leaves the area. Countries with micoroenterprise work include Mongolia, Cambodia, Myanmar, Vietnam, India and Indonesia.

Between 1924 and 1990 Monglia was under Soviet patronage. When the Soviet Union suddenly broke up, Mongolia's planned economy collapsed: the factories closed, jobs disappeared, and people went hungry because there was no food in the shops.

In the 1990s Mongolia began a painful transition to a market economy. It remains economically fragile and most people live in grinding poverty.

• Ranked at 116 out of 177 countries on the Human Development Index (NZ is 20th)
• More than 45% of Mongolians earn less than US$2 per day
• 27% of the population is under-nourished
• Per capita income is 137th in the world

Despite this, Mongolians are stoic, hard-working people determined to rebuild their country. Proud descendents of Ghengis Khan, they see their nation's potential.

Mongolians living in poverty want to work their way to a better future. To do so they need improved financial know-how, and access to business training and financial services. However, Mongolia's financial institutions exclude the poorest from opening savings accounts, and require collateral for loans. The Mongolian Central Bank estimates that of 200,000 poor households who would benefit from credit products, only 20,000 have access.

VisionFund Mongolia, with the help of New Zealanders, is addressing this problem. VisionFund Mongolia provides financial and small business training, mentoring and access to financial services to the poor. Directly targeting the poorest communities, it provides non-collateralised peer group lending so the entrepreneurial poor can become self-sustaining. It aims to reach 28,000 clients by 2010.

1. Breaks dependency on local loan sharks and unscrupulous local purchasers of the products

   The formal financial sector does not extend credit to poor enterpreneurs due to the small loan amounts required, the absence of any credit history and the lack of collateral assets.

   A money lender in the community often loans money at high rates of interest to enable the villlagers to buy seed, fertiliser and basic implements for cropping, or for purchasing other materials for producing handicrafts. Nearly all the entrepreneurs´ profits are applied to the payment of interest to the "loan shark", which leaves them in a position of grinding poverty. Unscrupulous purchasers of the products contribute to keep them poor.

   This is the cycle that needs to be broken.

2. Empowers the poor to solve their own problems

   VisionFund´s clients increase their household incomes, build assets and reduce their vulnerability to the crises that are so much a part of their daily lives.

   VisionFund clients are able to plan for their future and that of their families. They can manage their cash flows and apply them to whatever household priorities they judge most important for their welfare.

   VisionFund empowers and equips the poor to make their own choices and work their way out of poverty in a sustained and self-determined way.

3. Empowers women - the face of world poverty

   Access to financial services empowers women to become more confident and more likely to participate in family and community decisions.

4. Promotes children´s education

   One of the first things poor families do with new income from microenterprise is invest in their children´s education. Studies show children of microfinance clients are more likely to go to school and stay in school longer. Student dropout rates are much lower in microfinance client households.

5. Critical for overall development

   Testimonies and studies show households of microfinance clients have better nutrition, health practices, health outcomes and living conditions. Children are more likely to go to school and finish their studies and more children go on to further studies.

   Access to financial services forms a fundamental basis on which many of the other essential development interventions depend. Improvements in health care, nutritional advice, and education can be sustained only when households have increased earnings and greater control over financial resources.

   Improved earnings means that families can save money, which reduces their vulnerability when a business slows, a child gets sick or a family crisis hits.

   Microfinance gives families options for the future and enables them to give their children the best start in life.

Yes, most definitely. They are the face of world poverty.

In fact women make up 64% of all Word Vision´s loan clients (and more than 85% in Mongolia). Women have proven to be better at repaying their loans. Women also spend more of their business profits on their family and domestic needs, which means the children benefit from more nutritious food, better health care and schooling.

Yes, they do. Interest is charged for three reasons:

• To cover the cost of running a VisionFund microfinance programme;
• To help people become financially independent and competitive under normal market conditions;
• To avoid destabilising the local economy and distorting the development of the microfinance sector in-country.

VisionFund Mongolia charges an interest rate of 2.5% - 3.5% per month. This may sound high to those who have access to credit in developed market economies like New Zealand. The only other option for many of the rural poor who borrow from VisionFund Mongolia, however, is to borrow from local informal moneylenders who charge 10% per month.

Providing loans to the rural poor is expensive in relation to the size of the loan, and is one of the reasons the rural poor have not been an attractive market to the formal financial sector. A $300 dollar loan from a community bank, for example, requires the same management resources as a $2500 individual loan, thus increasing the transaction cost per dollar loaned.

Credit officers often have to travel to hard to reach remote areas to visit the client´s home or place of work to evaluate creditworthiness and work through the community bank to provide the loan, and make follow up visits to track and reinforce the repayment culture.

Ensuring ongoing sustainability requires VisionFund to charge a ´high´ rate of interest compared to what is expected in a developed country. It can cost NZ$80 to train clients and make a micro-loan, which can represent 30% or more of the loan amount. However, on the demand side, clients willingly pay the rates to ensure long-term access to fair credit and business support, and the return received on additional investments funded by the loan can well be many times greater than the interest rate charged.

VisionFund Mongolia charges little more than the commercial bank's collateralised loans and remains the lender of choice in all the districts it works. It is committed to improving efficiency levels and to increasing scale in rural Mongolia. This will bring down the cost of providing loans, improve access to loans, and lower borrowing costs.

VisionFund works closely with World Vision worldwide to identify those in the communities who are destitute and to whom it is more appropriate to provide subsidised economic assistance (job skills training and financial literacy education) rather than interest bearing loans. This subsidised assistance is delivered to communities by the World Vision development staff working in them and is distinct from the small loans offered by VisionFund credit officers.

Yes you can!

$8500 will establish a community bank. $300 will support one entrepreneur through a First Steps initial business loan. You could consider making regular monthly donations of this size, or if you prefer, you can form a group with somefriends or colleagues and together raise the $8,500.

Fill in the Contact Us form if this is an option for you and we can get you in contact with a World Vision Manager who is already experienced in forming VisionGroups.

Yes we can provide you with a more detailed description of the microenterprise process, project information and financials from World Vision International and information from VisionFund Mongolia.

To be part of VisionFund contact Rupert Ross on 0800 800 776 or email Rupert.Ross@worldvision.org.nz

It's not easy to start up your own business. Here in New Zealand we have a great infrastructure, accessible capital and business development loans, years of business tradition and a wide knowledge base. All these Mongolian entrepreneurs want is a chance to work their way out of poverty, and you can enable them.