Funding Women Entrepreneurs on Mongolia’s Covid Front Line

July 8, 2020

By Soomin Jun and Saranzaya Gerelt-Od

Mongolia was one of the first countries in the world to adopt strict Covid-19 containment measures, starting with a January 27 halt to air and land travel between China and Mongolia, school closings, and a ban on gatherings. Eventually, all commercial flights to Mongolia were stopped, and so far this has miraculously limited the number of infections to slightly over 200, with no confirmed cases of community transmission.

Mongolia’s economy has been a different story. Economic growth—a respectable 5.1 percent in 2019—is expected to fall sharply in 2020. The OECD originally forecast that Mongolia’s 2020 economy would grow at 5.4 percent, but in May it revised its estimate dramatically downward, to minus 1 percent. The nation’s heavy reliance on export earnings from extractive industries makes matters worse. This lack of diversification is likely to hobble employment, investment, productivity, and longer-term recovery from the pandemic in an economic future that is “subject to unprecedented uncertainty” for Mongolia and many other developing nations.

While the government quickly adopted expansionary monetary and fiscal policies—lowering interest rates, for example, and exempting the public from social insurance taxes for six months—Mongolia still faces serious macroeconomic challenges, including growing national debt, declining tax revenues, and falling commodity prices. This bleak outlook, and the country’s strong measures against Covid-19, have created a challenging business environment for all Mongolian entrepreneurs, but it has been especially difficult for women.

A Tsagaan Sar (New Year) sales event in 2018. Small businesses that depend on these sales often take out loans to stock up on inventory in the weeks before the holiday, and the unexpected lockdown this year has left them overstocked and in debt.

The majority of the female labor force in Mongolia is concentrated in the retail and service sectors, which are sensitive to downturns in consumer spending like those in the current crisis. While the government’s Covid-19 stimulus package includes relief for small businesses, none is designated specifically for women. The Asia Foundation conducted a rapid survey of a sample of businesswomen at Mongolia’s Women’s Business Center (WBC) in Ulaanbaatar, established in 2016 with support from the Korea International Cooperation Agency (KOICA). All 30 businesswomen surveyed said they were struggling, as revenues dried up, to keep their businesses open, keep up with accruing costs, and pay employee salaries.

The women surveyed also cited the additional burden of being primary caregivers for their families while trying to keep their businesses alive. Schools and kindergartens have been closed since January, and many families have no backup plan for childcare. Confinement at home has been challenging and in some cases dangerous, as increased domestic violence has significantly affected women and children’s safety since the lockdown.

Chuluuntsetseg selling her signature bed linens at a WBC event before the Tsagaan Sar holiday in 2018.

But now for a rare moment of positive news: The Asia Foundation’s Mongolia office recently rolled out several strategies to equip WBC clients to endure and operate in this environment. The Foundation’s the Lotus Rapid Response Fund provided critical survival tools, including emergency cash grants, a direct hotline for women experiencing psychological or social problems, mentorships to guide businesses in the transition to online sales, and a public information partnership with the Ulaanbaatar police department to disseminate information on domestic violence.

Small entrepreneur Chuluuntsetseg is among the businesswomen receiving assistance from the Lotus Rapid Response Fund. One of 47 graduates of the WBC’s business incubator, she launched a sewing business producing bed linens and blankets, but when the border with China closed, she lost her source of raw materials. Her business received another blow when the government, for the first time in literally centuries, canceled the February celebration of Tsagaan Sar, the Mongolian Lunar New Year. This is a holiday when people spend lavishly on gifts, and small businesses that depend on these Tsagaan Sar sales often take out loans to stock up on inventory in the weeks before the holiday. When the lockdown began at the end of January, the celebration was scrapped, leaving businesses overstocked and in debt.

The Women’s Business Center helped Chuluuntsetseg keep her small business, which almost failed during the pandemic.

Chuluuntsetseg’s business was one of them. Her profitability collapsed. She received no assistance from the government, she told us, either as a small business or as a disabled person. She had no choice but to close her business down. Many other women entrepreneurs also closed up shop, either temporarily or indefinitely. Most of the women from the WBC employed other women, and their business closures had a devastating domino effect.

The Rapid Response Fund stepped in with $500 emergency grants to Chuluuntsetseg and 15 other women entrepreneurs. With just this minimal support, Chuluuntsetseg was able to find new, local suppliers for her raw materials. She shifted her product line to include cotton masks and gloves to address the nationwide shortage of personal protective equipment. She worked with mentors to expand her online sales, including using Facebook’s “boost” option and the WBC’s new online shopping mall instead of relying on the government’s product expos, which have been canceled during the pandemic.

More than 6,000 women entrepreneurs are now registered with the WBC, most of them severely affected by the pandemic. Working inside the WBC, we see firsthand and every day the unique barriers women entrepreneurs face, and that they warrant dedicated support programs during this extraordinary crisis. We have made a good start by sustaining a small group of female-led businesses, and we hope support follows for the many more entrepreneurs who fuel Mongolia’s economic engine.

Soomin Jun is a program specialist for The Asia Foundation’s Women’s Business Center and Incubator Project in Mongolia, and Saranzaya Gerelt-Od is a senior program officer and gender specialist for The Asia Foundation’s Mongolia office. They can be reached at [email protected] and [email protected], respectively. The views and opinions expressed here are those of the authors, not those of The Asia Foundation.

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