Rapid Response Fund Buoys Mongolian Women Entrepreneurs Hit Hard by Covid

Mongolia, which shares a border with China, was quick to react to Covid-19. The capital, Ulaanbaatar, has been in a continual state of lockdown since January 27, 2020, with varying restrictions including the closure of schools and nonessential businesses, restrictions on regional and international travel, and the suspension of public gatherings. The first local transmission of Covid-19, which wasn’t recorded until November 11, 2020, led to intensified restrictions, and local businesses have not been able to fully operate as a result.

The swift government measures kept the virus at bay for nearly a year, but they also exacted a significant cost. With vaccines unavailable and the recent decision to impose the strictest lockdown to date, the economic and social consequences for vulnerable members of the population, especially women entrepreneurs, have been dire.

Not all the economic news is bad. After a sizable, pandemic-induced recession, Mongolia’s economy is projected to grow by 6 percent in real terms in 2021. This is due primarily to the strong performance of exports and mining, however, and will do little to reverse the impact of Covid-19 on micro, small, and medium enterprises (MSMEs), which comprise 77 percent of registered businesses and employ 72 percent of the total workforce.

The hardest-hit sectors of the economy have been those where women have a substantial presence, including agriculture, trade, manufacturing, and services, but official statistics paint an incomplete picture. The impact of the pandemic on the formal sector is well documented, but government agencies do not produce statistics on unregistered businesses—most of them MSMEs—and research institutes that study the informal sector lack gender-disaggregated data.

A recent survey by the Asian Development Bank studied the impact of Covid-19 on women entrepreneurs in the informal sector and suggested recovery options for MSMEs in Mongolia. The study noted that 77 percent of MSMEs and 65 percent of informal businesses had experienced a sharp fall in revenues, resulting in declining liquidity and cash flow problems that have affected economic fortunes, social status, and overall well-being. The report urged quick financial relief for women-led MSMEs.

Odontuul, a 29-year-old woman running an unregistered micro-business, told us:

Due to the lockdowns, I can’t sell my existing inventory, which ties up my already limited working capital. My family has just MNT 2 million [USD 700] in savings. We are trying to keep this for health emergencies. Since I don’t have any revenue now, I am desperately asking customers to pay their bills, and we are only able to buy food for our kids from those proceeds.

In addition to troubles like these, informal businesses, including many MSMEs and women-led enterprises, don’t qualify for government economic relief—measures like tax breaks, reduced social security premiums, or the postponement of tax penalties. And women entrepreneurs face their own set of pandemic pressures, including restrictive gender stereotypes, increased childcare burdens, and the growing incidence of domestic violence. For example, clients at Mongolia’s One-Stop Service Centers, which help women and children escape and recover from violent situations, grew by 87 percent in the first half of 2020, as lost income and social restrictions put families under growing psychological and financial stress.

In response to these economic and social challenges, The Asia Foundation, with support from Global Affairs Canada and the Lotus Circle, began offering rapid response funding (RRF) to women entrepreneurs working with our Women’s Business Center. After a successful first round of grants in the summer of 2020, it became clear that additional support was needed, and a second round was distributed to 50 women entrepreneurs in mid-September. The funds enabled entrepreneurs hit hard by the global crisis to stock up on raw materials to maintain production, and 26 percent invested in developing new business strategies to focus on e-sales, delivery services, and e-marketing, to cope with the extended lockdowns.

One recipient, Bolorchimeg Erdenebat, runs a small business selling children’s sleeping bags to parents, educators, and preschools. When the pandemic forced schools to close, sales of her most popular product plummeted. With the loss of her specialized market, she needed to adapt her product line to be more broadly affordable and appealing. She is now creating unique, affordable baby clothes with a new fabric-printing machine that she acquired using her grant, which also helped her cover two months of office rent.

Another RRF recipient, Tsetsegmaa Dorjbat, used her grant to buy a laptop to improve her computer skills and upgrade her business’s Facebook page to take online orders from clients.

The RRF program takes a holistic approach to the many barriers to women’s economic participation in Mongolia, providing individualized solutions to help women-led MSMEs survive the pandemic and prosper in the eventual post-Covid economy.

Tricia Turbold is director of economic empowerment programs, Tsolmontuya Altankhundaga is deputy program manager, Tsolmon Gantuya is senior project officer, and Jargalmaa Amarsanaa is a project officer for the Asia Foundation’s Women’s Economic Empowerment Project team in Mongolia. They can be reached at [email protected], [email protected], [email protected], and [email protected], respectively. The views and opinions expressed here are those of the authors, not those of The Asia Foundation.