Creating resilient economies in Mongolia

In Mongolia, two women hold reusable cotton bags produced by Tsetsegdelger Byamba and her husband, Hatanbaatar.
Tsetsegdelger Byamba and her husband Hatanbaatar in Mongolia produce reusable cotton bags. (Photo: UNDP)

Tsetsegdelger Byamba and her husband Hatanbaatar, of Mongolia, were among those who lost everything following the dissolution of the Soviet Union in 1991. Unemployment, a daughter’s illness and a fire in their home destroyed life as they knew it.

Today, however, Tsetsegdelger is the proud owner of a successful recycling business and a thriving chicken and vegetable farm.


  • The initial grant provided by UNDP to pave the way for Mongolia's early microfinance programme was $1 million.
  • The independent XacBank, created through the programme, currently holds 85,000 loans.
  • Throughout the 1990’s, as Mongolia began its difficult transition from a command to an open-market economy, 36% of the population on average fell below the poverty line.

A pioneering United Nations Development Programme (UNDP) microfinance programme, initiated in the early days of Mongolia's shift towards democracy, has transformed her life and that of thousands of Mongolians by creating economic opportunities, and helping to insulate them from uncertainties in a competitive market economy.

During the 1990s, Mongolia began its transformation from a centrally planned economy under the Soviet Union to a market-driven one. Market liberalization, currency reform, restructuring of the financial sector and administrative decentralization opened up new possibilities in the country for small and medium-sized industries.

While the country's economic growth accelerated impressively, not everyone benefited from the robust changes. Those living below the poverty line and families outside the city centres often got left behind.

To extend the benefits of economic liberalization to less-advantaged communities, the Government of Mongolia and several NGO’s embarked on an experimental pilot programme in microfinance with an initial grant of US$1 million from UNDP.

In its first years, the programme worked to establish a regulatory framework for microcredit in the country, which subsequently encouraged the Asian Development Bank, Mercy Corporation and other donor agencies to become involved.

The programme also worked to provide low-income populations with access to a variety of financial services, including credit, insurance, transfers and - most importantly - savings. As a result, access to credit services expanded throughout Mongolia’s rural areas and continues to do so today with the use of mobile banking services.

By 2001, the initiative had evolved into XacBank, an independent commercial bank operating on a market basis. Today, XacBank is a self-sustaining and profitable enterprise with nearly 85,000 loans.

It was XacBank that provided Tsetsegdelger with her first loan of 250,000 togrogs - roughly $200 – in 2004.

With this initial loan Tsetsegdelger was able to expand her recycling business and better provide for her family. She also received several additional small loans over the next few years to build a greenhouse and purchase chickens and roosters for her farm.

“My life from 2000 to 2009 is the story of not giving up,” she says.

Tsetsegdelger has even formed her own self-help loan group for women who can access loans from XacBank for their own small businesses.