August 2005 
Ulaanbaatar, Mongolia 
Prepared by the evaluation team: 
James C. Parys, USAID 
Tsetsen Dashtseren, MARBIS Consulting Company 
Oyunbileg Tseveen USAID Mongolia 
USAID/Mongolia, Reference numbers: 
Cooperative Agreement AID 492-A-00-02-00017-00 
Gobi Regional Economic Growth Initiative—Phase II 438-A-00-00002-00 
 Evaluation of the Gobi and GER Initiatives August 2005
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Abbreviations, acronyms, symbols and Mongolian terms used throughout the text
Aimag : Provincial level in Mongolia, also written as Aimak 
Airak : Fermented mare’s milk popular in Mongolia 
Apartment area : The central district of a town or city where residences are 
primarily apartments. 
Bagh : Lowest rural administrative level in Mongolia, also written as Bag 
BDC : Business Development Center 
BDS : Business Development Services 
Dzud : Natural disaster that causes material loss, usually refers to winter 
storms, long periods of abnormally cold temperatures 
Ger : A traditional Mongolian dwelling, which is made of a wood frame 
and covered by felt and canvas. 
Ger Area : Peri-urban areas which surround Mongolian urban areas and are 
not serviced by public water and sanitation, many of the homes 
consist of gers. 
IR : Intermediate Result, a component needed to achieve a Strategic 
Objective 
K : Thousand 
Khural : The lowest urban administrative level of Mongolian Government 
Khashaa : Originally meant fence, now refers to housing lots 
M : Million 
MIT : Ministry of Industry and Trade 
MNCCI : Mongolian National Chamber of Commerce and Industry 
MNT : Tugrik, the Mongolian currency 
Naadam : A national festival in Mongolia, usually held in early July 
NBFI : Non-Bank Financial Institution 
NGO : Non-Governmental Organization 
PCV : Peace Corps Volunteer 
SMEs : Small and Medium Sized Enterprises 
SO : Strategic Objective, a high-level goal in a USAID Strategy that 
funds are obligated under 
Soum : County-level in Mongolia 
UB : The capital of Mongolia, Ulaanbaatar 
VTIC : Vocational Training and Industry Center 
Currency Exchange: US$1 = MNT 1,192 
Acknowledgements: 
L.Narmandal, USAID/Mongolia’s administrative assistant, proved invaluable in arranging key meetings, 
taking care of reservations, and fending off USAID’s international staff. Help formatting this report 
came from Mr Naramandakh, the Gobi Initiative’s information technology intern. Ara Barsam and 
Sharon Yett proofread the final draft. 
The evaluation team also sincerely appreciated the time and effort given by all the staff of CHF and 
Mercy Corps International who dedicated significant time to talk with us and assist us in meeting all 
their project stakeholders. And it should go without saying, the team is particularly thankful to all the 
project beneficiaries and others who politely subjected themselves to our “machine gun-like firing of 
questions,” taking time out from their persistent efforts to succeed in Mongolia’s market economy. 
Indeed, this report—as the focus of the two subject programs should be—is dedicated to all rural and 
peri-urban Mongolians who are striving to find gainful employment in the private sector or develop 
private businesses. At the end of the day, these projects are about improving these individual lives. 
Cover photos: Left: GER Initiative Business Advisor Zoltsengel J. in Erdenet reviews A. Batcheral’s 
employment placement application. He had just arrived there looking for work from the Uvs Aimag. Right: 
Master Herder Sodnomdorj Smdanshiirev stands in front of his Gobi Initiative-supported dairy production 
and sales facility in the Uvurhangai Aimag center of Arvayheer. 
 Evaluation of the Gobi and GER Initiatives August 2005
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I. EVALUATION EXECUTIVE SUMMARY.......................................................................................5
A. BACKGROUND ......................................................................................................................................5
B. THE TEAM’S FINDINGS ON THE GER INITIATIVE ..................................................................................6
C. THE TEAM’S FINDINGS ON THE GOBI INITIATIVE ..................................................................................7
D. THE TEAM’S FINDINGS ON THE POTENTIAL OF OTHER PROVIDERS ........................................................9
E. THE TEAM’S OVERALL CONCLUSIONS AND LESSONS LEARNED.............................................................9
II. INTRODUCTION...........................................................................................................................11
A. MONGOLIANS STRIVING TO SUCCEED IN A MARKET ECONOMY.........................................................12
i. Population and rural/urban changes ................................................................................................12
ii. Effects of changes from communism to markets............................................................................14
iii. Small business climate...................................................................................................................15
iv. Access to finance ...........................................................................................................................15
v. Services and agriculture keep people employed?..............................................................................16
B. USAID’S STRATEGIC OBJECTIVE: ACCELERATE AND BROADEN SUSTAINABLE, PRIVATE SECTOR 
GROWTH ........................................................................................................................................................16
i. Intermediate Result (IR): Expanded economic opportunity for marginalized Mongolians .............17
ii. How should economic opportunities for marginalized populations be promoted?.......................17
C. BUSINESS DEVELOPMENT PROGRAMS FOR STRIVING MONGOLIANS ......................................................18
i. USAID projects’ progeny banks........................................................................................................18
1. Khaan Bank, the former Ag. Bank.....................................................................................................................18
2. Xac Bank ............................................................................................................................................................18
3. Sibling rivalry.....................................................................................................................................................19
ii. The GER Initiative.........................................................................................................................19
iii. From Gobi I to Gobi II..................................................................................................................22
1. Gobi I..................................................................................................................................................................22
2. Gobi II ................................................................................................................................................................23
3. Rural Business Network.....................................................................................................................................24
4. Other supporting program: Forage, Civil Society, and Peace Corps ................................................................24
5. USDA-related funded work and RASP .............................................................................................................25
iv. Business Development Services of others......................................................................................25
1. Private providers ................................................................................................................................................25
2. Implemented by the Mongolian Government....................................................................................................26
3. Implemented by donors......................................................................................................................................27
4. The special case of World Vision targeting the needy ......................................................................................29
5. What happened to MBDA?...............................................................................................................................30
III. EVALUATION PURPOSE AND METHODOLOGY.................................................................30
A. SCOPE OF THE EVALUATION...............................................................................................................30
B. SIMPLIFYING THE TEN ORIGINAL QUESTIONS TO FIVE .........................................................................31
C. METHODS USED..................................................................................................................................32
1. Informants interviewed......................................................................................................................32
2. Data analysis.....................................................................................................................................32
3. Other appraisal methods...................................................................................................................32
IV. FINDINGS ON THE GER INITIATIVE......................................................................................33
A. RESULTS.............................................................................................................................................33
v. Appropriateness of services and sustainability of businesses ...........................................................33
1. Loan facilitation .................................................................................................................................................33
2. Business consulting............................................................................................................................................35
3. Business training ................................................................................................................................................36
4. Business groups/associations development .......................................................................................................37
5. Business information and linkages ....................................................................................................................38
6. Employment matching .......................................................................................................................................38
7. How sustainable are the businesses supported?.................................................................................................40
8. Overview of findings on services and businesses supported.............................................................................41
vi. Working with others ......................................................................................................................43
vii. Potential legacies? ........................................................................................................................44
viii. How sustainable are GER facilitated loans? ................................................................................44
D. GER PROJECT MANAGEMENT AND STAFF CAPACITY ........................................................................45
E. CONCLUSIONS ON THE FOUR QUESTIONS AND RECOMMENDATIONS........................................................45
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V. FINDINGS ON THE GOBI INITIATIVE......................................................................................46
A. RESULTS FROM GOBI..........................................................................................................................46
i. Appropriateness of services and sustainability of businesses ...........................................................47
1. Support to herder and non-herder groups ..........................................................................................................47
2. Market Events ....................................................................................................................................................50
3. Benefits of groups and continued help for livestock .........................................................................................51
4. Training for short-term clients ...........................................................................................................................51
5. Rural Business Network.....................................................................................................................................52
6. Sustainability of businesses created?.................................................................................................................53
7. Overview of findings on services and businesses supported.............................................................................55
ii. Gobi working with others ..............................................................................................................56
iii. Opportunities for others to take on GI’s work ..............................................................................59
iv. Sharing the risk with financial institutions is a subsidy ................................................................60
v. Did the change from Gobi I to Gobi II make sense?.........................................................................61
F. PROJECT MANAGEMENT—NEED FOR GREATER DECENTRALIZATION AND CLIENT OWNERSHIP ...............62
G. CONCLUSIONS ON THE FIVE GOBI INITIATIVE QUESTIONS AND RECOMMENDATIONS ..........................63
VI. OVERALL CONCLUSIONS AND RECOMMENDATIONS....................................................64
VII. LESSONS LEARNED ....................................................................................................................65
A. EVEN THE MOST PROGRESSIVE DEVELOPING COUNTRY GOVERNMENTS CAN HAVE PROBLEMS WITH 
IMPLEMENTING BUSINESS SERVICES ...............................................................................................................66
B. COOPERATIVE AGREEMENTS CAN BE EFFECTIVE FOR USAID PROGRAMMING IN MONGOLIA.............66
C. FEES SHOULD BE COLLECTED AT THE OUTSET, HOWEVER MINIMAL....................................................66
D. RELEVANT BASELINES AND DATA ARE NEEDED IF USAID’S NEW EVALUATION AGENDA IS TO 
SUCCEED. .......................................................................................................................................................66
E. A TAXPAYER MAY ASK: WHY ARE MY CONTRIBUTIONS TO HELP MONGOLIA TREATED SO 
DIFFERENTLY?................................................................................................................................................66
VIII. ANNEX I: PERSONS CONTACTED.......................................................................................69
IX. ANNEX II: SELECTED PICTURES............................................................................................77
X. ANNEX III: SCOPE OF WORK FOR EVALUATION .............................................................85
BACKGROUND................................................................................................................................................85
PURPOSE OF THE EVALUATION.......................................................................................................................87
DETAILED STATEMENT OF WORK ..................................................................................................................87
DELIVERABLES...............................................................................................................................................88
TEAM COMPOSITION AND LOGISTICS .............................................................................................................88
XI. ANNEX IV: DATA TABLES.........................................................................................................90
H. GER INITIATIVE TRAINING AND TECHNICAL ASSISTANCE .................................................................90
I. GOBI INITIATIVE TRAINING AND TECHNICAL ASSISTANCE.....................................................................91
XII. ANNEX V: INCEPTION MEETING...........................................................................................94
XIII. ANNEX VI: BIBLIOGRAPHY..................................................................................................96
 
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I. Evaluation Executive Summary 
A. Background 
For one month in the su mmer of 2005, a team of one international and two Mongolian 
experts carried out an evaluation of two USAID-supported business development 
services (BDS) projects: 
1. The Growing Enterprise Rapidly (GER) Initiative; and 
2. The Gobi Regional Economic Growth (Gobi) Initiative, Phase II, or GI II. 
Under a background of uneven economic opportunities faced by rural (often nomadic) 
and peri-urban (periodically transient) dwellers in a reforming Mongolia, USAID 
invested in these two projects under separate cooperative agreements (CAs) with CHF 
International (GER) and Mercy Corps International (MCI), to achieve results in 
expanding economic opportunities for disadvantaged economic players under its 
Strategic Objective to accelerate and broaden sustainable, private sector-led economic 
growth. 
USAID’s contribution to CHF’s project was to be and has been $2m for three-years of 
activity beginning in August 2002. The project was later allowed a no-cost extension 
until March 2006. 
The CA for GI Phase II began in December 2003 and was valued at $10m, of which 
USAID has obligated $4m. 
Both CHF and MCI have also received more than $8.5m ($5.8m and $2.7m, 
respectively) in value to fund parallel and supporting programs from monetized US 
wheat commodities given to Mongolia by the US Department of Agriculture (USDA) 
under its 416 (b) surplus commodity program. 
The primary purpose of this evaluation was to provide USAID/Mongolia with an 
objective external assessment of: 
¾ The appropriateness and effectiveness of current Gobi Initiative and GER 
Initiative activities; 
¾ Whether the Gobi Initiative and GER Initiative should be involved in additional 
activities; and 
¾ The likelihood of sustaining Gobi Initiative and GER Initiative impacts after the 
completion of USAID funding. 
The scope of work for the evaluation also requested the team to evaluate whether the 
amendments made from the previous phase of the Gobi Initiative (GI I) to its present 
second phase, or GI II were appropriate. 
Although given the constraints on time—compounded by the fact that it can take eight 
hours to drive from one GI client to the next—in obtaining a complete picture, the 
evaluation team is confident that these two projects are uniquely providing business 
development services that contribute significantly to improvements of individual 
businesses and, although uneven, to lessening the market failure and transaction costs of 
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rural and per-urban micro-, small-, and medium- enterprises. Although both projects 
are significantly flexible and demand driven, the evaluation team did identify a few 
ways that they could expand activities. Although both projects require much of their 
clientele to pay (albeit minimally) for services, the current likelihood of sustaining 
cutting-edge BDS services after USAID funding ends remains slim. The team, 
however, is confident that both projects could leave behind important legacies to their 
efforts. 
B. The Team’s findings on the GER Initiative 
The GER Initiative is a business development and employment services project to 
improve the livelihood of residents living in peri-urban (or ger) areas of the four largest 
cities of Mongolia. The main objective of the project is “to support and promote private 
entrepreneurship in peri-urban areas through strengthening and improving 
microenterprises, creating new businesses, and increasing employment of ger 
residents.” The project’s services fall under two main components: Business 
Development Services and Employment Services (training and employment matching). 
Based on interviews and analysis of information provided by the project management, 
the evaluation team looked at how well these services are meeting the needs of clients, 
how well the GER Initiative has worked with partners, and estimated what could 
survive after USAID ends it funding. 
To the team, the most salient findings were: 
Based on its own reporting, the project has exceeded the targets if feeds into 
USAID’s performance monitoring plan in business creation, business growth 
and employment. 
In total, the project collects an average of $2,245 per month in fees, though there 
is reason to believe it could charge, and thereby collect, more. 
The loans it facilitates for clients are mostly for financing working capital for 
businesses with an average of 1.5 employees. Loan sizes were MNT 1,143,0 00 
($952), with an average repay ment term of 8.5 months. As o f August 2005, of 
the 2,400 loans it has facilitated, 49 of them were in arrears. Only 11 of its 285 
loans under its syndicated lending program are in trouble. 
The GER Initiative’s well-targeted vocational traini ng has been succ essful, 
although there is no comprehensive way to evaluate these.
The GER Initiative has supported the f ormation and maintenance of 165 
business groups or associations, help ing them reduce individual operating 
expenses through collective operations (s uch as collaborative purchase of raw 
materials and joint use of equipment). 
The project reports facilitating 72 one -off and on-going linkages, som e in 
conjunction with the groups it has formed. 
The project had been supporting many trader businesses that have little 
estimated promise for business growth, though it is working to steer clients 
towards better opportunities in services and production. 
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The GER Initiative is m aking inroads in behavioral changes of its clients, 
helping them become more confident in their pursuits. Comparative interviews 
conducted with both clients and non-clients of the project in one city revealed 
substantial differences in the conf idence and com petence (from training) 
between clients and non-clients. 
Through its partnership with banks, the GER Initiative appears also to be 
making, albeit slowly, inroads on commercial bank practices, promoting a 
change from collateral- to cash flow-based lending in Mongolia. 
In conclusion, the team found: 
¾ Overall, the services being provided by the GER Initiative are appropriate for its 
target population and are effective to lead to sustainable businesses. The team 
feels that there are significant ways the project is helping clients that are not 
readily captured through numbers. In addition to is collection of services, the 
project should consider promoting better safety and cleaner production practices 
of clients. 
¾ From the strong cooperation it has engendered, the project could develop ways 
to influence local governments to support sustainable private sector 
development. 
¾ While bank lending under the GER Initiative appears largely sustainable, work 
could be done on credit bureau-type operations, providing incentive-based 
training to banking staff and to clients on financial management. 
The team also suggests the GER Initiative look at ways to improve its data management 
and further develop the skills of its staff, particularly in financial calculations. 
C. The Team’s findings on the Gobi Initiative 
The Gobi Initiativ e evolved from a fou r-year cooperative agreement named the 
Mongolia Rural Civil Society Program (RCSP), begun January 1999, which fell under 
the overall management of Mercy Corps in partnership with Pact, Inc., and with 
implementing support from ARD (1999-2001) and Land o’Lakes (2000-2003). Early 
on, the name was changed to the Gobi Regional Economic Growth Initiative (also 
known as the Gobi Initiative Phase I, or GI I). The project was funded in the amount of 
$10,036,641. The current version, GI II, remains with MCI but only in partnership with 
Pact (which implements the project’s media operations, the Rural Business Network). 
The GI I focused on accelerating and sustaining market-led economic growth with 
herder groups and cooperatives (primarily with livestock development), local 
consultants and other businesspersons, and local governmental authorities. Although 
GI II’s target clientele are essentially the same in six Gobi Desert and Hangai Steppes 
aimages (provinces) its focus is on developin g other business opportunities outside of 
traditional herding. 
The team felt the most outstanding findings from its work on this project were: 
For tracking under USAID’s performance monitoring plan, GI is also exceeding 
prescribed targets in new and strengthened businesses and access to and use of 
business information. 
To date, clients have paid a total of MNT 2,707,000 to service providers under 
GI programs. 
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The GI beneficiary population is slightly skewed away from working with poor 
herders at a rate of 76.5 percent versus reported herder-wide rates of 85 percent. 
The team suggests the GI develop a “secondary herder support program” that 
would both help these herders, and provide an opportunity for GI to remain 
engaged in cashmere production. 
GI’s original “Cashmere Market Days” have developed into larger “state fair” 
type gatherings (Market Events) and are becoming financially viable without 
GI’s assistance. 
In interviews with both core clients and short-term clients, the team was 
consistently told of the efficacy of GI’s practical, field-based, one-on-one 
training on technical, rather than business, topics: “It is surely better than the 
old Soviet-style training we used to get.” 
Throughout its travels, the team regularly found that both GI clients and non￾clients listen to RBN Radio. According to a survey conducted by the monitoring 
department of Mongol Radio, the RBN news radio program ranked 15 out of 96 
programs regularly broadcast on Mongol Radio. 
Even though producers have experienced some difficulty, it is possible to 
conclude that vegetable, as well as other crop agriculture, production in the Gobi 
and Hangai regions of Mongolia is economically viable under certain 
conditions. 
All herders supported by the GI have a consistent cashmere base and cushion to 
build a foundation from and fall back onto. With help from the GI, they have 
the opportunity to reach for significantly higher economic returns from 
alternatives to livestock and generate significant surpluses. 
The project is consistently and sincerely praised by local authorities who 
recognize its contribution to economic development. 
Success of GI’s assistance to groups and cooperatives in succession plans and 
improving cohesion is vital. 
Over the co urse of fiv e years, the Gobi Initiative has evolved into an effective and 
unique donor project that has co ntributed to development in rural Mongo lia. The 
evaluation team feels, that with some modifications, greater impact could be realized: 
 
¾ The services being provided by Gobi II are generally appropriate for their target 
populations, and business entities created or expanded thus far by the Gobi 
appear, at this early stage, sustainable, or at the very least, clients always have a 
“cashmere cushion” to fall back on in the event their other businesses suffer 
losses. To further ensure this cashmere cushion and other benefits of livestock, 
the project should consider supporting Mongolia’s pilot livestock insurance 
scheme. 
¾ Given that almost no Mongolian media outlet is profitable, the most problematic 
component for sustainability is the Rural Business Network, implemented by 
Pact. 
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¾ Gobi has been very effective in taking advantage of opportunities for expansion 
and improvement of its activities with local governments and other donors. 
Although most activities are appropriate, more targeted efforts could be made to 
help local officials play a facilitating role for private sector development. 
¾ The transition in the goal, objectives and activities from Gobi Initiative-Phase I 
to Phase II was generally appropriate, although some legacy work should 
continue and rigidities in selection of beneficiaries should be lessened. Given 
what is already happening, GI Phase II focus’ on the expansion and 
diversification of herder-led business opportunities (e.g., vegetable farming), 
and non-herder business development assistance is appropriate. 
In addition, in order to improve the likelihood that businesses will be able to stand 
completely on their own, the team suggests that GI develop business planning systems 
that are entirely usable and owned by clients. 
D. The Team’s findings on the potential of other providers 
As expected, the evaluation team found a potpourri of organizations (operational, 
transient, and defunct) that recently have been providing services to businesses. 
The lion’s share of stable private business services providers are employed by well￾endowed national and international businesses or foreign-funded entities (including the 
GER and Gobi Initiatives). Government-related institutions and officials are stagnating 
due to old ideologies or lack of empowerment (e.g. no budget) to rely on for providing 
progressive BDS. The most promising of these private institutions were: 
¾ The 17 banks and non-banking financial institutions that provide micro lending 
in Mongolia; and 
¾ The growing number of business consultants. Although the team estimates that 
none would supply their services at rates peri-urban micro entrepreneurs would 
pay, there is promise for rural-based consultants to continue to provide 
assistance to GI businesses as these are generally larger and opportunity costs 
faced by aimag and soum consultants are not so great. 
Current efforts to develop Mongolian SMEs appear mainly to be provided by the 
internationally-funded donor projects. Nevertheless, given that only one is yet targeted 
(although one may soon start) on BDS and most are coupled with the same stagnant 
government-affiliated institutions, the team feels that neither of the two Initiatives could 
be comfortably relinquished to fall under another existing donor-supported program. 
E. The Team’s overall conclusions and lessons learned 
The four most compelling recommendations that this evaluation team sees as important 
for both projects are: 
1. They should work to phase out their loan guarantee/syndication facilities. As 
the major banks who lend in rural and peri-urban Mongolia have high liquidity, 
after the education effects of these guarantee programs have taken greater hold, 
a phase out is warranted. 
2. The uniqueness and private sector focus, along with charging for the services of 
these two projects, should lend to at least partial privatization of some of their 
current activities. However, now is not the right time. Practically, this should 
happen over a period of time after both projects put forth “legacy” institution 
plans. 
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3. USAID/Mongolia should set funding on the condition that these projects 
develop step-by-step realistic progressive plans (with benchmarks) on 
developing legacy institutions through coupling of efforts with new and existing 
bodies that will continue their core work after funding from USAID and USDA 
end. 
4. Both projects are well-positioned to assist in improving enabling environments 
with local governmental authorities where they work. 
The team also found ways that the two projects can learn from each other. Specifically, 
the GER Initiative’s monitoring and evaluation tracking systems could improve and one 
way to do this would be to use a home-grown and managed database system, as the GI 
has. GI, on the other hand, could learn more how to set a schedule of regular charges 
and provide more flexible, demand-driven, open door business development services. 
Lastly, the evaluation team identified five overall important lessons learned: 
¾ Even in Mongolia, with a progressive political system recognized by both 
USAID1
 and the Millennium Challenge Corporation, the government does not 
have a particularly good track record in supporting micro-, small-, and medium￾enterprises; 
¾ Cooperative agreements can be effective for USAID programming in Mongolia; 
¾ Fee collection at the outset of services by a donor-funded project can face 
opposition, but this is easier to implement than to add fees after services have 
been free; 
¾ Relevant baselines and flexible data management systems are needed if 
USAID’s new evaluation agenda is to succeed; and 
¾ There is a significant difference between the way USAID and USDA manage 
the assistance they provide to Mongolia although both, in the end come from US 
taxpayer dollars. 
 
1
 See Democracy Rising: Grassroot Revolutions. September 2005, p. 23. 
 Evaluation of the Gobi and GER Initiatives August 2005
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II. Introduction 
After the fall of single-party Soviet dominated rule and an end to a command economy 
in 1990, Mongolia has made significant inroads into developing a market economy 
under a multi-party state. By 2004, she had done so well as to be one of only sixteen 
least developed countries to be invited to make a proposal to the USG's new flagship 
assistance program, the Millennium Challenge Account (MCA) managed by the 
Millennium Challenge Corporation (MCC). Despite this, competitive production 
beyond that of primary goods remains in doubt as this land-locked country’s 2,906 mile 
southern border is shared with the world’s largest producer of inexpensive consumer 
and industrial goods. Her climate also makes it difficult to develop a strong competitive 
advantage in agriculture versus China, a relatively agriculture poor state, as she also has 
only 1% arable land and its annual temperature patterns support only one cropping 
season a year. 
Nevertheless, Mongolia enjoys very high rates of literacy (98.9 percent), even in distant 
rural areas. She also has a long history of successful livestock breeding and is the 
world’s second largest producer of raw Cashmere (after China). Tourism remains 
promising: International arrivals have grown from a 10,000 average in the 1980s to just 
over 300,000 last year, which represented a 49 percent increase over 2003. Although a 
mixed blessing, her large land mass holds significant reserves of valuable minerals and 
metals. 
Motivated by this background, USAID began promoting the growth of private 
enterprise, both to spur immediate, broadly shared growth and to lay a foundation for 
non-mining industries (including services), combating an easy trend towards “Dutch 
Disease.” Two efforts contributing to this are its CHF-implemented Growing 
Enterprise Rapidly (GER) Initiative (see www.chfmongolia.org) and the Mercy Corps 
International/Pact-implemented Gobi Initiative (see www.mercycorps.org.mn). 
The former works in the peri-urban ger areas around Mongolia’s largest cities to 
provide a wide range of flexible business development services. The latter, in addition 
to providing business information country-wide via a newspaper and radio and 
television programming, focuses activities in six Gobi Desert and Hangai Steppes 
aimags (provinces) to promote both rural and town-centered business activities. 
Both encourage producers to work in groups or cooperatives and both have developed 
webs of connections that serve to tie client businesses to both foreign and domestic 
buyers. Both also face special challenges in reaching and maintaining their client base. 
Ger area residents often face ridicule2
 as they totter over a crack in Mongolian society 
between modern urbanites and traditional Mongolian herders. This latter group, GI’s 
main clientele, is nomadic and spread across a broad expanse—it can take more than 
eight hours to drive from one client to the next. 
 
2
 One long-term foreign resident called them “ragamuffins” another expert argued that they should be relocated in planned 
communities. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Figure 1: The five Gobi Initiative Aimags appear in orange. The approximate 
location of the four GER Initiative cities of Ulaanbaatar, Eredenet, Darkhan, and 
Choibolson (far east) are denoted by pictures of a leather worker. 
Both projects fall under cooperative agreements with USAID, with initial planned 
USAID buy-ins of $10m ($4m obligated thus far) for GI and $2m (all obligated) for the 
GER Initiative. Both also receive funding from their own organizations, and 
particularly Mercy Corps and Pact, funding from other centrally and Mongolia-Mission￾funded USAID projects. Most awkward for complete and consistent USAID 
management, however, is that together both MCI and CHF have received more than 
$8.5m ($5.8m and $2.7m, respectively) in value to fund parallel and supporting 
programs from monetized US wheat commodities given to Mongolia by the US 
Department of Agriculture (USDA) under its 416 (b) surplus commodity program.3
 
In order to get an initial picture of the results—including those that may at least be 
partially the result of USDA’s investments—of these two projects to help inform future 
funding decisions, USAID/Mongolia commissioned this evaluation, which was carried 
out by a three member team in Mongolia, July 18-August 12, 2005. 
a. Mongolians Striving to Succeed in a Market Economy 
i. Population and rural/urban changes 
With 2 persons/km2
, Mongolia has one of the lowest population densities of the world, 
rivaling Western Sahara and Greenland. During the recent decade of market-driven 
economic development, Mongolia experienced a substantial shift in population from 
rural to urban areas, even further reducing the extremely low densities found in Gobi 
regions which in some areas were as low as .22 persons per kilometer in the early 
1990s. Since 1999, urbanization has rapidly taken place mostly in ger areas of the major 
cities. 
 
3
 To the knowledge of the evaluation team, there has been minimal direct monitoring of these projects by USDA nor has an 
evaluation of the impact of USDA-funded programs has taken place in Mongolia. 
 Evaluation of the Gobi and GER Initiatives August 2005
Page 13 of 97 
In 2004, there were 1 ,498,200 urban residents, accounting for approximately 59.22 
percent of the country’s tota l population. As Table 2 indicates, growth in urban areas 
(except for in 2001) has significantly outp aced that in ru ral areas due to rural-urban 
migration.
Picture 1: A typical ger area scene in Erdenet where homes are a 
mixture of gers and houses. 
Urban growth is projected to continue in this manner. For the rest of the decade 
Mongolia’s urban population is expected to grow at an average of 2.93 percent per 
year4
. According to this forecast, du ring the next five years, approximately 3,470 to 
4,174 households (or 16,3 25 up to 17,950 pers ons) will m igrate each year from the 
countryside to urban areas. 
The majority of these migrants will end up in peri-urban ger areas most similar to 
shanty-towns surrounding major cities throughout the developing world, where public 
urban services are minimal: ger residents must get their own water from private sources 
(often wells) and discharge wet waste in open ditches or septic pits. Though potentially 
living a more sedentary lifestyle from herders (particularly those who end up owning a 
khashaa), they are much more transient than core-urban or apartment dwellers. 
 
 
4
 Estimation of the urban population growth has been carried out on the basis of the following regression 
equation derived from the major key factors affecting the growth of the urban population: 
Pu = 1.86 * Pt - 0.74 * Pr - 0.16 (+/-0.02); 
where 
 
Pu – Urban population growth rate; 
Pt – Total population growth rate; 
Pr – Rural population growth rate; 
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Table 1: Mongolia’s Population, 1999-2004
1999 2000 2001 2002 2003 2004
Total population, in millions 2.37 2.41 2.44 2.48 2.50 2.53
Population annual change, % 1.69 1.35 1.35 1.16 1.16
Urban population, in millions 1.34 1.38 1.40 1.42 1.46 1.50
Urban population annual change,% 2.77 1.35 1.70 2.92 2.58
Rural population, in millions 1.03 1.03 1.05 1.05 1.04 1.03
Rural population annual change, % 0.28 1.35 0.87 -1.22 -0.82
Source: Key Indicators of Developing Asian and Pacific Countries, ADB, 2004 
 
Chart 1: Urban Population Growth 
Despite the rapid growth in urban populations, and indeed to keep it to sustainable 
increases, nomadic livestock producers are still critical to the Mongolian economy. 
Agriculture—dominated by the livestock sector—accounted for over 20% of GDP in 
2000. Livestock products including animal fiber such as cashmere, accounted for 8.5 
percent of the official recorded value of Mongolian exports in 2004 (minerals accounted 
for 40.5 percent). Textiles and textile articles (some of which are made from cashmere 
and wool), accounted for 27 percent of export value in 2003. 
These fundamental demographic and economic developments provide fundamental 
reasons for an international donor, like USAID, to support diversified business 
development programs in rural areas to help stem the tide, and to provide employment 
and business opportunities for those who have already found themselves in ger areas. 
ii. Effects of changes from communism to markets 
Not long after the end of communism in Mongolia, in 1992 and 1996 the government 
undertook partial liberalization. The results affected input prices while output price 
ceilings remained under the control of the government. This in turn caused the collapse 
of most agricultural companies, which then in turn led to the first massive rural-urban 
migration. 
The second stage started in 1996 when the government approved a new mass 
privatization program. Under this program all state-owned and parastatal companies 
were subjected to privatization mainly through auctions. By the end of 2000, state 
Urban Population Growth
1.34 1.38 1.40 1.42 1.46 1.50 1.54 1.58 1.63 1.68 1.73 1.78
0.00
0.20
0.40
0.60
0.80
1.00
1.20
1.40
1.60
1.80
2.00
1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Yrs
Urban Population, in mln
 Evaluation of the Gobi and GER Initiatives August 2005
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controlled stakes of most of the wholly and partially state-owned enterprises were put in 
private hands, mostly of urban and wealthy citizens. However, Mongolia’s wealthy 
class is not overly powerful (read oligarchs) as her .33 gini coefficient is lower—and 
thus inequality is lower—than the .35-.38 range of states from the former Soviet Union. 
Mongolia continues to make gradual progress in its transition to a market-oriented 
economy. Although the country’s recent economic performance has slightly improved 
thanks to private sector development, the prospects for sustainable growth remain bleak. 
The country’s export volume has been volatile due to fluctuations of commodity prices 
on world markets. The main Mongolian export products are limited to minerals, raw 
materials of animal origin, and a few consumer goods (such as leather, sheepskin and 
fur garments, carpets, and cashmere and camel wool knitwear). 
iii. Small business climate 
As in most developing countries, transaction costs for micro-, small and medium 
enterprises are relatively higher than they are for larger enterprises. Indeed, Mongolia’s 
privatization process, urban infrastructures, and fixation on collateral-based lending by 
both banks and borrowers, make transaction costs faced by rural and peri-urban 
entrepreneurs much higher than for those in town centers. The latter are usually holders 
of an urban apartment (the preferred form of collateral for individual interests) and are 
relatively more likely to have ended-up profiting from Mongolia’s privatization. 
Nevertheless, Mongolia has made certain in-roads in providing a better enabling 
environment across the board for all businesses. In the past year she improved the 
process for starting a new business, cutting the time (51 days to 20), and cost by more 
than one-third.5
iv. Access to finance 
In contrast to many other developing countries, Mongolian banks are flush with cash to 
lend, and they are reportedly succeeding in doing just that. Only four years ago the 
large majority of prospective borrowers went to friends and pawn shops for loans, and 
some nine percent received their loans from banks. This same latter percentage has 
grown now to 45 percent nationwide. 
Nevertheless, this leaves up to 55 percent who have no other source for debt financing 
and face a lending rate offered by pawn brokers which is far greater than the average 
lending rate offered by the commercial banks6
 with rates up to 9-10 percent per month. 
Previous reliance on collateral has led to both a market failure, i.e. little lending to good 
risks in the ger areas and rural populations, and to greater risk to banks, as evidenced by 
the relatively higher default rates in urban UB. 
Although a number of com mercial banks and financial institutions are active in the 
country, only som e of them offer m icro-lending products,7
 and their bank staff, 
particularly in branch offices, lack skills to analyze business plans and risks.8
 
 
5
 World Bank Doing Business 2005. 6
 By the end of the 2004 the weighted average lending rate of commercial banks constituted about 24.8 
percent per annum. 
7
 As of end of 2004, 17 commercial banks, 110 non-banking financial institutions and more than 270 
saving and credit cooperatives were active in Mongolia. 
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In addition to the commercial banks and non-banking financial institutions (NBFIs), the 
Ministry of Industry and Trade operates a SME Support Fund. Its loans, however, are 
disbursed according to crit eria no different from commercial banks, including 
commonly used collateral requirements, which effectively make the fund inaccessible 
for the businesses of ger areas. 
Given that Mongolia has an abnormally low credit registry (public and private) 
standing9
, this situation is not likely to change in the near future. Without reliable credit 
information on individual borrowers, collateral will continue to be emphasized and the 
best risks will remain with those who are in closer knit communities. 
v. Services and agriculture keep people employed? 
Throughout all of Mongolia, employment in services and agriculture account for 46 
percent and 43 percent respectively. In rural areas, three-quarters of the employed (read 
primarily those from the 190,000 herder families) work in agriculture. In urban areas, 
three-quarters of the employed work in services. Although the official unemployment 
rate in urban areas of 9.1 percent is significantly higher than the rural rate of 4.1 
percent, most herders are—based on the team’s interviews and observations—
underemployed. 
b. USAID’s Strategic Objective: Accelerate and Broaden 
Sustainable, Private Sector Growth 
Recognizing the economic conundrum confronting Mongolians summarized above, 
USAID implemented this strategic objective under its five-year strategy, FY 2004-FY 
2009, with a clear emphasis “on economic growth rather than welfare….The business of 
USAID in Mongolia over the five-year strategy period is business—dynamic, effective, 
private sector-led business.” Three intermediate results are designed to contribute to 
this Strategic Objective (SO), as shown below: 
 
8
 The team’s queries to bank staff for copies of their analyses of loans all ended in us receiving copies of 
loan applications. 
9
 World Bank, Doing Business, 2004. There is no private credit bureau in Mongolia and the public 
coverage is only 23 per 1000 borrowers. 
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The Economic Policy Reform and Competitiveness (EPRC) Project is responsible for 
achieving results for the first two Intermediate Results (IRs) and the GER Initiative and 
GI are responsible together for the third. Of the three indicators for the SO, the GER 
and Gobi Initiatives should impact on one: Private sector employment as a share of 
total employment. They are less likely to impact on the other two: The ratio of foreign 
direct investment (FDI) to gross domestic product (GDP), and the ratio of trade balance 
to GDP. 
i. Intermediate Result (IR): Expanded economic 
opportunity for marginalized Mongolians 
As this Intermediate Result (IR) sits firmly under the above SO, “marginal” exclusively 
refers to economic means, i.e. those who are “at a relative economic disadvantage.” 
The strategy proclaims (without providing detailed argument) that at least two groups fit 
this designation: those in the six Aimags of the southern Gobi region and those living 
in the peri-urban areas of the three largest cities—Ulaanbaatar, Darkhan and Erdenet. 
These are the target populations of the Gobi Initiative, and the GER Initiative, 
respectively. 
In order to track whether these two projects are contributing to this IR, four indicators 
(two per project) are used: 
1. Number of new and strengthened businesses in rural Mongolia (Gobi); 
2. Increased availability, access to and use of business information by rural 
business clients (one component of Gobi); 
3. Number of new and strengthened businesses in peri-urban Mongolia (GER); and 
4. Increased employment in peri-urban Mongolia (GER). 
ii. How should economic opportunities for marginalized 
populations be promoted? 
If the IR above for which they are responsible were taken out of context (i.e. ignoring 
the SO it is contributing to), the two subject projects of this evaluation could appear 
slightly out of place. Granted, ger area residents are often looked down upon and have 
access to inferior urban services and herders enjoy fewer creature comforts, the target 
SO: Accelerate and Broaden Sustainable, 
Private Sector-Led Economic Growth 
(Three indicators are used) 
IR: Improved 
Enabling 
Environment for 
Private Sector 
Growth 
IR: More 
Competitive 
Industries and 
Sectors 
IR: Expanded 
Economic 
Opportunity for 
Marginalized 
Mongolians 
 Evaluation of the Gobi and GER Initiatives August 2005
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groups of these two projects are not necessarily found at the bottom of the gunny sack, 
the absolutely economically marginalized. 
Nevertheless, given that a significant number of GER Initiative asset-poor clients rely 
on its employment placement service, the majority of Gobi herder clients have fewer 
than 250 head of livestock10, and the businesses supported by both GER Initiative and 
Gobi are generating employment, these two projects are at least indirectly improving 
the lot of many economically marginalized Mongolians. Likewise, one could make a 
type of trickle-down argument, as is implied by USAID’s poverty strategy, affirming 
that creation and growth of GER Initiative- and Gobi-supported businesses raises the 
general economic tide for all, including the truly poorest. 
Still, given all else USAID/Mongolia has stated (i.e. “we don’t do welfare”) and the 
focus of these two projects is on business development, it appears that the strategy’s 
word “marginalized” unnecessarily distracts from GER and Gobi Initiative goals—a 
better choice would be “disadvantaged.” In other words, if USAID were to keep to the 
full spirit of targeting the marginalized, then it should be supporting projects like the 
one described below under World Vision. 
c. Business Development Programs for Striving Mongolians 
As expected, the evaluation team found a potpourri of organizations—operational, 
transient, and defunct—that recently have been providing services to businesses. 
i. USAID projects’ progeny banks 
Two of the major banks in Mongolia have a strong US and indeed, USAID, imprint on 
them. Khaan Bank, the former state-owned Agricultural (Ag.) Bank, was rescued by a 
USAID-sponsored reform project implemented by Development Alternatives 
International (DAI). 
The other, Xac (pronounced “khass”) Bank, was constituted from a merger with 
UNDP’s MicroStart program and USAID’s microfinance program. Xac has since 
received MNT 773m from US Embassy-managed USDA wheat proceeds, and a central 
USAID $1.2m award for institutional strengthening. With its capital in Xac, Mercy 
Corps now has a 37 percent plurality stake in the bank. 
1. Khaan Bank, the former Ag. Bank 
Prior to August 2000, Ag. Bank was wholly owned by the Government of Mongolia. 
On the verge of complete collapse, USAID funded DAI to take control of the bank, 
implement reforms to make it profitable while still providing services to all of rural 
Mongolia, and sell it under an international tender. H.S. Securities of Japan’s bid was 
accepted and it took control of Khaan in 2003. H.S. Securities, however, chose to retain 
DAI to continue to manage the Bank, which they continue to do to date.
Khaan Bank currently has over 2,000 employees—200 are based in Ulaanbaatar at the 
head office and local branches, and the balance in the 394 rural offices. 
2. Xac Bank 
 
10 Based on a search done by GI that revealed 76.5 percent of its 1,217 family clients had fewer than 250 animals. 
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Founded in 2000, Xac Bank is now one of Mongolia’s largest bank, with 600 full-time 
and 500 part-time staff, covering 170 Soums serving 42,000 borrowers. A relatively 
new bank, Xac puts forth a strong image of being innovative. Instead of the usual two￾sided Mongolian-English name cards, the Director and other manager’s cards have a 
statement of Xac’s vision. 
3. Sibling rivalry 
What should, on the face of it, be applauded as a great USAID success story in 
Mongolia, the relationship between Xac and Khaan Bank, was in reality the most 
disconcerting finding of the evaluation team. Granted, this was not an item in the 
team’s core agenda. Nevertheless, senior management of these banks seem to have 
gravitated towards their natural project ally, Xac to the Gobi Initiative (Mercy Corps) 
and Khaan to the GER Initiative. 
The director of Xac told the team that he had a strained relationship with the GER 
Initiative, partially due to his claim that some of his staff were hired away by the GER 
Initiative. He also maintained that the GER Initiative is intentionally driving clients 
away from Xac bank. The team was likewise told that Khaan management had 
previously tried to have USAID’s centrally-funded grant to Xac cancelled. 
Despite this, Xac and Khaan do conduct business with both the GER Initiative and GI. 
And both Gobi and GER Initiative management have made some efforts to remain 
above this fray and focus on services that help clients find the best bank for their 
business proposals. 
Fundamentally, controversy between Xac and Khaan banks is at least in part motivated 
by an increase in competition throughout the banking sector, as the director of Xac bank 
said his portfolio yield at the end of 2004 was 37 percent while it now stands at 30 
percent. 
ii. The GER Initiative 
The Growing Entrepreneurship Rapidly (GER) Initiative was born as a three-year $2m 
cooperative agreement and as a Support to Enterprises and Economic Development 
(SEED) project in August 2002. The project was based on an unsolicited proposal to 
USAID by Cooperative Housing Foundation (CHF) International, of Silver Spring, 
Maryland. USAID initially funded the project at $700,000, with subsequent incremental 
funding of $1.3m. In May of 2003, the project was renamed as the GER Initiative and 
CHF was awarded an additional $2m from monetized USDA wheat commodities. In 
June 2004, CHF was awarded an additional $699,000 from USDA wheat funds. 
Although the original project was to end in August 2005, USAID approved a no-cost 
extension to March 31, 2006. 
The GER Initiative is a business development and employment services project to 
improve the quality of livelihood of residents living in peri-urban (or ger) areas of the 
four largest cities of Mongolia. The main objective of the project is “to support and 
promote private entrepreneurship in peri-urban areas through strengthening and 
improving microenterprises, creating new businesses, and increasing employment of
ger residents.” 
The project’s services fall under two main components: Business Development Services 
and Employment Services (training and employment matching). The latter begins with 
 Evaluation of the Gobi and GER Initiatives August 2005
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an assessment by a client/applicant and an advisor (as on the cover of this Report). 
Depending on the results of the assessment, the client may decide to enroll in training, 
be immediately matched to a job, or decide not to obtain any services at the current time. 
Training comes in two types: (a) how to successfully apply for and hold a job (e.g. how 
to complete a job application, the rights and responsibilities of employers, and how to be 
a good employee), and (b) vocational skills training (sometimes in collaboration with 
large businesses who guarantee placement afterwards). Usually after a client has 
received the requisite training, he or she is matched to a job, although some clients end 
up finding their own jobs. 
The GER Initiative’s Business Development Services are broader and fall into five 
categories: 
1. Assisting microenterprises to access capital, linking clients under 
agreements with four lending institutions: Primarily through Credit Mongol 
NBFI, Savings Bank, Khaan Bank, and Xac Bank, who provide loan products 
specialized to GER Initiative clients. The primary product is the GER Initiative’s 
Loan Facilitation Program, where the banks depend on the GER Initiative to 
provide loan training, bookkeeping, and monthly monitoring services to assist 
clients to obtain the loans and make loan payments on schedule. Banks then pay 
the GER Initiative for this service with 10 percent of the interest on each loan. 
The Initiative assists banks to find new creditworthy clients who may not appear 
to meet the collateral requirements of banks, and/or have the knowledge of how 
to apply for (includes documentation) and manage a loan. For worthy clients 
who have limited assets for collateral coverage, in 2004 the GER Initiative 
inaugurated a new product with the four banks to provide additional capital 
(originating from USDA proceeds) in a syndicated lending program termed the 
Capital Augmentation Fund (CAF). 
2. Providing one-on-one consulting to existing and new Ger Area 
microenterprises. Using a one-on-one advisory approach, GER Initiative 
Business Advisors give enterprises the opportunity to discuss their current 
business problems, consider new business ideas, and define their specific 
business goals. Consultations encompass all types of management issues and are 
based on the specific needs of individual businesses. 
3. Delivering general business and technical training that is customized to 
local business needs. Usually delivered by GER Business Advisors and other 
expert trainers from local and international partner organizations, training 
sessions are often organized at a client’s worksite so as to use the lessons of real 
life examples. Standardized training topics include: Starting your own business, 
planning business activities, marketing, bookkeeping, creating a financial 
statement and agricultural training (pig farming, chicken farming, home khashaa 
farming). 
4. Facilitating the development of business groups, associations and 
cooperatives. GER Initiative advisors work with residents and micro businesses 
to identify areas of collaboration where they can benefit from working together. 
Through association development, the GER Initiative helps Ger Area residents 
and businesses develop the skills that are needed to start and grow a business as 
well as build trust. The GER Initiative has developed curricula, trainings, and 
advice to help groups work together to reap the benefits of scale. 
 Evaluation of the Gobi and GER Initiatives August 2005
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5. Disseminating information and promoting linkages to Ger Area residents 
and businesses. The GER Initiative has implemented five main activities in this 
service area: 
i. Producing print materials, e.g. providing basic information on markets, 
latest technology, and government and banking services through a 
monthly newsletter and ad hoc printed materials; 
ii. Producing 16 two-minute “infomercial” portrayals highlighting the 
success of GER Initiative business clients in the Ger Areas; 
iii. Holding trade fairs to provide clients with an opportunity to sell their 
products, meet other producers, and get ideas about new products; 
iv. Conducting annual Khashaa (Land) Surveys to assist clients and financial 
organizations in better understanding the value of their khashaas; 
v. Developing business linkages to facilitate product sales channels, 
supplier relationships for product inputs, or other beneficial business 
relationships that increase the efficiency of business. 
After the first hour of free consultation, all clients are charged a minimal fee based on a 
set project-wide schedule. 
The GER Initiative’s Business Development and Employment Services are provided by 
its Business Advisors and Resource Advisors, a large subset of its more than 125 local 
staff members, through 13 Business Development and Employment Centers (BDEC) 
located in Ulaanbaatar, Darkhan, Erdenet, and Choibolson, where a total estimated 
population of ger residents stands at 570,000. The project’s overall management is 
under a director and deputy, both US nationals, and has US Peace Corps volunteers 
supporting its Erdenet and Darkharn Offices, along with a VSO expert in its Choibalson 
Office. 
On its own initiative, CHF commissioned a midterm evaluation from a locally-based 
international expert who put forth some 16 recommendations, nearly all of which were 
favorably, with some modification, agreed to. Most of the evaluator’s 
recommendations can be summarized as a need for improved participatory services and 
better initial and follow-up data collection and interpretation on clients. The only 
apparent significant point of contention between the evaluator and GER management 
was on collecting data on clients and tracking whether their “quality of life” had 
improved or not over time. GER management argued that with their open-door flexible 
service policy and focus on business results, the recommended scope and duration of 
data collection was not a valuable use of project resources. 
iii. From Gobi I to Gobi II 
1. Gobi I 
Inaugurated as a four-year cooperative agreement named the Mongolia Rural Civil 
Society Program (RCSP) in January 1999, the project fell under the overall management 
of Mercy Corps in partnership with Pact, Inc. and with implementing support from 
ARD (1999-2001) and Land o’Lakes (2000-2003). Early on, the name was changed to 
 Evaluation of the Gobi and GER Initiatives August 2005
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the Gobi Regional Economic Growth Initiative (referred to as the Gobi Initiative Phase 
I, or GI I). The project was funded in the amount of $10,036,641. 
As the name change implies, the project evolved significantly from being a civil society 
support project to one focused on accelerating and sustaining market-led economic 
growth with herder groups and cooperatives, local consultants and other 
businesspersons, and local governmental authorities. By the final year, the project 
focused on:
• Providing new business start-ups with broad-based training, existing companies 
with “one-on-one” management, product diversification and marketing 
assistance, and new cooperatives with organizational, management and product 
and market development training and technical assistance. 
• Improving animal breeding, feeding and product quality to provide better raw 
material for Mongolia's processing industry and to help ensure animal survival 
through the harsh Mongolian winters. 
• Improving herder and local government awareness of the ecological need to 
protect pastures and the value of developing and implementing land and water 
use management plans. 
• Supporting expanded business information dissemination through the Rural 
Business News magazine and radio programming. 
Although little data remains in the GI’s data tracking system from Gobi I to understand 
results, Mercy Corps states the main results from Gobi I were: 
• Creation of 300 new businesses through training for 2,500 “would-be 
entrepreneurs;” 
• Increased company productivity/profitability through consulting to 300 rural 
businesses; 
• Increased aimag -level business support capacity through "training of local 
trainers;" 
• Formation of 250 herder groups comprising more than 10,000 individuals; 
• Formation of 57 agricultural cooperatives involving more than 500 active herder 
families; 
• Introduction of a systematic herder-managed “elite” animal breeding program; 
• Held trade fairs and exhibitions to help herders sell cashmere and obtain and 
exchange high quality animals 
• Produced the popular Market Watch program, providing timely and accurate 
commodity price information, thus significantly reducing discriminatory 
regional pricing differences 
• Produced the Rural Business News (RBN) magazine, radio and television 
programming, delivering a regular stream of national and regional business 
information 
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The main business, as can be gleaned from the results above, was helping herders 
improve their goat stock and understand how to profit more from the production of raw 
cashmere. 
2. Gobi II 
As time progressed, USAID and Mercy Corps tired of giving away services and 
commodities to herders and focusing on a national cashmere industry that remains 
stunted by the inability of domestic producers to compete with the Chinese, beginning 
with high paying Chinese raw-cashmere buyers. More over, Mongolia’s 
competitiveness along the supply chain remains inhibited by a state-owned company, 
Gobi Cashmere, which has a virtual monopoly on spinning capacity. In agreement with 
USAID, on December 11, 2003, Mercy Corps submitted a non-competed follow-on 
proposal that focused more on bank financing, fees for services, and helping herders 
diversify into other sectors outside of animal husbandry. Additional efforts were 
enlarged to provide business development services to non-herder businesses, mostly 
based in Aimag and Soum centers. 
The resultant project goal was simply to develop and strengthen rural businesses, yet 
activities became much more complex: 
• Agriculture and business training and technical assistance for herder groups and 
cooperatives to expand and diversify their businesses. Sought-after training and 
technical assistance topics include: animal health and nutrition planning; elite 
animal breeding; dairy and vegetable production and marketing; fodder and 
forage management; cooperative financial recordkeeping and reporting; 
cooperative law and taxation; human resource management; and market 
research, product promotion and marketing outreach. 
• Assistance to herder groups and cooperatives with identifying and securing 
sources of raw materials, equipment and financing from non-Gobi Initiative 
commercial or non-commercial sources, including private vendors, financial 
institutions, local government agencies and/or foreign donors. 
• Targeted “one-on-one” technical assistance for non-herder businesses to 
increase sales, profit margins and/or market share, add new profitable 
products/services, and/or identify and eliminate unprofitable products/services. 
Sought-after technical assistance topics include: accounting and financial 
management; business law and taxation; business planning; client/customer 
satisfaction; equipment sourcing and use; human resource development; market 
research and marketing; product promotion and distribution; and production 
technology. 
• Capacity building for both qualitative and quantitative improvements in locally 
provided training and technical assistance delivered by private consultants, 
associations/NGOs, institutions and government offices. 
• Assistance with linking rural producers to markets and with promoting local and 
regional market development. 
• Capacity building for greater local dissemination of business information and 
communication of business interests and needs through private and state media, 
business associations/NGOs, private firms and government offices. 
 Evaluation of the Gobi and GER Initiatives August 2005
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• Continued delivery of RBN magazine, and radio and television programming, 
including Market Watch and popular programs such as “Herder from the 
Future.” 
3. Rural Business Network 
The information component of the original Gobi Initiative arguably (although again, 
not a lot of reliable rem aining data to prove this) delivered the greatest impact. Most 
prominent and remembered by many today was: by advertising cashmere prices around 
the country on its radio and newspapers, RBN eliminated cashmere traders’ 
opportunities at arbitrage across regions. Over the past five and a half years, this Pact￾implemented component has maintained its magazine and radio program ming, but has 
progressively moved into m ore advanced ways to provide attractive business 
information—and this is not just “dull price data”. The latest effort is to produce a 26-
episode television mini-series with Mongol TV, called The Endless Labyrinth, about a 
herder family with large livestock losses moving from the countryside to a rural town 
center. 
4. Other supporting program: Forage, Civil Society, 
and Peace Corps 
Similar to the GE R Initiative, GI has also been able to engage Peace Corps volunteers 
(PCVs) in its field offices. Currently, there are two in its offices in Uvurhangai and 
Dungovi. GI also had one Luce Scholar based in its UB Office and a Mickey Leland 
International Hunger Fellow, funded by the Congressional Hunger Center. 
Beyond these “free” international staff m embers, Mercy Corps received one USAID 
grant to build local Mongolian civil societ y organizations, entitled the Training and 
Advocacy Network (TAN). Their activities began in Uvurhangai and Dungovi in 2004 
with an agenda to strengthen community service organizations and help local 
governments and communities mobilize resources. They are currently working with 
ten core NGO partners in the first two years, and 40-50 non-core NGOs. 
Lastly, under USAID’s Global Livestock Collaborative Research Study Program 
(CRSP) with the University of California at Davis, in conjunc tion with Texas A&M 
University, Mercy Corps is implementing the Gobi Forage Project. This project intends 
to help Mongolia attain the capacity to predict where the best forage land will be 30 
days in advance. It began its field work with 120 monitoring stations in three Aim ags 
in 2004 and is funded until 2008. A linked component, funded by USDA, is being 
developed to passively determine forage quantity through near infrared spectroscopy on 
fecal samples to determine the protein intake of animals. 
5. USDA-related funded work and RASP 
Mercy Corps has, thus f ar, received three traunches of monitized wheat proceeds that 
have gone to support the creation of Govi in-Ekhlel, the micro-lending component of 
Gobi Initiative Phase I that ev entually evolved into one share of Xac Bank, to finance 
the start-up of the “W hite Revolution” dairy farm in Tuv aim ag, to provide 
supplemental funding to the Gobi Initiative, and to fund its Rural Agribusiness Support 
Program (RASP), which carries out key G obi Initiative-like activities in the other 
aimags of Khovd, Zahhan , Arhangai, Suk hbaatar and Dornogovi. Its RASP-only 
 Evaluation of the Gobi and GER Initiatives August 2005
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offices are smaller in term s of staffing, with a stronger focus on prod ucer-processor 
business linkages. 
 
Fiscal year wheat-proceeds that were used by MCI in Mongolia were as follows: 
2000 $978,942 (MNT 1,514,577,825)—for “dzud” assistance and to support 
Goviin Ekhel and the Tuv Aimag “White Revolution” dairy farm. 
2002 $2,648,512 (MNT 3,157,026,202)—all of which went to support the final 
year of Gobi Phase I. 
2003 $2,171,807 (MNT 2,668,200,694)—entirely to support RASP. 
MCI also received MNT 4,360,008,450 in the fall of 2004 yet will be expended for 
RASP activities in calendar year 2006. 
Although largely separate, RASP has two components that are enjoyed by GI 
beneficiaries: (a) capital used in GI’s loan guarantee program (for both borrowers in GI 
aimags, and RASP aimags) comes from USDA funding; and (b) RASP has provided a 
subgrant of $575,133 to Mongolia V.E.T. Net, a local public service NGO supporting 
veterinary services. The subgrant proceeds are being used to provide continuing 
education to veterinarians and vet technicians (in both GI and RASP aimags), and to 
operate a pharmaceutical and equipment revolving fund. 
iv. Business Development Services of others 
Although the Evaluation Team could not possibly identify the whole realm of service 
providing organizations and individuals in present-day Mongolia, we did learn about a 
number of private, government and donor-driven providers, which are described 
immediately below. 
1. Private providers 
The lion’s share of private business services providers are employed by well-endowed 
national and international businesses or foreign-funded entities (including the GER and 
Gobi Initiatives). 
a. Banks and Non-banking financial institutions 
Currently 17 banks and non-banking financial institutions provide micro lending in 
Mongolia. Among the leaders are Xac and Khaan Banks. In fact, the Xac Bank 
director reports that his bank has its own “Initiative,” based on the GER Initiative’s 
loan facilitation services. Reportedly, four branches in UB and one in Erdenet use 
local officials (on a volunteer basis) to bring loan officers closer to staff. 
b. Employment placing 
In preparation of this evaluation, the GER Initiative had identified five UB-based 
organizations that were doing employment placing. The team attempted to interview all 
of them, but only one was available to meet the team face-to-face. Even this one, who 
said she was about to close up shop, gave the team little confidence in current private 
employment placement services. 
c. Consultants 
The team found no effort to build a network of business consultants. Nevertheless, 
demand for qualified (read Western-trained) consultants is reportedly high and it is not 
 Evaluation of the Gobi and GER Initiatives August 2005
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uncommon for larg e companies to offer swee theart employment packages to f ormer 
consultants, further reducing supply. One consultant also mentioned that he often enters 
into performance based contracts with his clientele, receiving a 15% cut on any increase 
in profits up to four months after the completion of his work. 
As expected, a la rge number of consultants, providing both bus iness and financial 
advice, and certainly those in technical fi elds, come from academia, earning extra 
income outside of teaching and research. On e advisory service identified in the GER 
Initiative’s Needs Assessment for Erdenet actually was a club of teachers providing 
short-term consultancy services, but has since disbanded. 
2. Implemented by the Mongolian Government 
a. Employment Service 
Under a recent governmental structural reform, labor, social services and employment 
promotion have been combined, making a one-stop shop. The team found this “reform” 
may actually diminish the effectiveness of the government’s employment placing 
services (see box), even if the Employment Law of 2000 dictates that the government 
pays 60% of the salary of a placed employee for the first six months of employment. 
The Mongolian Chamber of Commerce and Industry (MNCCI) reports that it is also 
developing an online employment matching service. 
b. Business promotion by MONEF and the MNCCI 
Established in 1990, The Mongolian Employers’ Federation (MONEF) is a self￾financed, non-governmental organization representing the rights and legal interests of 
some 7,900 national and foreign employers operating in Mongolia. The Federation has 
served as a collective voice of the Mongolian business community, primarily employers 
to express their opinions and positions at the national level, addressing the needs of the 
newly emerging private sector. MONEF also provides various types of services to its 
members, such as dissemination of information and training (at least one session was 
done in conjunction with the GER Initiative). 
MONEF has a nation-wide representation and currently operates through 23 branches in 
all 21 provinces and two major cities of the country. The Federation represents 
Mongolian employers in the International Labor Organisation and at other international 
forums such as the International Employers’ Organisation and the Confederation of 
Asia-Pacific Employers. 
MNCCI (www.mongolchamber.mn) takes a classical approach, primarily promoting 
SMEs. The Chairman is proud, however, to have started a microenterprise forum, and 
this has reportedly become one of the main activities of MNCCI. The Chairman 
maintains that MNCCI is one of the first organizations to generate policy-maker 
interest in micro enterprises. The MNCCI has also created and publishes a “red tape” 
perception index to highlight the troubles businesses must endure to remain legal. The 
Chamber is also planning to create a credit guarantee fund for its small enterprise 
members, looking for assistance from the Dutch. 
Box 1: One case of worse services from government reform 
Before October last year, Mr. Enkhtaivan worked in the labor division in the Chingeltei 
District of Ulaanbaatar, where there used to be four labor specialists, now down to three. 
He has seen definite changes from before October when there was a specialization on job 
services. He commented that the new arrangement is worse for clients than before as their 
former focus has blurred. 
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Despite all that is advertised for MNCCI, both in written materials and on the website, 
the team found little evidence of any real business development services carried out by 
MNCCI for micro, small and even medium enterprises, beyond its occasional market 
events. In any case, it will be some time before this state-connected Chamber reforms 
its branches into a progressive provider of business development services. Its office 
which the team visited in Erdenet, in the corridors of an unkempt apartment building 
with Lenin’s profile on one face, only provided basic translation and photocopy 
services. 
3. Implemented by donors 
Current efforts to develop Mongolian SMEs (including the training of local consultants 
and service providers to help SMEs) appear to be provided mostly by the 
internationally-funded donor projects. In the subsections below, the key—by no means 
an exhaustive list—donor projects identified by the evaluation team are briefly 
described, with two purposes: to show opportunities for collaboration and what 
components of the Gobi and GER Initiatives could be relinquished to another donor, 
yet also to set the stage for showing clear contrasts (below) to the ways the GER 
Initiative and GI function. 
Despite the fact that UNDP’s recent project formulation of Enterprise Mongolia
(explained below) found 20 BDS projects, both the GER Initiative and GI stand 
uniquely focused on BDS in their target areas. Indeed, in its Project Appraisal 
Document for its Sustainable Livelihoods Project, the World Bank lists GI as the sole 
donor effort in Regional/Private Sector Development. 
a. Urban-based programs are mostly targeted to improve 
governance and/or targeted at larger entities 
Once it begins implementation later this year, Enterprise Mongolia may be an 
exception to the title above and thus deserves further USAID and the GER Initiative 
tracking. In August 2005 this MIT-executed project will support “one village, one 
product”, selecting five products in five to-be-determined villages. Actual 
implementers will be selected on a tender basis. 
Another project, slated to end in 2007 matches some of the efforts of the GER Initiative 
in Darkhan, Choibalsan and other areas. A joint loan from the Nordic Development 
Fund and the Asian Development Bank (ADB) supported an “incubator” sub￾component under a Social Security Sector Development Project (MON-L 1836/1837) 
entitled “Skills Training and Entrepreneurship Development, ” and targeted potential 
and existing entrepreneurs, who can be classified as poor, unemployed or likely to 
become poor. The government continues to support these incubator centers, which are, 
however, more tailored for spawning small retail trading businesses. 
At the higher end are GTZ and Dutch supported programs. The latter comes out of a 
project for large privatized companies which started in 1998. After two previous 
versions, the Private Sector Development Project now works with 29 companies, nine 
of which are in the leather industry. For these latter nine, significant technical 
assistance is provided in cleaner production. With its client companies, the project 
initiates a contract and then starts with a diagnostic that identifies ways to improve. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Most companies find two to three areas of need, although some companies merely 
contract to receive only a diagnostic. 
The GTZ Small and Medium Sized Enterprise Promotion Project describes its project as 
“acting on the Government level… it focuses on the elaboration of the regulatory 
institutional environment which is beneficial for the export-oriented business sectors” 
(their language, not ours). On the ground, this project has supported businesses and 
provided technical assistance to and through six national technical institutes: 
1. ARMONO Forest and Wood Research Center in the wood processing industry; 
2. The Infrastructure Training Institute in the construction Industry; 
3. The ARMONO Leather Institute in the leather and fur industry; 
4. Print and Publishing Education Center at the Mongolian University of Science 
and Technology in the printing industry; 
5. The Textile Institute at the Mongolian University of Science and Technology in 
the wool processing industry; and, 
6. The Institute of Tourism and Management in the eco-tourism sector. 
b. Rural projects are often more targeted at the poor 
and/or natural resource management issues 
GTZ also has a veterinary project in Mongolia which has developed and launched a 
rural advisory program with a focus on animal health issues. The program was initiated 
in 2000 in Tuv, Dorngobi, Uvs and Zavkhan aimags. Materials are developed centrally 
in collaboration with the Mongolian National Veterinary Association (MNVA). A 
trained "herder advisor" from each soum in the project area is responsible for conducting 
sessions with 25-30 groups over two months, two times a year, to disseminate the 
animal health information. The program is designed to provide herders with important 
information about livestock disease. 
UNDP’s Sustainable Grassland Management Project attempts to both work like Gobi I 
and influence government and information providers: 
1. Like GI, it has activities at the herder community level and upwards, designed to 
develop informal community-based pastoral resource management, strengthen 
herder institutions at the grass roots level and build herder technical competence 
in pasture management. The project attempts to strengthen the ability of 
community associations to deal on a more equal footing with outside service 
providers; 
2. Less like GI, however, it has activities at the national level and downwards, 
designed to support and strengthen the ability of central and local government, in 
addition to private sector service providers, to provide relevant and useful 
resource information and services to herders, and to create and manage an 
appropriate legal and economic environment for sustainable herder and grassland 
development. 
The World Bank’s Sustainable Livelihoods Project (SLP) is in the first phase of a 
proposed 12-year program, with a total funding of $20 million with three components: 
pastoral risk management, micro-finance outreach, and a community investment fund. In 
addition to the nation-wide activities of policy reform and institution building, it is pilot￾testing new approaches in the selected soums of eight provinces: Bayan-Ulgii, Uvs, 
Bayankhongor, Ovorkhangai, Omnogobi, Dundgobi, Tov and Dornod. Later phases of 
the overall program intend to support scaling up to the national level as results of the 
pilots are refined. Some areas of intervention are: 
 Evaluation of the Gobi and GER Initiatives August 2005
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¾ Support to integrated risk forecasting, management and contingency 
planning; 
¾ Pasture and grazing management, including preparation of soum land use 
maps; 
¾ Herder organization and local self-help, including establishing and 
building capacity of around 200 herder organizations at the community 
level (10-20 households); 
¾ Hay and fodder development and management, including household hay 
making; 
¾ Micro-finance for herders; and 
¾ Pilot testing of emergency restocking models. 
Originally a component of the SLP, the World Bank and the Mongolian Government 
recently approved a new index-based livestock insurance program (see Gobi 
recommendations and conclusions below). 
4. The special case of World Vision targeting the 
needy 
With ample self-source resources (reportedly $28m annual), World Vision has programs 
targeted towards the most needy. All local government officials, GER Initiative and 
Gobi staff, as well as clients uniformly recognize this niche of World Vision’s current 
portfolio as distinct from a BDS program, although a core WV activity is a group-based 
lending program for micro household-based production with initial loans at MNT 
150,000 and amounts progressively increasing. Group size of the current 275 groups is 
10-20 members. Interest rates are set at a 3.5 percent flat rate. 
World Vision will also implement a USDA-funded Gobi-clone project that was 
designed by the previous Gobi I Deputy Chief of Party entitled the Herder Livelihood 
Diversification Project, working in different areas from Gobi. The Project’s managers 
recognized a need for reducing herders’ focus on a single industry, so designed their 
interventions to reduce food and income insecurity, adding value to herders production 
of wool and meat (sounds like Gobi to me). They are, however, venturing beyond the 
scope of the Gobi Initiative by introducing basic literacy and business education skills 
such as math, reading and learning about what people are capable of producing. They 
are also making activities “very soum specific.” 
5. What happened to MBDA? 
One project, the Mongolian Business Development Agency (MBDA) that should have 
made mention above, is given its own subsection here as it has now stopped effectively 
functioning, i.e. it should be a good lesson for USAID on what should be avoided for 
the future for the GER and Gobi Initiative. 
Although its beginnings appeared highly promising, securing a government decree to 
establish it, after Tascis-EU funding ended, it began to unravel. The Evaluation Team 
made numerous attempts to find reported remnants, but failed. 
On a web search, the Team did find an outdated description: 
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The MBDA was established in October 1994, and was the first of its kind in the 
country: an independent, non-profit, non-governmental organization to promote 
private enterprise development in Mongolia. 
MBDA generates and promotes projects, provides information and advisory 
services, and offers business, technical, and managerial support. The MBDA 
serves as an intermediary between private sector and governmental 
organizations. It assists in preparing training packages in support of business 
development. The MBDA is supported by private and governmental agencies 
and was established at the initiative of business organizations, international 
donors, and the Mongolian government to provide one-stop shopping for private 
enterprises. 
Picture 2: Despite claims on this prominent billboard in UB, 
MBDA appears to be working for no one. 
III. Evaluation Purpose and Methodology 
A. Scope of the Evaluation 
In the Scope of Work (for a full version of the SOW, see Annex III) for the original 
team leader, the following summarization of the purpose of the evaluation was 
delineated: 
The purpose of this evaluation is to provide USAID/Mongolia with an objective 
external assessment of: (1) the appropriateness and effectiveness of current 
Gobi Initiative and GER Initiative activities; (2) whether the Gobi Initiative and 
GER Initiative should be involved in additional activities; and (3) the likelihood 
of sustaining Gobi Initiative and GER Initiative impacts after the completion of 
USAID funding. USAID/Mongolia also is soliciting concrete, implementable 
recommendations for improvements to the Gobi Initiative and GER Initiative. 
This was further defined in greater detail under ten separate items to be evaluated. 
Nevertheless, in the evaluation inception meeting, these ten were discussed and all 
agreed there was significant overlap, and that one should really fall under the purview 
of the USAID Mission Director, i.e. to assess projects with respect to the political 
realities facing USAID. 
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B. Simplifying the ten original questions to five 
Thus, in an attempt to make explicitly clear the questions for review, the resulting four 
questions for both projects and one question for the Gobi Initiative are written concisely 
below. For all, USAID/Mongolia asked the evaluators to propose implementable 
additional means to improve the impact and effectiveness of these Projects: 
1. Are the services being provided by Gobi II and GER Initiatives appropriate for 
their target populations and effective to achieve project objectives in 
development of sustainable businesses? 
2. Review and evaluate the appropriateness and effectiveness of these projects to 
work with other partners: 
o Donor agencies, non-governmental organizations, private organizations 
(e.g. private financial institutions and large businesses). 
o Local governments. Are there other activities which could/should be 
undertaken? Should this work be expanded? 
3. Assess the capacity of local trainers and other local people to continue their 
activities, and the willingness and capacity of the private sector (e.g. financial 
institutions) and government entities to facilitate or carry out these same 
activities. 
4. Assess the sustainability of outstanding loans and bank lending operations for 
new loans after the end of the two projects, and propose realistic ways to 
strengthen relations between project clients and the banks that lend to them. 
And for the GI alone: 
5. Determine whether the transition in the goal, objectives and activities from Gobi 
Initiative-Phase I to Phase II was appropriate. Determine whether the Phase II 
focus on (1) the expansion and diversification of herder-led business 
opportunities (e.g. vegetable farming) and (2) non-herder business development 
assistance is appropriate. 
Sections III. and IV. below on findings for the two projects follow these four (for the 
GER Initiative) and five (for GI) questions. 
C. Methods used 
The evaluation team made its best effort to source reliable information on these two 
projects as well as issues related to their target populations. The team also attempted to 
test claims of success during its field visits. Nevertheless, our findings can at best be 
described as semi-scientific, since neither project has designed baseline information that 
also contained control groups. More relevant, we were only able to see a small number 
of non-clients and, given the distances required, we had little choice in selection of Gobi 
clients. In addition, given the lack of available reliable public socio-economic data and 
time for the team to complete a well-targeted survey, the team had to rely on rapid 
assessment techniques and was subsequently left with little to statistically analyze. 
GER Initiative’s rapid needs assessments did, however, provide some basis for 
understanding the lot of those who had not yet received its services. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Although the GI (phases I and II) has been operational for more than twice the amount 
of time of the GER Initiative, no extensive records of client information remain from GI 
I, nor did the GI conduct formal needs assessments prior to inaugurating GI II. 
1. Informants interviewed 
The primary source of information on these two projects came from approximately 170 
semi-structured interviews with permanent staff, retained consultants, beneficiaries and 
non-beneficiaries in the target areas, related businesspersons, relevant Mongolian 
officials, other donors, and others. A complete list of these appears in Annex I below. 
2. Data analysis 
Initially it was hoped that some analysis could be made on the performance data of all 
GER Initiative business clients. After wrestling with reports generated from the 
project’s Project Reporting System (PRS), it was clear this could not be accomplished. 
Still, we were able to carry out some analysis of sales data from Gobi II clients and 
from GER Initiative clients’ loan application analysis tables. 
3. Other appraisal methods 
In each visit to target areas, team members also made an effort to see the physical 
results of the support they received from the two projects. Some of these observations 
were used to help form questions and some were recorded among the more than 250 
photographs taken. 
The team also made two attempts at ranking exercises with multiple informants, 
although both were poorly executed and thus provided unreliable results. The first 
exercise was a variation on participatory wealth ranking. Informants were asked to rank 
small producers in a single industry in their neighborhoods by performance and growth 
potential . The second, a matrix ranking with non-beneficiaries on which services were 
most important ended up sourcing information from one informant. 
IV. Findings on the GER Initiative 
A. Results 
Based on its own reporting, the project has exceeded the targets if feeds into USAID’s 
performance monitoring plan: 
Table 2: GER Initiative’s results for USAID targets 
Indicator 2003 
Actual/Target 
2004 
Actual/Target 
2005 
Todate/Target 
Number of new and 
strengthened 
business in ger areas 
37/48 327/264 290/264 
Number of 
employees placed in
ger areas 
387/125 1,983/1,010 1,516/865 
 Evaluation of the Gobi and GER Initiatives August 2005
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Although this reporting and that done additionally by the project give some indication 
of the results this project is achieving, it should be noted that there are significant ways 
the project is helping clients that is not readily captured through numbers. Most 
prominently, over the time the evaluation team worked in the GER Initiative office, a 
steady stream of clients brought their wares into the office to get on the spot assistance 
from local and international staff on ways they could be better designed and marketed. 
As of the end of last year, the GER Initiative had collected $15,310 after an abnormally 
high level of bank collections in the last quarter. The results from the table below, for 
the most recent quarter gives a more expected amount from previous quarters, around 
the average of $2,245 per month. 
Table 3: Fees collected by GER Offices in the 2nd calendar year quarter of 2005 
v. Appropriateness of services and sustainability of 
businesses 
1. Loan facilitation 
Loan facilitation is one of the GER Ini tiative services most in demand. Indeed, some 
interviewed clients were drawn to their local GER Initiative branch office after they had 
been rejected for a loan by a local bank. Also, it is not unreasonable to assume—and as 
some interviewees im ply—some clients seek this serv ice knowing that their interest 
payments will likely b e lower, usually 2.8 percent rather than 3.0 perce nt if they went 
alone to the ba nk themselves. There are too, however, clients that are referred by the 
partner banks to apply for loans thro ugh GER’s facilitation m aking the banks m ore 
comfortable with lending to these clients they have been trained, had their applications 
vetted by GER staff, and then repayments monitored by the GER Initiative. 
More than 80 percen t of GER Initiative lo ans were used to f inance working capital 
(with trade representing the largest sector receiving loans). The average loan size was 
MNT 1,143,000 ($952), with an average repayment term of 8.5 months. As of August 
2005, there were 885 outstanding loans with 49 of them in trouble, specifically 20 are 
overdue, five are in d efault and the rem aining are in jeopardy of becoming so. It is 
notable that nearly 61 p ercent of these poorly perform ing loans are on the books of 
Savings Bank whereas total lending through Savings Bank, as state owned bank, 
accounts for just over 39 percent of lending under GER Initiative facilitated loans. The 
GER Initiative is trying to improve this by both reducing the number of large loans and 
providing training to bank staff. 
 
 
11 Includes: books purchased, employment registration, employment matching, and information services. 
 Service, fee source April-June 2005, Amounts in Tugrigs
 
 UB Darkhan Erdenet Choibalsan Total
1 Training 458,800 152,550 213,100 132,965 957,415
2 Consulting 560,300 322,900 315,600 75,950 1,274,750
3 
Ten percent loan 
facilitation 3,168,279 252,103 639,402 131,800 4,191,584
4 Other11 782,300 199,900 489,400 135,000 1,606,600
Total 4,969,679 927,453 1,657,502 475,715 8,030,349
 Evaluation of the Gobi and GER Initiatives August 2005
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Table 4: GER loans facilitated to date by bank 
Bank Loans Amount % by number % by value
Savings 916 1,212,110,000 38.17% 45.23%
Khaan 1,020 1,030,660,000 42.50% 38.46%
Xac 268 143,170,000 11.17% 5.34%
Credit Mongol 92 79,900,000 3.83% 2.98%
Others12 104 214,050,000 4.33% 7.99%
2,400 2,679,890,000 100.00% 100.00%
 
Chart 2: Number of Borrowers by Year and Chart 3: Disbursed Amounts (m of MNTs), by Year 
280
1043
854
0
200
400
600
800
1000
1200
Number of Borrowers
Total 280 1043 854
2003 2004 2005/6
337
1159
952
0
500
1000
1500
Disbursed Loan Amount
Total 337 1159 952
2003 2004 2005/6
In June of 2004, the GER Initiative signed agreements with three of its four banking 
partners to begin the Capital Augmentation Fund (CAF) syndicated lending, where the 
GER Initiative finances a portion of the business loans. Although no CAF loans have been 
declared in default, a total of ten are in arrears.
Table 5: GER CAF Loans by bank (values in thousand MNTs) 
 
# of 
CAF 
loans 
Total Value 
of Loans 
CHF 
Capital 
Value of 
Loans 
Bank Capital 
Value of Loans 
XAC 3 1,200 950 250
Savings 89 71,180 58,155 13,025
Khaan 191 208,420 161,520 46,900
Credit 
Mongol 2 4,000 2,000 2,000
Totals 285 284,800 222,625 62,175
Not only does this lead to access to financial resources, but more importantly it lays a 
foundation for a longer-term relationship between ger area businesses and com mercial 
 
12 Others are TDB, Anod, Mongol Post and Golomt Banks. 
 Evaluation of the Gobi and GER Initiatives August 2005
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banks. Based on discussions with bank managers, through the GER Initiative, banks 
have begun to recogn ize the good risk and value of lending to ger area residents. 
Indeed, given a num ber of reasons (see below on the sustainability of GER Initiative 
supported lending), the m ain value of the CAF (and at least partially of its core 
facilitation activities) is educating banks on the profitability of lending to m icro and 
small entrepreneurs in ger areas on a cash flow basis. 
2. Business consulting 
Entrepreneurs receive this service mainly in conjunction with loan facilitation. The 
whole package could include management advice, basic m arketing strategies, and 
investment analyses tied to business plans (which, for loan applicants include relatively 
extensive financial tables, including all projected cash flows until the loan is fully paid). 
Nevertheless, there is flexibility in the level of sophisticatio n of consulting services 
allowing them to be accessible to clients w ho may have merely a basic education, yet 
can be tailored to those well-educated. For example, marketing assistance for Mr. 
Bayaraa in UB (See Box 2) has been appropriate to his level of education, whereas, for 
a noodle producer in Darkan, the GER Initiative has helped in adding suggested recipes 
to packages. 
Similar privately provided marketing services would be out of the range of affordability 
for most GER Initiative clients. Nevertheless, clients interviewed maintain they would 
prefer marketing help from the GER Initiative, even if fees were doubled. Clients 
appear to be loyal, as they have gained a better understanding of principles of business 
planning, loan application procedures and financial management, leading to better 
business performance. 
3. Business training 
Although basic business training is widely av ailable from other providers, the team 
found them less effective, often too vague or less practical. And the GER Initiative’s 
well-targeted vocational training has on balance, based on our interviews, been more 
successful, although the two fulf ill very different needs. One example was a series of 
Box 2: UB art teacher becomes artisan 
Mr. Bodbaatar Bayaraa, born in 1977, recently returned from Japan where his wife worked for a short 
time. From their savings, he decided to cut back on his teaching and begin producing handicrafts. In 
April of 2005, he approached the Sharhad BDC for help in marketing. Since then, the BDC has given 
him extensive assistance in design (including experimentation with colors that would be more appealing 
to foreigners) helping him present at fairs, and facilitating a loan. In addition to trade show fees, he has 
paid some 10,000 tgs for all of these services. 
Here Mr. Bayaraa stands in front 
of one of his creative chess sets.
 Evaluation of the Gobi and GER Initiatives August 2005
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technical trainings by a foreign pig raisi ng expert on cyclical production of pork 
provided to pig farmers. 
Overall, GER Initiative training activities have enjoyed increased popularity as by mid￾year 2005, the number of project participants was already 8 3 percent of the total for 
2004 (see Chart). This is in part, at least, due to quality , including the practicality of 
content presented. Nevertheless, this m ay be partially due to a general perception that 
training provided by foreign donor-sponsored programs is of better quality compared to 
the same training provided by purely local entities. Clearly, in advancing plans to make 
the GER Initiative’s traini ng activities sustainable, the GER Initiative should seek 
effective collaboration with local entities (e.g. local employment offices), the f ormer 
taking advantage of the latter’s financial resource, and the latter taking initial advantage 
of the reputation of a foreign organization.13 
Although the GER Midterm Evaluation had recommended six month follow-ups on all 
clients that received services, and this was agreed to by the GER Initiative, it appears, at 
least for those who received training, that this has only partially happened: After each 
training session, participants complete a questionnaire, declaring their employment 
status and responding to a number of questions about the quality of the training. The 
results from these questionnaires, however, are not compiled and the team did not find 
any comprehensive regular follow-up. 
Nevertheless, the team sees little need for the GER Initiative to put extensive resources 
into this since training often accompanies other services that are monitored for results, 
e.g. 1,836 (44 percent) of the 4,099 business clients who have taken training received 
loans. 
Chart 4: Number of participants attending business trainings 
4. Business groups/associations development 
The GER Initiative has been supporting the formation and maintenance of business 
groups or associations, targeted towards assisting ger residents to jointly solve common 
problems, and reduce individual operating expenses through collective operations (such 
as collaborative purchase of raw materials and joint use of equipment). 
 
13 With the purpose of addressing the needs of unemployed people in vocational trainings, the Employment Office distributes 
“training vouchers” to this category of people. A holder of such a voucher is entitled to attend any desired vocational training at any 
certified local training center. After service delivery, the training providers redeem the vouchers for cash with the Employment 
Office based on the number of the “collected vouchers”. 
617
1762 1455
0
500
1000
1500
2000
Nr of participants
Yrs
Number of Clients who participated in Business 
Trainings
Total 617 1762 1455
2003 2004 2005/6
 Evaluation of the Gobi and GER Initiatives August 2005
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In late 2004, the GER Initiative added a grants component to the group formation 
efforts. These grants were designed to support successful groups with equipm ent or 
training that they need to effectively reach a higher level of production or organization. 
Although several groups have ap plied for gran ts and a small number of grants were 
provided with them the Project changed this to assistance through loans in September of 
2005. 
At this point, the outcome of this new se rvice is unclear, differing from one group to 
another, although this seem s to depend m ore on the nature of the business. In the 
opinion of interviewed group m embers, their group form ation not only helped them 
increase the scale of the business thro ugh combined production, but it also allowed 
them to enjoy being a part of a group. According to interviewed group members, prior 
to joining a business group, they were virtually ignored. Now they have a sense of 
affiliation with the business group, and this comradeship has made them more confident 
and committed to striving for success. 
Chart 5: Business groups created or supported 
0
50
100
Business groups
Total 60 99
2004 2005/6
5. Business information and linkages 
Over the past year, the GER Initiative has organized and sponsored six trade fairs in the 
four cities. The project also prepared its second Annual Khashaa (Land) Survey in UB. 
This exercise started a year ago, one year after the Government of Mongolia began 
titling land. Although many clients have title to their land, they are unable to determine 
the value of the property. In response to this need, the GER Initiative has conducted a 
khashaa valuation survey in Ulaanbaatar. Other similar surveys in Erdenet and 
Darkhan are warranted. 
The project reports facilitating 72 one-off and on-going linkages, some in conjunction 
with the groups it has formed (see box) over the past year. The GER Initiative’s trade 
fairs—often in conjunction with the local Chamber of Commerce branch—contributed 
to this. Participants of the trade fairs generally felt positive about them as some enjoyed 
an increase in orders. Nevertheless, there was one entrepreneur interviewed who said he 
would be much more careful in the f uture after paying MNT 30,000 to participate in a 
fair and making no sales. 
 Evaluation of the Gobi and GER Initiatives August 2005
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6. Employment matching 
With 46% (5,056) of this year’s registered clients looking for employment – not to run a 
business – employment services are an important and highly demanded GER Initiative 
service. Consistent successful long-term matching of employees with employers has 
proven challenging. Based on a survey of 1,174 clients conducted throughout June 1 
through July 31, 2005, the GER Initiative found 613 persons (52.3 percent) had 
remained on the job for 30 days, and only 129 (11 percent) people stayed for more than 
180 days. 
There are a number of factors that make this particularly difficult: 
¾ For a variety of reasons, registrants m ay not really be physically or mentally 
prepared to hold down a job. 
¾ Age discrimination is widely accepted. According to an employment official, 
women over 40 and men over 45 are effectively barred from their program. 
¾ Formal recruitment by established employers for lo ng-term employees is 
commonly done through targeted newspaper advertisements (though GER 
Initiative staff also monitor public announcements of job openings and attempt 
to help clients fill them). 
¾ This leaves service providers like the G ER Initiative with at least greater 
proportional influence over short-term placement opportunities (e.g. 
construction) than for long-term ones. 
The evaluation team found cases where GER Initiative-placed employees stay longer or 
are more committed than other job-seekers, however, it appears more employers find 
them no different from others. In the fi ve companies interviewed, two found them no 
different, although one did (see Table 5). Of the five, th ere was only a 4 1 percent 
retention rate. Employment Office officials report they have a similar rate. 
Box 3: An Association and Link: 
Ger linked the Uliastai Pig Group to the CIS catering company who supplies meals 
on-site to Boroo Gold Company outside of Darkhan. The Uliastai Pig Group is now 
providing a reliable supply of pork meat. The group formed in October 2004 with six 
pig farmers. In December 2004, an initial order from CIS to the Uliastai Group was 
completed. For the next four months, however, the relationship faltered as the group 
needed assistance in pricing, meat selection and packaging. The GER Initiative 
provided this help along with technical assistance that included a pig-raising specialist 
and a butcher to assist the farmers in learning about meat cuts. This revived linkage has 
resulted in over $3,500 in sales for the production group. One GER Initiative advisor 
continues to meet with this group at least once a month.
 Evaluation of the Gobi and GER Initiatives August 2005
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Table 6: Job placement results of five firms 
 Nevertheless, the team did find that the GER Initiative’s results were not due to a lack 
of trying: The project has developed a process that works actively with m edium to 
large employers, vets registra nts through an interview, provides them with relevant 
training, and usually rapidly places promising candidates. Indeed, if one could point to 
places where the GER Initiative excels versus the State Employment Office, they would 
be the project’s commitment to training and the speed in which people are placed. 
No less important, however, is the GER Init iative’s human resource training programs 
for employers (see Box 4). Instead of accepting, as many do, that employees were the 
cause of retention problems, the GER Initiative found that employers too were often at 
fault. Now as a matter of course, the GER Initiative provides obligatory training to its 
main placement target businesses on how to best manage employees. 
7. How sustainable are the businesses supported? 
In no case did the evaluation team on its own identify a failing or in-trouble business, 
although these do exist by the project’s own admitted small loan default rate. Surely 
this is at least in part due to the fact that the GER Initiative’s interventions are relatively 
new. After another year or so, it is highly possible that more businesses will eventually 
fail. 
 
14 A supermarket network. 
15 An operator of restaurants, supermarkets, and bakeries. 
16 A diversified enterprise in trade, automobiles, and construction. 
17 A construction company that also runs a vocational-technical center. 
18 A carpentry factory. 
Questions 
Asked 
Firm 
interviewed: 
Minii delguur14 Ulemj15 Zig Zag16 Gan 
Khulug17
MMW18
How many GER Initiative 
clients have received jobs? 
15 20 3 126 20 
How many of these clients 
stayed stable with you? 
10 10 None 53 3 
Are there any differences 
between GER Initiative 
clients and other 
jobseekers? 
GER clients have 
a more sincere 
eagerness to work. 
No real 
differences, 
although GER 
clients are more 
reliable. 
 No, they quit 
their jobs as 
others. 
Do you think that there is a 
need in job matching 
services? 
Generally there is, 
particularly for 
identifying trained 
workers. 
Very needed. It 
saves an 
employer’s 
time. 
Probably. Very needed. 
Our training 
center cannot 
provide 
information 
on jobs 
available. 
Needed. 
However, there 
is a need for 
employees to be 
trained 
according to 
employers' 
criteria and 
requirements. 
What are your 
recommendations for GER 
Initiative to improve 
services? 
Despite usually 
requiring a college 
degree, we accept 
GER clients with a 
high school 
education if they 
demonstrate the 
capacity to work 
under pressure. 
GER could find 
clients with better 
educations and 
able to cope in 
stressful 
environments. 
The GER 
Initiative 
should 
psychologically 
prepare workers 
for intensive 
work. Workers 
need to learn 
first how to 
work hard, and 
perform 
required duties. 
Could the 
GER Initiative 
provide a 
guarantee for 
its 
placements? 
We usually 
prefer to hire 
people either 
we know or 
with reliable 
references. 
Could GER 
assist poor 
workers with 
a subsidy? 
e.g. 
 MNT 
10,000 Our 
meal and bus 
subsidies are 
not enough 
for these 
people. 
GER could 
assist 
employers to 
ensure their 
requirements 
are well￾understood. 
 Evaluation of the Gobi and GER Initiatives August 2005
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In order to get some idea of this possibility, in addition to interviewing clients and 
discussing their constraints, the evaluation team took four example client business 
plans, as represented in their loan applications, and calculated their rates of return. It 
should be evident—and no surprise—from this that there are great risks to traders who 
operate on thin margins. This can be seen in one of four randomly selected examples of 
rates of return for four businesses below. 
Case I: A trader selling shoes
This UB seller begins with an inventory of MNT 300k (also the size of the proposed 
loan) in shoes, buys a wooden box to hold and display them, and generates monthly 
sales from April to September of MNT 20k, 22k, 93k, 8k, 90k, and 102k. 
Case II: Sewing dal, a traditional dress 
This producer proposed to borrow MNT 200k to cover a portion of her fixed costs of 
MNT 387k and inventory of 96k. For six months, she generates cash flows of 78.5k, 
33.4k, 39k, 28.1k, 20.3k, and 53.7k. 
Case III: Sewing a variety of garments
This client also is a sewing producer, albeit a much larger operation. She intends to 
borrow MNT 1m to purchase additional material. She begins with fixed assets valued 
at 3,020,000 and generates cash flows of MNT 1.4m for the first three months and MNT 
1.6m and 2m for the final two. 
Case IV: Wood-working
This woodworker begins with MNT 2m in equipment and borrows MNT 1m for 
materials. He generates cash flows of MNT 350k, 85k, 24k, 18k, 54k, 34k, and 204k. 
A full return calculation includes assuming his equipment has a scrap value of 
1,875,000. 
 
Table 7: IRRs for four selected GER business plans 
Client Business Nominal annual 
calculated IRRs 
Gereltsulun Selling shoes 25.1% 
Suren Sewing del (a traditional outfit) 103.9% 
Lhagva Sewing 41.6% 
Oyuntunya Wood working 52.8% 
The low rate of return of the seller is a lso consistent with comments heard by the 
evaluation team that though popular, trading provides little promise for business 
growth, as one com mentator said: “there are just too m any people running off to 
China, where no visa is needed and cust oms control is weak, buying cheap Chinese 
products and bringing them back to sell.” 
There is some indication that the GER Initiative is—albeit with minimal results—taking 
this into account. Based on the table be low, new trader busin esses account for 47 
percent of all new businesses, whereas traders account for 49 p ercent of all clients. 
Although the project should not prohibit its offices from supporting the creation of new 
trader businesses, there should be a more persistent effort to help clients look bey ond 
trading (especially that of consumer retail where more than half of traders deal) and 
working with them to spawn service and producer businesses. This simple comparison 
 Evaluation of the Gobi and GER Initiatives August 2005
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by percentage weights (i.e. percentage of ne w businesses versus to tal clients) could be 
one way to monitor the progress of such an effort. 
Lastly, also consistent with the above rates of return is that GER Initiative records show 
producers account for 40 percent of improved businesses whereas they are only 36 
percent of total clients. 
Table 8: Relative weights of business types 
Traders Services Producers 
New Businesses 47.17% 22.64% 30.19%
Improved business 49.12% 11.31% 39.57%
Total Clients 49.00% 15.00% 36.00%
8. Overview of findings on services and businesses supported 
Overall, as described above, the evaluation team found the GER Initiative’s services 
appropriate to clients’ needs. Furthermore, currently no other organization provides 
similar services at the scale, from easily accessible local branches, and with a 
progressive demand-based approach as does the GER Initiative. 
The team also found the GER Initiative making inroads in behavioral changes of its 
clients, helping them become more confident in their pursuits. Comparative interviews 
conducted with both clients and non-clients of the project in Erdenet revealed 
substantial differences in the confiden ce and com petence (from training) between 
clients and non-clients. 
Although the evaluation team was not explicitly asked to determine the total direct and 
indirect impact of GER Initiative servic es, using simple assumptions one can roughly 
calculate this. The project records 22,694 clients to-date, 9,454 of which were business 
clients and 10,137 were peopl e seeking jobs. Th e remaining 3,103 “other” clients 
sought business services although they were not business own ers at the time of 
registration. Given that, as of August 2005, 7,790 persons (average age of 33 ) were 
placed in jobs, it m ay be assum ed that beyond them, two other persons per client 
benefited from their income—a total of an additional 15,580 indirect beneficiaries. 
Likewise, for improved businesses (though these data are questionable, see below on 
management) 513 (average age of 46) owners directly benefited as well as an average of 
1.5 employees per business and 3.5 additional family members—an additional 2,693 
indirect beneficiaries. Thus, one estimate of total direct and indirect be neficiaries is 
40,967 or about seven percent of the total target population of 570,000 and on average a 
cost of $48.82 per beneficiary. In sum, the project has had more than a reason able 
impact at a very acceptable cost. 
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Nevertheless, the GER Initiative should continue to push for improved and 
innovative—for the Mongolian context—practices of its clients, e.g. help them 
understand safety and environmental protection practices. Given that producers 
supported by the GER Initiative are operating on small margins in competitive 
environments, high demands on them to add more modern safety practices or cleaner 
production would not be effective. 
Still, it was confounding to find that one of the project’s most advanced wood workers 
had lost a finger after receiving assistance, and that a number of producers paid little 
consideration to the waste they created. Indeed, if done right, a small effort to promote 
better safety and cleaner production can actually help businesses increase output and 
reduce cost. 
Picture 3: This GER Initiative client in UB could benefit from both 
safer and more cost effective spray painting practices. Much of his 
paint is lost along with the fumes that enter the air he breaths. 
Box 4: Could an experienced weaver serve as a consultant in Erdenet? 
In the background below is the wife of a husband-and-wife team weaving business that 
employs seven people. In October of 2004 they went to GER Initiative to help them find 
five additional employees. As a matter of course to make sure these employees had the 
best possible conditions, GER Initiative gave them a training session in human resources 
management (at a fee of 5000 MNT). They also received assistance from GER Initiative 
to borrow twice from the bank, each time 1m MNT. The GER Initiative has also helped 
them access the internet to locate better designs. When asked what the husband would 
charge if he were to work as a consultant training others, they replied they were not sure, 
but at least 600,000 tgs a month. 
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vi. Working with others 
Although there is room for improvement, based on interviews with clients and local 
government officials, the GER Initiative is working well with local governments. One 
bagh governor interviewed in Darkhan complemented the GER Initiative’s support to 
500-600 clients. More importantly, he told of a trade fair organized with the GER 
Initiative in January where 60 Bagh residents participated and 20 different products 
were displayed. After the fair, a decision came to copy the exercise in other Baghs. 
Still, he and likely others remain unclear about the importance of market-based business 
development services. He was very hesitant to support any further increase in the GER 
Initiative’s fee structure and thought the GER Initiative should provide wells to his 
constituency. 
 
Likely for this reason, CHF submitted a concept paper to USAID to fund related 
activities to create a stronger connection between the public and private sectors. 
Although this proposal was not accepted, the team recommends that USAID Mongolia 
reconsider it, and to see if perhaps some work can be done by GER in this effort. 
From its UB contacts, the GER Initiative generally has a good reputation, except for 
Xac Bank—and a similar complaint from the Dutch-funded PSDP that GER Initiative is 
taking its consultants. When told that USAID may consider ending it support of the 
GER Initiative, the director of MONEF said: “That would be very no good.” 
To-date, although it has not signed any formal collaboration agreements with other 
donor programs, the GER Initiative has worked on jointly finding ways to market heat 
efficient stoves with no subsidy with the World Bank Stove Project; It has worked on 
trainings with the ADB Disability Project and the ILO and has reportedly influenced the 
activities of the ADB Incubator Project. 
It also worked with VetNet, providing training to over 500 people in bookkeeping and 
other financial management. 
The GER Initiative’s network of large businesses has generally done well (despite all 
the associated difficulty) as described above in the sections on services. 
vii. Potential legacies? 
From the descriptions above of other service private and public providers, it should be 
evident that at present, local trainers and other local institutions will not be likely to 
replace the GER Initiative’s services—particularly to the degree and cutting-edge ways 
of the GER Initiative. 
Only financial institutions are showing some willingness and capacity to facilitate or 
carry out these same activities. As a semi-concrete example, the current director of 
Khaan Bank has toyed with the idea of acquiring the GER Initiative after its assistance 
funding ends: “Instead of having all the offices and equipment liquidated, this unique 
project that generates value could continue, particularly the services related to banks.” 
Nevertheless, this is not necessarily an obvious long term strategy for all banks, as the 
director of Xac Bank affirmed that the costs for operating, as it is, are too high. 
In most interviews with clients, one team member asked how high a fee they would be 
willing to pay for GER Initiative services. At approximately five times the current rate 
 Evaluation of the Gobi and GER Initiatives August 2005
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clients became hesitant; below this, clients reported they would still demand the 
services they received. Nevertheless, even if the GER Initiative collected five times the 
fees it is collecting now, the calculated monthly average of $11,225 would fall 
significantly short of the implied monthly cost (at 42 months) to USAID for this project 
of $49,619. This implies, however, that with careful planning and cutting of costs, 
relevant portions of this project could survive after USAID ends its funding. 
One alternative proposed by GER Initiative management should also be considered as a 
means towards legacy of the project’s work: the ability of current Business Advisors to 
continue as independent consultants after the close of the project. 
viii. How sustainable are GER facilitated loans? 
Based on interviews with key bank officials, lending—as it has for the past years—is 
likely to grow in the ger areas after the end of the GER Initiative. Officials at Khaan 
Bank realize that GER Initiative clients are good risks. 
Given the way GER Initiative loan facilitation most normally (outside the CAF) 
includes a 10% payment to the GER Initiative for administering the loan, banks clearly 
demonstrate that these are good risks. 
Through its partnership with banks, the GER Initiative appears also to be making, albeit 
slowly, inroads on com mercial bank practices cash flow based lending in Mong olia. 
Currently, based on views of borrower s and banks alike, loans for micro, small and 
medium sized enterprises are on the basis of collateral. 
Thus ownership of assets becom es essential for the m icro-business operators of ger 
areas. In addition, the situation becomes more complicated due to rigid re quirements 
that allow for few forms of collateral mainly consisting of real estate or expensive 
equipment. Livestock, dwellings or land are not accepted by the banks as collateral. 
In a more direct attempt to overcome and teach banks that they should be more flexible 
in their collateral requirements, CHF is implementing, very carefully, a syndicated 
lending program under its Capital Augmentation Fund (CAF, with all capital from 
USDA funds). CHF sees this as a way to provide real lessons to banks to demonstrate 
that they should take on well-founded business risks without being overly fixated on 
collateral. In this, the evaluation team agrees, i.e. the CAF should be used to ensure 
good loans for clients are made based on business plans, and as a tool to teach banks 
this. Once this has been achieved, and GER Initiative management appears to agree, the 
CAF should be phased out. 
d. GER Project Management and Staff Capacity 
Beyond the difficulty the evaluation team had in determining the effectiveness of GER 
Initiative interventions because these are relatively new, the team could not, with 
confidence, perform statistical analysis on data stored in the Project Reporting System 
(PRS). The problem was three-fold: a large set of client files lacked the key entries of 
sales, working capital, and fixed capital; the code did not allow for certain reports (as 
such services provided by types of businesses); and it generated inaccurate results. 
When baseline data were missing, the system appeared to have its own faulty process 
overriding divide-by-zero problems. In the case of records with no baseline sales and 
working capital recorded, “zero” percent appeared in the percentage change field. 
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However, for records with no baseline fixed capital figures “100%” increase was 
reported by default, potentially flagging businesses in this case as being improved. 
Fortunately, after discussing these issues with the GER Initiative management, CHF has 
taken measures to correct this. 
In addition to improving its data management, the GER Initiative is well positioned to 
make even further inroads in developing the capacity of its local staff. Although the 
team did not carry out any capacity needs assessments of staff, it did notice there were 
areas where staff could learn more about analyzing business plans or providing 
services—based on the experiences of other BDS projects throughout the world. For 
the former, in our attempts to calculate internal rates of return, one of us gave a brief 
explanation of the theory and purpose of this calculation to one of the GER Initiative’s 
coordinators and its financial advisor. It seems, in addition to further exposure to 
workplace safety and cleaner production practices, GER Initiative business advisors 
need more extensive training in financial analysis, particularly related to the theory of 
interest and the time value of money. 
e. Conclusions on the four questions and recommendations 
In answer to the four key evaluation questions for the GER Initiative, the team 
concludes: 
1. Overall, the flexible demand driven services being provided by the GER 
Initiative are appropriate for its target population and are effective in achieving 
project objectives in development of sustainable businesses. Business entities 
created or expanded under GER Initiative support have promise. Although this 
reporting and that additionally done by the project gives some indication of the 
results this project is achieving, it should be noted that there are significant ways 
the project is helping clients that are not readily captured through numbers. In 
addition to is collection of services, the project should consider promoting better 
safety and cleaner production practices of clients. 
2. Work with partners has progressed and is generally appropriate and effective. 
Although there is room for improvement, the GER Initiative is working well 
with local governments. Again, here, the GER Initiative could further develop 
ways to influence local governments to support sustainable private sector 
development. Collaborative efforts by the GER Initiative with other donor 
agencies and non-governmental organizations have progressed unevenly and 
with mixed results. Work with financial institutions and large businesses has 
generally gone well. 
3. Local trainers, consultants, and employment providers people will not likely 
take up the slack left behind if the project were to end in March of 2006. 
4. While it depends upon a host of factors, bank lending thus far under the GER 
Initiative is sustainable and, given the educational effects of the GER Initiative, 
bank lending is likely to grow in the ger areas after the end of the project. In the 
meantime, work could be done on credit bureau-type operations, providing 
incentive-based training to banking staff and to clients on financial management. 
Lastly, CHF should put forth a plan toward divestment of its funds used under 
its syndicated lending mechanism, the CAF. 
As detailed above, the team also believes that: 
¾ GER Initiative data management could improve. 
¾ Other targeted training of staff and partners to better understand financial 
calculations and BDS could increase. 
 Evaluation of the Gobi and GER Initiatives August 2005
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¾ It is important for the GER Initiative to develop a realistic progressive plan that 
could put forth incremental increases in fees and development of legacy 
institutions that will continue the GER Initiative’s core work after its funding 
from USAID and USDA end. 
V. Findings on the Gobi Initiative 
A. Results from Gobi 
For tracking under USAID’s performance monitoring plan, GI is also exceeding 
prescribed targets as follows: 
Table 9: Gobi Initiative results for USAID Targets 
Indicator 2004 Actual/Target 2005 To-date/Target 
Number of new 
and strengthened 
business in rural 
Mongolia 
295/250 415/250 
Access to and use 
of business 
information
314,000/140,000 382,000/145,000 
 The overall results from Gobi up to June 30, 2005 are: 
• Formal business planning undertaken with 182 groups comprising more than 
6,000 members. 
• Sales generated by herder group clients totalled MNT 856.1m ($715,000) 
through June 30, 2005. 
• Assistance provided to 182 clients to secure MNT 482.8m ($402,000) in loan 
capital. 
• More than 550 targeted training and technical assistance interventions provided 
to 267 herder and non-herder clients. 
• Twenty-five local aimag-based training and technical assistance providers 
“mentored” and “certified,” bringing the total number of qualified in-country 
consultants to 73. 
• Six provincial two-day “Market Fairs” conducted, showcasing local Gobi 
production, and generating MNT 125m ($105,000) in sales. 
To date, the clients have paid a total of MNT 2,707,000 to service providers under GI 
programs. 
i. Appropriateness of services and sustainability of 
businesses 
1. Support to herder and non-herder groups 
At the inception of GI II, the GI put forth a process of selecting its long-term herder 
clients with the following primary criteria: 
¾ Not less than six households (this was recently changed to eight); 
¾ At least 800 head of livestock, in total; 
 Evaluation of the Gobi and GER Initiatives August 2005
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¾ A commitment to form a cooperative out of an existing cohesive herder group; 
¾ A business activity outside of animal husbandry—i.e. willing to work in a new 
way; 
¾ Business profits to be shared by all members of the group/entity. 
. 
For non-herder groups, selection criteria begin with a requirement that a prospective 
client must already be involved in a business activity (no start-ups are accepted) and be 
willing and capable of covering 25% of the costs for technical assistance. Clients must 
also be able to identify a clear role for GI assistance and, with GI staff, define expected 
results from this assistance. Lastly, the management should have commitment and a 
clear vision of what exact business activity they wish to expand or develop with the 
assistance of GI. 
Once aimag business officers identify potential clients, they complete a form called 
“company brief” that gives basic information on each business, including its current 
products and services, any plans for changes in these, and its financial position (past 
cash flows and loans). The form also includes a section on possible benefits the 
businesses bring to their communities and another section on next steps, e.g. whether a 
full business plan is needed or not. 
Both herder and non-herder clients then enter into MOUs that are slightly, but 
significantly, different from each other. The non-herder MOU format has an additional 
provision that the client “Agrees to pay a percentage of the consultant or technical 
assistance provider's fee directly to the individual (cost share). The percentage of the fee 
paid by the client will be negotiated between GI and the client prior to delivery of any 
training/technical assistance services.” It also incorporates provisions of the loan 
guarantees: 
• Gobi Initiative will provide a loan guarantee in agreement with the Mercy Corps 
Loan Guarantee program. Loan guarantee duration will be negotiated on an 
individual basis, but will not exceed 36 months. 
• The client will be required to complete a Business Plan that is reviewed and 
approved by Mercy Corps; copies of these Business Plans will be provided to 
the lending institution. The client will also be required to complete and submit 
all documentation required by the lending institution. The client will also be 
expected to pledge owned assets as collateral. 
• The client will select the financial institution from which they will borrow, 
based on best terms offered and other considerations. Mercy Corps will neither 
select nor influence the selection of the lending institution by the client. 
• The client will use the loan for its intended purpose only. Mercy Corps will have 
the right to revoke the cash collateral in case of misuse of the loan. 
• Collateral provided by Mercy Corps will not exceed the difference between the 
collateral supplied by the client and the amount required by the financial 
institution to secure the loan. The collateral provided by Mercy Corps will be 
"second recourse," provided only after the bank has exercised all of its rights 
against the client's collateral. 
The standard herder MOU format appears below. 
 Evaluation of the Gobi and GER Initiatives August 2005
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 Evaluation of the Gobi and GER Initiatives August 2005
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The criterion of 800 animals for herder groups above applies to the group as a whole. 
Based on an analysis of their own data, the GI reports that only 286 (or 23.5 percent) of 
the project’s 1,217 family clients own more than 250 animals, i.e. are above the poverty 
line standard used in rural Mongolia. Thus the GI beneficiary population is slightly 
skewed away from working with poor herders at a rate of 76.5 percent versus reported 
herder-wide rates of 85 percent. Therefore, the project is missing out on reaching poorer 
populations that could use at least a portion of its herder services to long-term clients. 
A suggestion from the evaluation team would be to develop a “secondary herder support 
program” that would both help these herders, and provide an opportunity for GI to 
remain engaged in cashmere production. 
This would necessarily be less intensive tha n what GI is currently doing for its core 
herder and non-herder groups. GI enters into an MOU with them , and provides them 
with training on how to complete a business plan. Once a group’s plan is approved by 
GI, it can apply for a loan in one of the project’s partner banks and receive technical 
assistance (up to three instances free of charge and then as an individually tailored cost 
share) to both im prove its production and its business and financial management. For 
an approved loan, GI deposits fund s (originating from USDA) in the bank as a 
guarantee for any portion of the loan beyond what the ban k identifies as acceptable 
collateral. These guarantee ac counts also earn interest as to other deposit accounts at 
the bank. In the case of default, the bank is required to f irst exercise all its rights 
against the bo rrower’s collateral and then only have “second recourse” to GI’s 
deposited guarantee funds. 
2. Market Events 
GI’s original “C ashmere Market D ays” have developed into large r “state fair” type 
gatherings (Market Events) and GI has done well to slowly have them become self￾supporting, overcoming the hurdle descri bed by an international consultant19 who 
reviewed this component: 
The Umnugovi Herders Producer Association NGO-driven model for the “Cashmere market 
Days 2003 Event” was a success. However, as the Gobi Initiative Umnugovi aimag office played 
a key role in the logistical and administrative work for this event, this raises the question as to 
whether and how this NGO-driven model will be replicated elsewhere with little or no more 
support from outside. 
In 2004, th ese events exhibited wares from 628 interests and drew 38,000 visitors. 
They were organized and/or co-sponsored by a n umber of different organizations in 
addition to GI. These include: 
¾ In Uvurhangai: Chamber of Commerce and Industry, Aimag Governor's Office, 
Invalid People’s Employment Generation Project, and the Herder and Business 
Support Association 
¾ In Govi-Altai: Chamber of Commerce and Industry, Aim ag Governor's Office, 
Employer's Association, and the Herder and Business Support Association 
¾ In Bayanhongor: Aimag Governor's Office, Agricultur al Broadcasting Center, 
Employer's Association, and the Aimag Agriculture Department 
 
19 Cashmere Market Days, 2003:Event Assessment by James Hamilton. 
 Evaluation of the Gobi and GER Initiatives August 2005
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¾ In Govi-Sumber: Aimag Governor's Office and the Aimag Agriculture 
Department 
¾ In Dundgovi: Aimag Governor's Office, Aimag Agriculture Department, Animal 
Breeding Department, and the Herder and Business Support Association 
¾ In Umnugovi: Aimag Governor's Office, Agricultural Broadcasting Center, and 
the Herder's Initiative Association 
The financial costs to GI are now f ar less, as a percentage share than the c osts it 
incurred in sponsoring the "Cashmere Market Days" in previous years. Total cost to GI 
for the six market events was MNT 2,967,870, ($2,475) which was 26% of the total 
cost. Corporate and institutional partners now cover the largest portion of the event 
costs. 
Chart 6 
Share in Market Events Costs
26%
38% 20%
13% 3%
Gobi Initiative
Local
Government
Corporate &
Institutional
Partners
Exhibitor fees
Raffle tickets
The Market Events recently held in 2005 had 1,034 businesses exhibiting products and 
services to 66,900 visitors (including the Prime Minister at the Dundgovi event). 
3. Benefits of groups and continued help for livestock 
The evaluation team agrees that stronger herder groups are key to better management of 
pastoral and business risks, allow for increased economies of scale for production by 
sharing resources, and provide an added—potentially no less important—benefit that 
there can be non-cash sharing of products among the members. In fact, in most cases 
visited and scrutinized by the evaluation team, a significant amount of production was 
used for “internal consumption.” 
Although Gobi II may have put less stress on livestock, it has continued some activities 
from Gobi I in veterinary services, continuing to improve access to adequate veterinary 
care but now is moving upscale to support veterinarians and VetNet (through RASP), 
potentially having a greater impact for all herder groups (see also the box on the TMZA 
Partnership). 
4. Training for short-term clients 
 Evaluation of the Gobi and GER Initiatives August 2005
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As with the GER Initiative, GI trainings have been mainly focused on supporting 
business plans of clients, although a number of trainings have been available for “short￾term” clients (for detailed data on these, see tables in Annex XI). 
Cooperative development was still a highly-demanded topic participated in all 
provinces (54 trainings out of 220 trainings for 19 topics). Next came vegetable/crop 
production (42) and financial management (28). Uvurhangai had the highest total 
number of trainings (51) and Gobi-Sumber had the least (18). Uvurhongai training 
focused on financial management (16), vegetable/crop production (11), and cooperative 
development (7). Half of Gobi-Sumber trainings were on cooperative development (9). 
Bayanhongor focused on vegetable/crop production (20 out of 39). Umnugobi and 
Gobi-Altai spread trainings on most topics, ranging from one to nine trainings per topic. 
In interviews with both core clients and short-term clients, the team was consistently 
told of the efficacy of GI’s practical, field-based, one-on-one training on technical, 
rather than business, topics: “It is surely better than the old Soviet-style training we 
used to get.” 
Nevertheless, in at least two cases, GI’s financial management courses were described 
as “too short.” One in the Bayanhongor center reported: 
After attending a one week accounting training from GI, my wife, who does my 
firm’s accounting, attended a three month training in accounting run by a 
college in the aimag center. We paid MNT 140,000 for this mediocre course but 
at least it got her “certified” which the GI course did not. 
Lastly, as with the GER Initiative’s training, one of the finest indicators for 
effectiveness of this service is how much participants are willing to pay. In its most 
recent quarterly report (April-June 2005), except for an information technology training 
provided by a Peace Corps volunteer, participants paid from 39 percent to 100 percent 
of the costs. 
5. Rural Business Network 
Since GI I and the beginning of GI II, RBN has updated both the type of information it 
provides and the media which it uses. Information on commodity prices is collected on 
a daily basis in 20 aimags as well as the two large raw-material markets in Ulaanbaatar. 
During the second quarter of 2004, Market Watch began including primarily the prices 
for cashmere, wool, meat, skins, hides and intestines. During the cashmere-combing 
season, RBN Radio broadcast provided more detailed cashmere price information and a 
broader market perspective for herders to help them better understand global and local 
market dynamics and price trends. RBN Radio also provided pricing information, 
including vegetable seed prices and select agricultural machine prices. To determine 
which items should be added, a preliminary survey was conducted and items selected. 
The information was disseminated via three different media: RBN-509 (MobiCom SMS 
service), RBN Radio, and RBN Magazine. 
Throughout its travels, the team regularly found that both GI clients and non-clients 
listen to RBN Radio. Distribution of the newspaper to clients and other subscribers (no 
copies are sold on the street) depends on each aimag office information officer (termed 
“Program Officer for Information and Logistics”) and part-time information outreach 
 Evaluation of the Gobi and GER Initiatives August 2005
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officers who often work for local governments but are paid a monthly stipend of MNT 
30,000-50,000 by GI. 
Currently, RBN uses what it terms a Participatory Information Survey Analysis (PISA) 
tool to determine how much its programs are being read, heard and watched. The 
approach begins with selecting news items with potentially usable information and 
giving these to 40-50 respondents who are asked: 
1) Was the article/program relevant to the person’s needs? 
2) Was the article usable, i.e. did it contain information that has practical usability? 
3) Is there any constraint or obstacle to using this information (access to specific 
resources, training, etc.)? 
4) Is the individual planning to act on this information? 
More convincing to the effectiveness of RBN are results from more independent media 
surveys: 
• According to a survey conducted by the monitoring department of Mongol 
Radio, the RBN news radio program ranked 15 out of 96 programs regularly 
broadcast on Mongol Radio. 
• Production of the radio drama Herder from the Future has continued. In a survey 
conducted by the monitoring department of Mongol Radio the program ranked 
31 out of the 96. 
Nevertheless, without more complete and reliable data, the team cannot determine what 
level of popularity, or for that matter, the coverage, RBN’s products have had. 
Fortunately, Pact has asked a media survey and monitoring and evaluation expert to 
review its procedures in the late fall of this year. 
6. Sustainability of businesses created? 
With just one year of experience, business entities created or expanded by the GI have 
shown a mixed record. For various reasons—primarily that plans were overly 
optimistic—most vegetable growers failed to produce according to their business plans. 
Even so, the recently GI-commissioned study by drylands-expert Gary Hickman argues 
that “it is possible to conclude that vegetable production in the Gobi and Hangai regions 
of Mongolia is economically viable under certain conditions.”20 In addition, given 
results from a previous study commissioned by the GI21 and interviews conducted for 
this evaluation, consumers often prefer domestically grown vegetables over those from 
China. 
 
20 His report, titled Report on the Opportunities and Constraints for Vegetable Cultivation in the Gobi Region of Mongolia outlines 
these conditions. 
21 Report on Vegetable and Dairy Product Market Assessment by L. Urtnasan. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Chart 7 
Actual Sales vs Projection, 2004 
-
50,000.0
100,000.0
150,000.0
200,000.0
250,000.0
300,000.0
350,000.0
Dairy
products
Vegetable
production
Felt
production 
Ellite
animal
breeding
Meat
prodcution
Tourism 
Trade/
Services
Projection Actual Sales
In order to get a clearer idea of how promising GI-supported businesses are, the team 
selected four of those visited and calculated rates of return. The results are highly 
instructive about both what makes sense for producers and how their plans are actually 
implemented. Detailed results are in the table below. 
Case I: Making Airak (fermented mare’s milk)
Algiin Devish formed more than a year ago to jointly produce airak for consumption in 
UB and locally in northern Dungovi. Through August of 2005, the price of airak was 
higher than planned and, even with providing one third of its production for “internal 
consumption” among its members, its monthly internal rate of return for airak is 
projected this season to be 9.50%, but proceeds will be much less than what its 
members have earned this season on cashmere. 
Case II: A new dairy start-up
Although it is just entering into the production of a variety of dairy products (indeed 
tasty!) the Shargaljuut dairy cooperative has secured at least one supply contract with a 
crèche connected to a nearby sanatorium. If, however, it were to follow its agreed 
business plan with GI, its IRR would not make production worthwhile. Fortunately, it 
has forgone the MNT 800,000 electrical butter churner in its business plan, opting for a 
140,000 tgs hand-operated one instead, allowing it to have a potential monthly IRR of 
nearly 50%. In any case, given that the original churner made little sense (it would have 
required a generator to run), there is potentially more than mere oversight as to why its 
original business plan was inflated. 
Case III: Making leather and felt products
The return of 2.63% monthly on this firm is just about at the normal cost of capital, 
though considerably higher than the cost of a GI loan. 
Case IV: A non-herder business, woodworking
In this case as with Shargaljuut, the IRR is highly contingent (though both are 
reasonably high) upon a large purchase. In this case, the owner, after completing his 
business plan and receiving a loan, apparently realized he should not buy a building. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Table 10: IRRs for selected Gobi businesses 
Client Business Past 12 month Income and calculated 
IRRs 
Estimated annuual 
Cashmere income 
Alagiin 
Devshih
Airak MNT 4.5m 
9.50% monthly, 113% nominal annual 
MNT 10.8m 
Shargaljuut Dairy Newly formed. 
BP: 1.49% m onthly, 17.82% nom inal 
annual 
Potential: 49.82% monthly, 597.85% 
nominal annual 
MNT 3.3m 
Uutiin Leather products MNT 3.0m (four months) 
2.63% monthly, 31.51% nominal annual 
MNT 3.3m 
Tebbe Wood working MNT 18m (seven months) 
Building purchase: 7.9% monthly 
No building purchase: 17.1 % monthly 
NA, a non-herder 
7. Overview of findings on services and businesses supported 
Statistical tests on all of GI’s herder clients show that all families enjoy a “cashmere 
cushion” on which to fall in the case their non-livestock businesses experience trouble. 
For client business plans in 2005, the members earn an average of MNT 449,525 from 
their GI supported businesses and MNT 239,573 from cashmere. The standard 
deviations of these two income source are so significantly different, MNT 830,616 
Box 5: Crop cooperative
Sixty-eight year old master herder B . Lhagvasuren stands behind his 17 member cooperative oat crop 
in Bayan-Ovoo suom, Bayankhongor. Before 1990, he was the director of the suom’s 750 family 
cooperative. Although he is thankful communism has ended in Mongolia, he worries whether this new 
cooperative of 2,744 head of livestock and 4.8 ha of well irrigated land, left from the previous time and 
whether it will survive after his passing, as the new generation “just does not seem to work as hard.” 
GI’s current work to identify succession plans for its clients will be critical to the sustainability of his 
operation. 
 Evaluation of the Gobi and GER Initiatives August 2005
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versus MNT 160,363 that t-scores comparing the two populations end up effectively 
zero. Overall per member income correlates well with per member income from the GI 
II supported activities (r2
=.97) whereas it does not with per member cashmere income 
(r2
=.12). There is, as these would indicate, no apparent correlation between per member 
cashmere income and per member income from the GI II supported activity (r2
=.02). 
In sum, all herders supported by the GI have a consistent cashmere base and cushion to 
build a foundation from and fall back onto. With help from the GI, they have the 
opportunity to reach for significantly higher economic returns and generate significant 
surpluses: i.e. what economic development should be all about. 
As with the GER Initiative, although the eval uation team was not ex plicitly asked to 
determine the total direct and indirect impact of GI’s efforts, with more data on regional 
financial flows (e.g. based on household incom e and expenditure surveys), a model 
could be constructed to demonstrate multiplier impact on rural areas and towns.22 
Without this data, the evaluation team is hesitant to stand by a similar calculation of 
cost per beneficiary for this project for two reasons: a) The figu re could be as low as 
$25.19 per beneficiary if RBN is included, or as hig h as $666.67 (based on 15, 000 
beneficiaries) if not, and b) The evaluation team deems the most salient goal of the GI, 
beyond helping in dividuals, is to support both the basis of production in r ural areas 
(read livestock) yet begin to broaden this too-narrow rural eco nomic base, lest 
Mongolia becomes a country with over-crowded peri-urban areas en circled by mining 
operations. 
One substantive activity expansion GI could make in securing a more secure cushion 
for herders is to collaborate with the World Bank on a new program that will fill an 
important gap: providing livestock insurance. The project, approved in July 2005, will 
begin introducing a pilot scheme in September. Bayanhongor is one of the program’s 
three pilot sites. According to the in-country manager of the scheme, there are a 
number of ways GI could support the scheme, including assisting in a public campaign 
in the pilot aimags, under its RBN operations. 
ii. Gobi working with others 
Gobi has developed an extensive set of partners, listed in the table below. 
Table 11: Gobi Initiative Project Partners
Entity Nature of partnership 
Government 
Aimag Governors 
Dissemination of information on project activities; 
ensuring that activities help the aimag priorities 
get accomplished 
Aimag Agricultural Departments 
Participation in programs and activities such as 
"Elite Animal Fairs"; exchange of information 
 
22 A good example of a Keynsian local multiplier model can be found in Economic Linkages Between Small Towns 
And Surrounding Rural Areas In Scotland, March 2005. In this paper, the model calculates an average multiplier of 
1.329, i.e. an economic gain of £1,329.38—distributed in varying ways depending on town and rural linkages—from 
an infusion of £1,000. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Aimag Tax Office 
Assistance for its clients; exchange of 
information 
Aimag Professional Inspection Agency 
Assistance for its clients; dairy safety program in 
Govi-Altai 
Training and Research Center of the 
Mongolian Tax Office Provision of training and consultancy 
University and Research Institute 
University of Agriculture 
Exchange of information and reports on studies 
and research on agriculture and livestock sector 
Livestock Research Institute 
Exchange of information and reports on studies 
and research on agriculture and livestock sector 
Plants Research Institute 
Exchange of information and reports on studies 
and research on agriculture and livestock sector 
NGOs 
Mongolian Women Farmers Association 
Participation in training programs for local 
trainers and agricultural producers 
Cooperative Training and Information Center 
Participation in training programs for local 
trainers and agricultural producers 
Mongolian Food Producers Association 
Exchange of information and implementation of 
joint studies 
Cooks Association 
Exchange of information and implementation of 
joint training programs 
Mon Ger Cooperative 
Participation in training programs and exchange 
of information 
Donor organizations 
World Bank 
Information exchange and cooperation at the 
local level 
UNDP Sustainable Grassland Management 
Information exchange and cooperation at the UB 
and local level. GI has entered into a 
Memorandum of Understanding (MOU) that 
allows this project’s clients to tap into GI Loan 
Guarantee Fund. 
World Wide Fund 
Participation in programs in Uvurhangai to 
combat desertification and stop sand movement. 
ADB Ag Sector Development Project 
Participation in programs in Govi-Altai to support 
rural business and herders. 
TACIS EU Wholesales Network 
Provision of grants to GI clients in Govi-Somber 
to purchase agricultural equipment and 
machinery. An MOU similar to the one with 
UNDP above is currently in negotiation between 
this project and GI. 
Based on meetings with government officials, the evaluation team is confident that GI 
has been very effective in taking advantage of opportunities for expansion and 
improvement of its activities with local government, i.e. officials are genuinely 
positive about its work. Nevertheless, one aimag official reported that the aimag
government was not consulted during GI’s development of its plan for 2005. 
Local officials too, even those who have supposedly been through GI training, still have 
little idea of what their role could be in promoting business. One soum governor 
mentioned that generally all officials should support business, and he does so by 
enforcing regulations, permitting businesses to operate, providing land permission, and 
 Evaluation of the Gobi and GER Initiatives August 2005
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applying a consistent tax policy. When asked if he had an additional budget to support 
businesses, he mentioned that he would support the vegetable cultivation by buying 
equipment and providing irrigation from wells to farming groups. One reason that the 
GI’s training appears to have had little impact on him and others was that it was not 
tailored towards government promotion of business; rather local officials have merely 
attended GI’s business training for its business clients. 
Fortunately, at least one official—the head of the Uvurhongai Hural—had a more 
sophisticated understanding of what GI has been striving for: 
GI is the most productive donor project. Why? It supports rural businesse 
improving the capacity and independence of rural businesses from the aimag 
economy. From these efforts, the aimag potential will improve. Other projects 
mainly have a social direction---and not such a clear outcome. For some 
people, solving social problems is important, but the future is for development. 
Although most activities are appropriate, more targeted efforts could be made to help 
local officials play a facilitating role for private sector development. 
Under the 1992 Law on Administrative and Territorial Units of Mongolia and Their 
Management, with amendments in 1999 and 2000, local government has considerable 
powers relating to pasture management. Aimag, soum and bagh khurals are authorized 
to make decisions about economic and social development activities in their areas. 
Governors at all three levels have the authority to organize the sustainable use and 
rehabilitation of natural resources, and to control the implementation of relevant 
legislation. Bagh governors are specifically charged with organizing the participation of 
citizens in, and their control over, livestock development activities such as veterinary 
and breeding services. With little individual budget authority, it has been common for 
aimag and soum governments to ask businesses for donations to allow them to pay out 
awards (usually for horse races) during annual Naadam celebrations. 
With its current and previous help in veterinary services and its prior work in Gobi I, 
the GI is uniquely positioned to provide targeted technical assistance to local authorities 
to better carry out their responsibilities for ensuring that the private sector is promoted, 
properly managed, and not siphoned from. 
One specific example comes to mind. The Uvurhangai Aimag government has 
developed a strategy for the development of tourism that appears (since a full 
translation was not available) to be short on proactive ways to promote sustainable 
tourism in one of Mongolia’s most exceptional historical tourist sites: the location of 
Chingis Khaan’s son’s capital and the country’s oldest monastery. Already, tourist 
camps have spawned and land speculation was driving prices (until the government 
placed an edict to stop the buying and selling of land). GI has already invested in 
supporting one tourist camp. At least one evaluation team member felt that Harhorin 
(Karakorum) is on the cusp of becoming a tourist haven, particularly if an interested 
party finds a means to capitalize on the recent New York Times Bestseller Gengis Khan 
and the Making of the Modern World.23 
 
23 By Jack Weatherford, printed by Three Rivers Press, 2004. 
 Evaluation of the Gobi and GER Initiatives August 2005
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The GI has well-developed relationships with other donor agencies, non-governmental 
organizations and private organizations (e.g., private financial institutions and large 
businesses) as described in Table 8. 
One other element that is no less important to the sustainability of these businesses is 
the long-term viability of their management of particularly since many are managed by 
progressive, hardworking elderly leaders. Fortunately, GI is currently carrying out a 
capacity assessment to determine how it could help groups and cooperatives with 
succession plans and improving cohesion. 
iii. Opportunities for others to take on GI’s work 
Box 6: Where will RBN’s advanced information services end up? 
Under both Gobi I and Gobi II, Pact has implemented a variety of progressive information services 
without government interference. As most media in Mongolia is reportedly losing money, it is very 
problematic to predict how RBN can be spun off, as was already tried with Market Watch, into a 
private entity. 
This RBN announcer begins the daily market watch program, 
providing a variety of market prices to an audience around the 
country from RBN’s own studio equipped with advanced German 
sound equipment. 
Box 7: TMZA Vet Partnership 
On the left, Mr. Sh. Ulziibat and his daughter, who is in her last year of vet school, work at the 
counter of his clinic. He and she have received training, help with obtaining a 3m tgs loan from GI, and 
a lab equipment grant of 820k MNT (in use by one of his technicians on the right). He remains happy 
despite the fact that it is not clear to herders that the government, through him, only pays for 
vaccinations against infection. Although regulations exist for him to be able to charge herders for 
deworming, dipping and disinfection, herders do not understand this. The jars behind his head are 
filled with traditional remedies that he uses to treat animals. 
 Evaluation of the Gobi and GER Initiatives August 2005
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In some ways, the opportunities for GI activities to continue are similar to those for the 
GER Initiative’s: From the descriptions above of other private and public service 
providers, it should be evident that at present, local trainers and other local institutions 
will not likely continue their activities to the degree and in the cutting edge-way GI 
provides its services. 
Nevertheless, given that local consulting services in Aimag, and soum centers are not 
so developed and come out of communities more tightly knit, it is likely that some 
consultants may continue to provide services to GI clients, after GI ends. In other 
words, as opposed to consultants in UB, the opportunity costs for providing services to 
small and medium businesses for aimg and soum consultants are much less. 
GI is also on the way towards making individual private veterinarians and VetNet more 
sustainable self-standing entities. Reportedly, GI phase I’s former tripartite agreements 
among herders, vets, and GI have continued, with the local soum government replacing 
GI. 
One of the most important questions for the team here was whether RBN’s operations 
could be made sustainable. Reportedly, in the previous Gobi phase, real privatization of 
Market Watch was tested, and failed. The evaluation team has no ready practical 
answers other than requesting GI and Pact to investigate and put forth options as to how 
some of its work could continue under private financing. 
iv. Sharing the risk with financial institutions is a subsidy 
As of the date of this report, no loans are in default. The recent break down by bank 
and total capital is below. 
 
Table 12: Herder and Non-herder loans under GI’s loan guarantee program by bank 
BANKS 
Herder/
Non￾herder 
Numbe
r of 
loans 
Amount of 
loans 
% in 
number 
of loans 
% in 
amount 
of loans 
Collateral 
by MCI 
%covered 
by MCI 
H 171 398,199,000 70.08% 53.77% 321,303,100 80.69%
XAC NH 36 120,750,000 14.75% 16.30% 72,606,280 60.13%
H 18 67,650,000 7.38% 9.13% 37,925,000 56.06%
KHAAH NH 15 131,800,000 6.15% 17.80% 76,300,000 57.89%
H 
 
- 
 
- 0.00% 0.00% 0 N/A 
ZOOS NH 1 6,000,000 0.41% 0.81% 2,036,000 33.93%
H 2 10,200,000 0.82% 1.38% 3,320,000 32.55%
POST NH 1 6,000,000 0.41% 0.81% 3,000,000 50.00%
SUB H 191 476,049,000 78.28% 64.28% 362,548,100 76.16%
TOTAL NH 53 264,550,000 21.72% 35.72% 153,942,280 58.19%
TOTAL 244 740,599,000 100.00% 100.00% 516,490,380 69.74%
The interest rate most GI clients get is 1.5 percent a month (sometimes 2.0 percent), or 
18 percent annual, effectively a 12 percent annual subsidy on what a bank would 
normally charge in a rural setting. This much was confirmed by the director of the GI’s 
largest partner bank, Xac Bank. Loans to its clients begin with the business plan, 
decided by the local bank and GI office, and then are sent to UB for approval. Once the 
loan is approved, the GI places some amount, of guarantee, with the bank making the 
 Evaluation of the Gobi and GER Initiatives August 2005
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loan. The process, as demonstrated by the loan application of Mr. Sh. Ulziibat 
(which took more than six months to complete), can apparently take time while all 
parties agree. 
Its guarantee is likely, as with the GER Initiative, to be leading to increased lending to 
those with no well-formed business plans that may not have the requisite 150 percent 
collateral coverage. However, there could be cases, as above with the Shargaluut Dairy, 
where clients see cheap credit and are not as prudent as they would be regarding 
expenses had they only been borrowing at a usual market rate. This is the danger of 
subsidized rates. 
Given that bank loans are made by the banks after careful GI analysis, loans outstanding 
at the end of the GI are likely to be at least no worse than others in the rural banking 
sector. 
Still, the team is even more convinced that GI’s loan guarantee and effective subsidy 
should be progressively phased out as banks begin to allow for greater flexibility on 
collateral coverage, as Khaan Bank has reportedly done over the past year, by allowing 
its branches to waive collateral requirements for good loans. One official of the bank 
commented that it is no coincidence that good loan officers are regularly making loans 
when the value of collateral is exactly at 150 percent, the minimum required, effectively 
gaming with the banks normal rules for collateral coverage. 
USAID’s guidance on guarantees also argues they be phased-out in a relatively short 
period: 
Partial guarantees can be useful in encouraging established financial 
institutions to enter into microenterprise lending, by sharing in the perceived 
risks involved in such lending. Assistance agreements should be structured so 
that guarantees are phased out over a relatively short period; by the end of this 
period, the institution should be expected to have developed the necessary skills 
in microfinance, as well as a realistic estimate of the underlying risks of 
microenterprise lending. In the meantime, the share of any loan defaults borne 
by USAID should not be so great as to deter vigorous efforts at loan recovery; 
in no case should 100 percent guarantees be provided. More generally, 
Missions should avoid offering guarantees to any financial institution that has 
not shown a strong motivation to move into the microfinance market; risk￾sharing arrangements cannot make up for a lack of such motivation on the part 
of the institution.24
v. Did the change from Gobi I to Gobi II make sense? 
In addition to the team’s support of the fact that GI is no longer giving away things and 
is actually charging fees, the team’s answer to the above question is a qualified “yes.” 
There are several reasons for our affirmative answer: 
1. The GI is merely supporting a process already taking place as herders recognize 
the need to diversify their production against risks of livestock loss or a fall in 
prices of cashmere; 
 
24 USAID’s guidance on Microenterprise Development. Mandatory reference: 200-203. p.28. 
 Evaluation of the Gobi and GER Initiatives August 2005
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2. In fact, it appeared that Gobi’s herder clients who decided to branch off into 
another type of production were among some of the most successful and 
progressive herders, i.e. they surely knew what they were getting into; 
3. At a minimum, they understood that herders who concentrate on only animal 
husbandry have significant amounts of slack time. They might as well use that 
time to make extra money or goods for their own consumption; 
4. Some key inputs for agricultural production (growing crops on land), and/or 
processing agricultural goods (making dairy products from milk from their 
herds) are very abundant and require little initial investment; 
5. There is little more that Gobi can do with progressive herders to improve the 
yield and quality of their cashmere as long as the industry remains mostly a 
supplier to low quality Chinese garment production; 
6. Without a unique competitive edge (e.g. a worldwide recognized Mongolian 
Cashmere brand) that international buyers are willing to pay a premium for, 
Mongolian producers are naturally weaker than the Chinese since the Chinese 
cashmere crop comes on the market first (warmer weather for combing), is 
generally finer, and most of the procurement funds of the large international 
processors are earmarked for China. 
7. Even if this bottleneck in the supply chain to the Mongolian cashmere industry 
were opened, it could become even more compelling for USAID’s flagship rural 
economic development project to limit being implicated in contributing to the 
environmental degradation that would likely increase with increased goat 
foraging, although GI could remain consistent on supporting only improved 
animal quality for “high-end” processing. 
This said, the team found that cashmere remains the main economic game for herders 
and there are still many who have not benefited from Gobi I. Although GI offices do 
not keep records of inquiries or requests for services, at least one Aimag office manager 
reported that his office has received many requests for continuation of help that had 
been given under Gobi I to assist herders improve their cashmere production. 
After constraints along the supply chain are relieved, Mongolia can strengthen its hand 
in exporting cashmere—which is generally longer than that of the Chinese making it 
easier to spin—by improving the quality and reliability of supply. The first is a question 
of selective breeding and doing some intensive work on salvaging as much of the good 
genes as possible, establishing nucleus herds, and doing controlled breeding of good 
quality animals as China did with Australian experts. 
With offices well-placed and staff well versed in some of the technical assistance given 
to herders in Gobi I, the team recommends that some Gobi I legacy work continue and 
rigidities in selection of he rder beneficiaries should be lessened, adding “secondary” 
herder groups to its clientele. 
Beyond cashmere, Mongolia could be one of the world's key sources of meat for pet 
food (the EPRC Project is working on this) and/or meat products high in Omega 3 fatty 
acids, a real contender in wools (camel, red bayan-olgii sheep), and a recogn ized 
supplier of wool fiber for carpets. Cont inued efforts by the GI o n its livestock 
improvement programs would at least provide incremental progress towards this. 
 Evaluation of the Gobi and GER Initiatives August 2005
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f. Project management—need for greater decentralization and 
client ownership 
The evaluation team found GI’s operations to be well managed and records of clients 
relatively complete, but almost to a fault. There appears a danger of over and too 
advanced management of UB in all approvals. Currently only 25 percent of expenses 
are made in Aimag program delivery while the remainder of costs cover operations in 
UB and indirect costs. This is partly to pay for the estimated (since administrative staff 
are only partially funded under GI and work for other MCI projects) 47.4 percent of 
GI’s staff work out of UB. 
Even as loan and business plan approvals have become speedier than they were in 2004 
when sometimes it took more than six months, the team recommends GI strive even 
more to give ownership to local offices, and more importantly, to clients themselves. 
In its interviews with clients, in nearly every case there had been significant changes in 
the business plan, or the client did not fully understand all items in the plan.25 After 
seeing several instances of this, the team began to realize that these so-called “business 
plans” were not so much living documents, rather they served more as client and loan 
guarantee applications. 
In response to these comments by the team, the GI management maintained they were 
reluctant to “dummy-down” these business plans. Granted the plans should be well 
formed based on the best available market and financial analysis in order to evaluate the 
risks related with what a client wishes to do. The team, however, still finds it 
problematic if the clients either do not fully understand these plans or, for their long￾term sustainability, are unable to have ownership to generating changes and future 
plans. Thus, the team sees a great need for GI now to create, with clients, a process 
whereby clients can initiate, and revise as needed, their own business plans, year-by￾year. 
g. Conclusions on the five Gobi Initiative questions and 
recommendations 
Over the co urse of fiv e years, the Gobi Initiative has evolved into an effective and 
unique donor project that has co ntributed to development in rural Mongo lia. The 
evaluation team feels that with some modifications, greater impact could be realized: 
 
1. The services being provided by Gobi II are generally appropriate for their target 
populations and business entities created or expanded thus far by the Gobi 
appear, at this early stage, sustainable, or at the very least, clients always have a 
“cashmere cushion” to fall back onto in the event their other businesses suffer 
losses. Nevertheless, the project should strive to work with greater numbers of 
less capable herders to help them find ways to build from their cushions and find 
ways to support Mongolia’s trial livestock insurance program so all have more 
 
25 An easily misunderstood practice in all plans in Bayanhongor was presented to demonstrate market 
demand. An example from a business plan (sic): Market capacity of Bayan-Ondor soum can be determined as 
follows, 
Q=N*g*p where Q= Market capacity, N= Numbers of households in Bayan-Ondor soum, 646 households., q￾Amount of one-time purchase, Vegetables - 0.3 Kg a day and, P= Average price / 250 MNT, Q = 646*0.3*250 = 
48,450 MNT a day 
 Evaluation of the Gobi and GER Initiatives August 2005
Page 63 of 97 
secure cushions. Given that nearly no Mongolian media outlet is profitable, the 
most problematic component for sustainability is the Rural Business Network, 
implemented by Pact. 
2. Gobi has been very effective in taking advantage of opportunities for expansion 
and improvement of its activities with local governments and other donors. 
Although most activities are appropriate, more targeted efforts could be made to 
help local officials play a facilitating role for private sector development. 
3. The project’s partial fee coverage by clients shows there is some promise for 
continued services after the project ends. At least the team finds this promise 
greater for consultants and trainers in aimags and soums since their opportunity 
costs are not as high as are those for urban-based providers. 
4. The team believes that GI’s loan guarantee and effective subsidy should be 
progressively phased out as banks begin to allow for greater flexibility on 
collateral coverage. Given that bank loans are made by the banks after careful 
GI analysis, loans outstanding at the end of the GI are likely to be good, 
although the significant subsidy GI provides may lessen a client’s concern about 
how much he or she borrows and the potential moral hazard. 
5. The transition in the goal, objectives and activities from Gobi Initiative-Phase I 
to Phase II was generally appropriate, although some legacy work should 
continue and rigidities in selection of beneficiaries should be lessened. Given 
what is already happening, Phase II focuses on the expansion and diversification 
of herder led business opportunities (e.g. vegetable farming) and non-herder 
business development assistance is appropriate. 
In addition, the team suggests that the GI put into place usable business plans for 
clients. And as with the GER Initiative, the team finds it important for Gobi to develop 
a realistic progressive plan on developing legacy institutions that will continue its core 
work after its funding from USAID and USDA end. 
VI. Overall Conclusions and Recommendations 
The evaluation team is confident that these two projects are uniquely providing business 
development services that contribute significantly to pinpointing possible improvements 
of businesses and, although uneven, to lessening the market failure and transaction costs 
of rural and peri-urban micro-, small-, and medium-enterprises. 
The team recognizes that efforts under these two projects reads as if coming straight out 
of reports that put forth USAID’s best practices in business development services:26
 
• Project designs should not be overly prescriptive or micromanaged. They should 
clearly define desired results and then manage implementers against defined 
performance milestones. 
 
26 Adapted from USAID’s Handbook on Enterprise Growth Initiatives: Strategic Directions 
and Options, 2004. 
.
 Evaluation of the Gobi and GER Initiatives August 2005
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• More innovative linkages should be made between financial products that 
increase access to markets and business services to increase the productivity of 
enterprises for growth opportunities. 
• Technical assistance to improve emerging growth enterprises and deal flow 
could be leveraged by working more closely with financial institutions. 
• Private brokers and service providers operating through performance contracts 
based on commercial incentives are best positioned to help growing enterprises. 
• Donor support should stimulate new business services that improve trade, 
market entry, and productivity for enterprises through commercial transactions. 
• Donors should require that demand-driven service programs include provisions 
for monitoring inputs and activities (such as the number of local service 
providers, number of participants, fees paid for services) as well as for assessing 
program outcomes (increases in productivity, sales, and profitability). 
• Projects should serve as brokers and facilitators for wholesale and retail 
business services. Direct firm-level assistance should rely on local service 
providers whenever possible. 
Outcomes from these two projects should also bode well for USAID/Mongolia in its 
input into the Agency’s reporting for the “Microenterprise Results and Accountability 
Act of 2004,” particularly on their comparative cost effectiveness and sustainability. 
Also the team finds there is no compelling need for either project to invest in broad 
training of bank management or staff. Banks are already mostly learning by observing 
and participating in both Initiatives’ well-founded application processes and monitoring 
that have led to relatively high repayment rates. 
 
Nothing’s perfect, and neither are these two projects. 
The four most compelling recommendations that this evaluation team sees as important 
for both projects are: 
1. Work to phase out their loan guarantee facilities. As the major banks who lend 
in rural and peri-urban Mongolia have high liquidity, after the education effects 
of these guarantee programs have taken greater hold, a phase out is warranted. 
2. The uniqueness and private sector focus, along with charging for the services of 
these two projects, should lend to, at least partial, privatization of some of their 
current activities. However, now is not the right time. Practically, this should 
happen over a period of time after both projects put forth “legacy” institution 
plans. 
3. USAID/Mongolia should set funding on the condition that these projects 
develop a step-by-step realistic progressive plan on developing legacy 
institutions that will continue their core work after funding from USAID and 
USDA ends. 
4. Both projects are well positioned to assist in improving enabling environments 
where they work. Efforts in this respect with local governments should not be 
seen merely as a governance activity, given that it should all be to achieve 
results under the objective of growing private enterprise. Work in private sector 
promotion, particularly for micro-small and medium enterprises, around the 
 Evaluation of the Gobi and GER Initiatives August 2005
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globe demonstrates that local regulations significantly shape the environment 
within which informal workers and enterprises operate. 
Lastly, the team did find ways that the two projects can learn from each other. 
Specifically, the GER Initiative’s monitoring and evaluation tracking systems could 
improve. One way to do this would be to use a home-grown and managed database 
system, as the GI has. GI, on the other hand, could learn more about how to set a 
schedule of regular charges and provide more flexible, demand-driven, open door 
business development services. 
VII. Lessons Learned 
The evaluation team felt there are at least five important lessons learned from its 
investigation. 
A. Even the most progressive developing country governments can 
have problems with implementing business services 
Despite the fact that Mongolia is one of the most shining examples based on MCA 
indicators, and that its World Bank Doing Business indicators are improving, BDSs for 
less than major companies is lacking. There are several ghosts from the past that show 
donor projects have not been very successful thus far. This should have real import to 
any remaining US Government officials who believe that, as Mongolia has qualified for 
MCA funding, other regular assistance funds should be cut. 
B. Cooperative agreements can be effective for USAID 
programming in Mongolia 
One reason for the poor performance of donor projects in developing BDSs is that many 
have been run through the government: MCC, beware! USAID’s projects, under 
implementation of private voluntary non-profit organizations, have allowed its work to 
be closer to the private sector with less of a chance (of course down-playing the 
occurrence of some slanderous attempts to attacking them of questioning their 
motivations. More importantly, both Mercy Corps/Pact and CHF, with ownership of 
these two projects, have been willing to invest monies from other pots from their 
headquarters to advance flexible and cutting edge (sometimes trial) agendas that have 
arisen through implementation of their respective Initiatives. 
This too is consistent with USAID’s mandated movement under the Microenterprise 
Results and Accountability Act of 2004 to support microenterprises through cost 
effective voluntary organizations rather than under large contracts. 
C. Fees should be collected at the outset, however minimal 
Both projects have implemented fees from their outset for many of their services, and 
despite the opposition, particularly in the GER Initiative’s efforts, this has largely 
worked. In fact, with clients now understanding what help they can receive from the 
GER Initiative, those interviewed would be willing to pay much more than what it is 
presently charging. Based on the limited experience of the evaluation team, this is 
much easier than putting fees into place after providing services at no charge. 
 Evaluation of the Gobi and GER Initiatives August 2005
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D. Relevant baselines and data are needed if USAID’s new 
evaluation agenda is to succeed. 
Beyond the lack of capacity of the team that carried out this evaluation, lack of quality 
relevant baseline data contributed to the mediocrity of this work. In the words of the 
USAID Administrator: 
Accordingly, I expect you [USAID Missions] to plan for appropriate evaluations 
in the design of all activities and ensure that ongoing activities have an 
evaluation component. Also, I expect improvements in the quality of 
evaluations. 
E. A taxpayer may ask: why are my contributions to help Mongolia 
treated so differently? 
Consistently throughout this evaluation, evaluators were reminded that certain 
components were not funded under the USAID agreements of the GER and Gobi 
Initiatives—some were funded under centrally-awarded USAID grants, others have 
been funded by the USDA. 
It is not clear, however, whether the USDA has any strong interest in ensuring its funds 
are effective, or at least an interest as strong as USAID’s. While the latter has a full￾time manager in Mongolia who is in contact on a day-to-day basis with the managers of 
both Initiatives, USDA’s oversight is directed out of Washington and supported by a 
State Department official in the US Embassy in Ulaanbaatar. The most recent visit by a 
USDA official to the projects, and to Mongolia for that matter, occurred more than a 
year ago although the US Embassy has no record of his (?) or her (?) findings. 
Beyond this, USAID has fairly rigorous rules on supporting financial institutions: 
Before the Mission signs an agreement to provide assistance to any 
microfinance institution, the management of the institution must provide the 
Mission with a credible written commitment to (1) attain full financial 
sustainability on the MFI’s financial service activities within no more than seven 
years of the initial provision of USAID assistance and (2) use USAID assistance 
to expand the availability of financial services to microentrepreneurs and other 
poor people. This commitment must be accompanied by a plan outlining the 
major steps to be undertaken in the process of achieving this goal, including a 
realistic timetable for undertaking those steps, and defining periodic 
benchmarks by which progress toward the goal can be determined.27 
The team was reminded that rules such as these do not apply to USDA’s funds. 
At the very least, this should be puzzling to any discerning US taxpayer who funds all 
of this work and who should ask: if there is a need for in-country managers and 
evaluations of significant US assistance programs, then where are the USDA managers 
and evaluators? Or, if there is not such a need for in-country management and 
evaluations, then is USAID wasting my money by supporting all of this oversight? 
 
27 USAID’s guidance on Microenterprise Development. Mandatory reference: 200-203. p.17. 
 Evaluation of the Gobi and GER Initiatives August 2005
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Picture 4: Thank-you for your help and visit says a dairy group in Bayanhongor as 
it waves good-bye. 
Annexes to Report on Evaluation of the Gobi and GER Initiatives August 2005 Draft of 4:51 PM on 4/21/2006
Annex, Page 68 of 97 
VIII. Annex I: Persons Contacted 
List of persons contacted 
 Name Organization Position Contact (if available) 
USAID/US Government 
 Leon S. Waskin USAID/Mongolia Representative Phone: 312390 
Lwaskin@usaid.gov 
 Jeffrey W. Goodson USAID/Mongolia Senior Program 
Manager 
Phone: 312390 
jgoodson@usaid.gov 
Megan T. Myers U.S. Embassy Economic and 
Commercial Officer 
Phone: 329095 
MyersMT@state.gov 
Government, banks, NGO and donor organizations’ officials
Peter Morrow Khaan Bank 
Agricultural Bank of 
Mongolia 
CEO Phone: 457880 
Mob: 99113749 
pete@khanbank.com 
Niel Isbrandtsen Khaan Bank 
DAI 
Advisor Phone: 460618 
Mob: 99090925 
isbrandtsen@khanbank.com 
Zolzaya Khaan Bank Loans Department 
Director 
Phone: 460618 
Batsaikhan Khaan Bank Branch Banking 
Division 
Director 
Phone: 460618 
Ms. Enkhsuvd Darkhan 
Khaan Bank 
 
Mr. Tojil Darkhan 7th bagh governor 
Demberel Sambuu Mongolian National 
Chamber of 
Commerce& Industry 
Chairman & CEO Phone: 324620 
Mob: 99112509 
chamber@mongolchamber.m
n 
Ganbaatar Kh. Mongolian 
Employers' 
Federation 
Executive Director Phone: 325635 
Mob: 91191008 
Fernando Bertoli EPRC project COP Phone: 321375 
fbertoli@chemonics.net 
Sedvaanchig Ts. “Gobi Cashmere” 
corporation 
CEO Phone: 342713 
gobimon@magicnet.mn 
Gankhuyag Ch. XacBank Executive Director Phone: 318185 
Ganhuyag.ch@hacbank.mn 
Soronzonbold L. XacBank Director of the 
Strategic Planning 
and Marketing 
Division 
Phone: 318185 
Tsogbadrah G. XacBank Director of Branch 
Banking Division 
Phone: 318185 
Mob: 99112359 
Jim Anderson XacBank Senior Technical 
Advisor 
Phone: 318185 
Mob: 91918052 
Toshiya Nishigory UNDP Private Sector 
Development Officer 
Phone: 327585 
toshiya@undp.org 
Jonathan Simon Private Sector 
Development Project 
supported and 
implemented by GTZ, 
MoIT, Royal 
Netherlands 
Embassy-Beijing, OD 
Project Director Phone: 310537 
Mob: 99264857 
jonsimon@psdp.mn 
 Evaluation of the Gobi and GER Initiatives August 2005
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Consult 
Zorigtbaatar Purev Governor Bayankhongor 
Aimag 
Phone: 01442-22501 
Mob: 99442066 
Ms. Dulmaa Deputy Governor Dundgobi 
S. Dashdeleg Uvurkhangai 
Tugrug soum 
Soum governor 
Ts. Tserendorj Uvurkhangai 
Tugrug soum 
Soum 
Representatives 
Hural 
Uvurkhangai 
Saihanovoo soum 
Soum governor 
Mr. Altangerel Uvurkhangai 
Saihanovoo soum 
Soum agriculture 
specialist 
Mr. Shoovdor Uvurkhangai aimag Head, Agriculture 
Department 
G. Olonbayar Bayankhongor Loans officer 
J. Bolormaa Bayankhongor Senior officer 
XacBank 
Gan-Erdene S. The Japan Center Officer Phone: 310879 
ganaa@japan-center.mn 
Heinz Schumacher SME Promotion 
Project, GTZ, ICON 
Institute 
Project Coordinator Phone: 315574 
Mob: 99119276 
Heinz.schumacher@icon￾institute.de 
Alan Flux Wool SME 
Promotion project 
Adviser/Designer Phone: 326345 
Myagmarjav Erdenet 
Buyant 
Grocery 
Non-client 
GER Initiative 
 Uranbileg Erdenet 
Tip Top car service 
Non-client GER 
Initiative 
Erdenetsetseg Erdenet 
Khairkhan grocery 
Non-client GER 
Initiative 
Munkhtuya Erdenet 
Naran bagh 
Grocery 
Non-client GER 
Initiative 
Ulziibat 
Gan-Erdene 
Erdenet 
Grocery 
Non-client GER 
Initiative 
Damdinsuren 
Tuya 
Erdenet 
Grocery 
Non-client GER 
Initiative 
Dashmaa Ulaanbaatar 
“Bridge” group 
HR department 
Director 
Phone: 450941 
Jargalmaa Ulaanbaatar 
“Gobi Corporation” 
Gobi training center 
Director 
Phone: 341381 
Jargal Ulaanbaatar 
“Minii Delguur” 
supermarket chain 
Training officer Phone: 681496 
Ganbold Ulaanbaatar 
“MMW” 
Deputy Director 
Nyamaa Ulaanbaatar 
“Zig Zag” 
Deputy Director 
Oyungerel D. “Magic Suit” 
Personal Manager 
Director Mob: 99149737 
Sukhbaatar Erdenet Michid 
Bakery & 
Construction 
company 
Director 
Shirchmaa Erdenet 
Jaran Us Construction 
company 
Director 
 Evaluation of the Gobi and GER Initiatives August 2005
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Naranchimeg Erdenet 
Chamber of 
commerce 
Assistant to 
Representative 
Enkhtaivan Chingeltei District 
Employment and 
Social Welfare 
Services Department 
Officer 
Enkhtuya Ts. World Vision Business 
development services 
manager 
Phone: 345323 
Oyunbileg P. World Vision USDA/Herders’ 
livelihood 
diversification 
project officer 
Phone: 345323 
Dominic Graham World Vision USDA/Herders’ 
livelihood 
diversification 
project project 
Manager 
Phone: 345323 
Dominic_graham@wvi.org 
GER Initiative staff
Margaret Herro CHF International Country Director Phone: 319969, 319970 
Mob: 99116914 
herro@mercycoprs.org.mn 
Neil McCullah CHF International Deputy Country 
Director 
Phone: 319969, 319970 
Mob: 99118630 
neil@chfmongolia.org 
Mart E. CHF Business 
Development Center 
(BDC) Manager 
Phone: 319919 
Mob: 99111423 
mart@chfmongolia.mn 
Tserenchimid B. CHF Employment 
Coordinator 
Phone: 319919 
Mob: 99171611 
tserenchimid@chfmongolia.
mn 
Amarzaya L. CHF Sharkhad Area 
Business Advisor 
Phone: 95254389 
Mob: 99287773 
Amarzaya_l@chfmongolia.m
n 
Serjmaa B. CHF Darkhan Area 
Business Advisor 
Phone: 01-372-24078 
Mob: 99115373 
serjmaa@chfmongolia.mn 
Sainsuren S. CHF Ulaanbaatar, 4th Bus 
stop 
Resource Advisor 
Phone: 952555356 
Mob: 99780505 
sainsuren@chfmongolia.mn 
Oyunbileg Ch. CHF Ulaanbaatar, Tolgoit 
Business Advisor 
Phone: 95254480 
Mob: 99199911 
Oyunbileg@chfmongolia.mn 
Amarjargal B. CHF Darkhan Derevnya 
Business Advisor 
Phone: 01-372-35118 
Mob: 99398272 
amarjargal@chfmongolia.mn 
Dorjkhand CHF Darkhan 
Business advisor 
Khishigjargal Ts. CHF Darkhan Market 
Business Advisor 
Phone: 01-372-35303 
Mob: 99374354 
khishigjargal@chfmongolia.
mn 
Sarantungalag Sh. CHF Erdenet Area 
Business Advisor 
Phone: 01-358-28914 
Mob: 99116932 
sarantungalag@chfmongolia.
mn 
Anna Jan CHF Volunteer Phone: 01-358-28914 
Mob: 99367912 
 Evaluation of the Gobi and GER Initiatives August 2005
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anna@chfmongolia.mn 
Telmen B. CHF Erdenet Bichil 
Business Advisor 
Phone: 01-358-24472 
Mob: 99124866 
telmen@chfmongolia.mn 
Purevsuren P. CHF Erdenet Bichil 
Business Advisor 
Phone: 01-358-24472 
Mob: 99357912 
purevsuren@chfmongolia.mn 
Gobi Initiative staff
Steven Zimmerman Mercy Corps 
International 
Country Director Phone: 461145 
Sean Granville-Ross Mercy Corps 
International 
Deputy Country 
Director/ Rural 
Economic Advisor 
Phone: 461145 
Mob: 99114204 
sean@mercycorps.org.mn 
Bayan-Altai Luvsandorj Mercy Corps 
International 
Program Director Phone: 461145 
bayan@mercycorps.org.mn 
Stevan Buxt PACT Senior Techical 
Advosor - 
Information for 
Development 
Phone: 460901 
Mob: 99119618 
stevan@gobi.initiative.org.m
n 
Gankhuyag D. PACT Mongolia RBN 
Editor-in-Chief 
Phone: 462043, 460901 
Mob: 99117922 
ganhuyag@pact.mn 
Sansar Ch. Mercy Corps Program Officer 
Research and 
Documentation 
Phone: 461145 
Mob: 99278259 
sansar@gobi.initiative.org.m
n 
Erdenetsogt N. PACT Mongolia Market Watch 
Analyst 
Phone: 462043 
marketwatch@pact.mn 
Tornon T. Mercy Corps Program Officer 
Agriculture 
Phone: 461145 
Mob: 99185586 
tornon@gobi.initiative.org.m
n 
Udval G. Mercy Corps 
Gobi Forage 
Nutrition Research 
Officer 
Phone: 461145 
Mob: 99171368 
udval@gobi.initiative.org.mn 
Tsogoo D. Mercy Corps 
Gobi Forage 
Fodder Research 
Officer 
Phone: 461145 
Mob: 99137636 
tsogoo@gobi.initiative.org.m
n 
Bayanjargal B. Mercy Corps Program Officer 
Information 
Mob: 99840690 
bayanjargal@gobi.initiative.o
rg.mn 
Baasankhuu Namjildorj Mercy Corps Dundgobi Program 
Representative 
Phone: 01592-22103 
Mob: 99093532 
Gerel Ts. Mercy Corps Dundgobi 
Agriculture PO 
Phone: 01592-22103 
Daanii L. Mercy Corps Dundgobi 
Business PO 
Phone: 01592-22103 
Davaanyam S. Mercy Corps Dundgobi Market 
and Information 
Officer 
Phone: 01592-22103 
Puntsag D. Mercy Corps Uvurkhangai 
Program 
Representative 
Phone: 01-322-22966 
Tegshbayar E. Mercy Corps Uvurkhangai 
Program Officer 
 Business 
Phone: 01-322-22966 
Tsend-Auysh B. Mercy Corps Uvurkhangai Officer 
Agriculture 
Phone: 01-322-22966 
Bayarmaa E. Mercy Corps Uvurkhangai Phone: 01-322-22966 
 Evaluation of the Gobi and GER Initiatives August 2005
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Program Officer 
Translator 
A. Bat-Uul Uvurkhangai 
Saikhan Ovoo soum 
Information & 
Outreach officer 
Erdenesuvd N. Mercy Corps Uvurkhangai 
Admin & Finance 
Officer 
Phone: 01-322-22966 
Bayarmagnai S. Mercy Corps Bayankhongor 
Program 
Representative 
Phone: 01-442-22992 
Bayasgalan D. Mercy Corps Bayankhongor 
Program Officer 
Agriculture 
Phone: 01-442-22992 
Byambasuren Mercy Coprs Bayankhongor 
Program Officer 
Business 
Phone: 01-442-22992 
Erenebileg D. Mercy Corps Bayankhongor 
Program Officer 
Marketing and 
Information 
Translator 
Phone: 01-442-22992 
Enkhbat E. Mercy Corps Bayankhongor 
Admin Assistant and 
Finance 
Phone: 01-442-22992 
Jay Angerer Texas A&M 
University 
Assistant Reserach 
Scientist 
Phone: (979) 458 3229 
jangerer@cnrit.tamu.edu 
Doug Tolleson Texas A&M 
University 
Assistant Research 
Scientist 
tolleson@cnrit.tamu.edu 
GER Initiative clients 
Name, surname Location/Business Date of interview Interviewer 
“Gerelt chimeg” group Ulaanbaatar 
Bayankhoshuu 
Construction&repair 
July 21, 2005 D. Tsetsen 
“Munkh Undarga” 
group 
Ulaanbaatar 
Bayankhoshuu 
Sewing 
July 21, 2005 James Carlson 
“Undarga” group Ulaanbaatar 
Tolgoit 
Vegetable planting 
July 21, 2005 Ts. Oyunbileg 
B. Boldbaatar Ulaanbaatar 
Sharkhad 
Handicrafts 
July 21, 2005 James Carlson 
“Ochirt” group Ulaanbaatar 
Yarmag 
Sewing 
July 21, 2005 James Carlson 
Dolgormaa Batburen Darkhan 
Fitness club owner 
July 22, 2005 James Carlson 
Ts. Oyunbileg 
Battsengel 
Tserennadmid 
Darkhan 
Hairdresser 
July 22, 2005 James Carlson 
Ts. Oyunbileg 
Baljinnyam D. Darkhan 
Kiosk 
July 22, 2005 James Carlson 
Ts. Oyunbileg 
G. Bayarmaa 
Spouse of Mr. 
Tserenvaanchig 
Darkhan 
Fodder & Grain 
production 
July 22, 2005 James Carlson 
Ts. Oyunbileg 
Adyabadrakh Darkhan July 22, 2005 D. Tsetsen 
 Evaluation of the Gobi and GER Initiatives August 2005
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Pig production 
Shijeeravdan Darkhan 
Carpentry 
July 22, 2005 D. Tsetsen 
Bayarmaa Darkhan 
Food products trader 
July 22, 2005 D. Tsetsen 
Altantuya Darkhan 
Firewood trader 
July 22, 2005 D. Tsetsen 
Gantulga Darkhan 
Canteen 
July 22, 2005 D. Tsetsen 
Nasanjargal Darkhan 
Wood seller 
July 22, 2005 D. Tsetsen 
Urantsogt Darkhan 
Uliastai pig association 
July 22, 2005 D. Tsetsen 
Enkhbayar Darkhan 
Tsagaannuur group 
July 22, 2005 D. Tsetsen 
Davaasambuu Darkhan 
Mangirt group 
July 22, 2005 D. Tsetsen 
Oyun Darkhan 
“Uran setgemj” sewing 
group 
July 22, 2005 Ts. Oyiunbileg 
Regzedmaa Darkhan 
“Uilchin” sewing group 
July 22, 2005 Ts. Oyunbileg 
Tuyatsetseg Darkhan 
“Uran dol” sewing 
group 
July 22, 2005 Ts. Oyunbileg 
Nyamsuren Erdenet 
Noodle production 
July 23, 2005 James Carlson 
D. Tsetsen 
Orgil Purevdorj Erdenet 
Agriculture 
July 23, 2005 James Carlson 
D. Tsetsen 
Otgonbuyan Samdan Erdenet 
Agriculture 
July 23, 2005 James Carlson 
D. Tsetsen 
Erchim group Erdenet 
Yak hair ger ropes 
July 23, 2005 James Carlson 
D. Tsetsen 
Daramsuren Erdenet 
Agriculture 
July 23, 2005 James Carlson 
D. Tsetsen 
Uuganbayar Erdenet 
Machine-knit clothing 
July 23, 2005 James Carlson 
D. Tsetsen 
Erdenechimeg 
Purevdorj 
Erdenet 
Grocery, trade, farm 
July 23, 2005 Ts. Oyunbileg 
Gazryn Ogooj group Erdenet 
Jam and pickled 
vegetables 
July 23, 2005 Ts. Oyunbileg 
Dulamsuren Erdenet 
Fuel bricks made form 
cattle dung 
July 23, 2005 Ts. Oyunbileg 
Davaajav Erdenet 
Shoe repair service 
July 23, 2005 Ts. Oyunbileg 
Baasantsoo Erdenet 
Vegetable growing 
July 23, 2005 Ts. Oyunbileg 
Narantuya Erdenet 
Sewing/textiles 
July 23, 2005 Ts. Oyunbileg 
Batjargal Ulaanbaatar 
Felt product maker 
July 24, 2005 D. Tsetsen 
Narantsogt Ulaanbaatar 
Shoemaker 
July 24, 2005 D. Tsetsen 
Selengemurun Ulaanbaatar 
Leather&Felt souvenirs 
maker 
July 24, 2005 D. Tsetsen 
Altanjargal Galbadrakh Ulaanbaatar 
Garments maker 
July 24, 2005 Ts. Oyunbileg 
Ganbaatar Ulaanbaatar July 24, 2005 Ts. Oyunbileg 
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Jigmedjantsan Children’s shoe maker 
Nasanbat Ulaanbaatar 
Grocery shop 
July 24, 2005 Ts. Oyunbileg 
Gobi Initiative Herder and Non-herder Businesses, Local Consultants interviewed 
Name Location/Business Date of interview Interviewer 
B. Bilegsaikhan Ulaanbaatar 
CEO, Mongolia Research 
company 
Business management 
consultant 
June 29, 2005 James Carlson 
D. Tsetsen 
D. Bataa Ulaanbaatar 
Pig breeding & husbandry 
consultant 
June 29, 2005 D. Tsetsen 
T. Enkhtuul Ulaanbaatar 
Mongercoop LLC 
Director 
Finance & accounting 
consultancy 
June 29, 2005 James Carlson 
D. Tsetsen 
N. Togtokhbayar Ulaanbaatar 
Agricultural University 
Livestock department 
Consultant 
June 29, 2005 James Carlson 
Ms. Purevnyam 
Mr. Gankhuyag 
Mr. Battulga 
Dundgobi 
Herder Cooperative 
“Alagiin Devshil” 
June 30, 2005 James Carlson 
D. Tsetsen 
Ts. Oyunbileg 
Ms. Dashzegve Dundgobi 
Certified aimag 
consultaint on cooperative 
development 
June 30, 2005 D. Tsetsen 
Ch. Damba Dundgobi 
Certified aimag consultant 
on vegetable production 
June 30, 2005 Ts. Oyunbileg 
Mr. Dashzeveg Dundgobi 
Herder from Gobi I Goat 
breeder group 
June 30, 2005 D. Tsetsen 
Ts. Oyunbileg 
Dundgobi 
“TEBBE” LLC 
Carpentry business 
June 30, 2005 James Carlson 
Baymba Jambyn Uvurkhangai 
Saikhan Ovoo soum 
“Har Hairhan” Vegetable 
Partnership 
June 31, 2005 James Carlson 
D. Tsetsen 
Ts. Oyunbileg 
Sh. Ulziibat Uvurkhangai 
Tugrug soum 
“TMZA” 
 Vet partnership 
June 31, 2005 James Carlson 
Ts. Oyunbileg 
J. Purevjav Uvurkhangai 
Tugrug soum 
“Mazarbayankhangai” 
Cooperative 
June 31, 2005 D. Tsetsen 
Ms. Altantsetseg 
Mr. Delgerbayar 
Uvurkhangai 
Bat-Ulzii soum 
“Suun Dalai” LLC 
Dairy curd processor, 
trade & karaoke bar 
August 1, 2005 D. Tsetsen 
Ts. Oyunbileg 
Mr. Demberelsambuu 
Ms. Yumdorj and 
members of the 
cooperative 
Uvurkhangai 
Zuunbayan Ulaan soum 
“Aviat Aman” 
Cooperative 
Fodder crop production 
August 1, 2005 James Carlson 
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D. Pagma Uvurkhangai 
Certified aimag consultant 
on vegetable production 
August 2, 2005 Ts. Oyunbileg 
Ms. Amarjargal Uvurkhanagi 
Aimag consultant on felt 
products making 
August 2, 2005 D. Tsetsen 
Ts. Ariuna Uvurkhangai 
Certified aimag consultant 
on dairy production 
August 2, 2005 D. Tsetsen 
Mr. Sodnomdorj Uvurkhangai 
Arvaikheer soum 
“Uguuj Chandman” 
Dairy production 
cooperative 
August 2, 2005 James Carlson 
Mr. Gankhuyag D. 
Ms. Batsaikhan 
Uvurkhangai 
Arvaikheer soum 
“Itgel Uv” LLC 
Bread & Bakery 
August 2, 2005 D. Tsetsen 
Ts. Oyunbileg 
Mr. Sereenendorj Uvurkhangai 
Taragt soum 
Gobi I goat breeding 
herder group 
August 2, 2005 James Carlson 
D. Tsetsen 
Ts. Oyunbileg 
Mr. Adyasuren Bayakhongor 
Shargaljuut soum 
“Suun bulag” Cooperative 
on dairy production from 
yak milk 
August 3, 2005 James Carlson 
D. Tsetsen 
Ts. Oyunbileg 
D. Otgonkhand Bayankhongor 
Certified aimag consultant 
on dairy production 
August 3, 2005 Ts. Oyunbileg 
Mr. Tuvshinjargal Bayankhongor 
Galuut soum 
“Uutyn urlal” 
Leather production 
cooperative 
August 3, 2005 James Carlson 
D. Tsetsen 
Ts. Oyunbileg 
Mr. Lhagvasuren Bayankhongor 
Bayan Ovoo soum 
“Asgamba” Cooperative 
on vegetable production 
August 3, 2005 James Carlson 
D. Tsetsen 
Ts. Oyunbileg 
B. Bat Bayankhongor 
“Munkh Burgas” 
Cooperative on meat 
processing & trading 
August 4, 2005 D. Tsetsen 
Ts. Oyunbileg 
Mr. Batdelger Bayankhongor 
“Sulden Tenger” 
Bakery 
August 4, 2005 James Carlson 
Ms. D. Irina Bayankhongor August 4, 2005 Ts. Oyunbileg 
Bayankhongor 
“Bi Enkh Tuguldur” LLC 
August 4, 2005 James Carlson 
Bayankhongor 
“Khongor Anduud” 
August 4, 2005 James Carlson 
Bayankhongor 
“Unaga Trade” LLC 
August 4, 2005 D. Tsetsen 
Bayankhongor 
“MC Enkh” LLC 
August 4, 2005 D. Tsetsen 
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IX. Annex II: Selected Pictures 
Picture 5: The GER yak rope group in Erdenet. 
Picture 6: Kneading dough in Bayanhongor. 
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Picture 7: Master herder B. Lhagvasuren’s kin and cooperative members surround him. 
Picture 8: While Aimag staff stand by, this master herder shows his cellar. 
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Picture 9: An Aimag staff member heads to the door of a master herder’s cellar. 
Picture 10: The evaluation team interviews a GER Initiative client who grows vegetables in a 
greenhouse. 
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Picture 11: This is the inside of a greenhouse for vegetables in Erdenet. 
Picture 12: Evaluation team member Oyunbelig interviews a GER Initiative client in Darkhan 
who started a fitness center. 
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Picture 13: This UB area carver stands behind his intricately crafted chess set. The pieces were 
later sold to the Speaker of the House of Representatives on a visit to Mongolia. 
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Picture 14: Milking time for livestock held by members of a dairy cooperative in Bayanhongor. 
Picture 15: Already one can find entrepreneurs putting into place services, like the nightly show 
advertised here, for foreign visitors to Kharhoran. 
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Picture 16; This herder originally opted out of GI II from GI I as he did not have the time. He 
now plans to join GI II. 
Picture 17: Team member Tsetsen inspects accounting records of a couple that makes noodles in 
Erdenet. 
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Picture 18; This is the house used by the TMZA vet partnership. 
Picture 19: This UB GER Initiative branch abuts a popular bus station. 
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X. Annex III: Scope of Work for Evaluation 
Background 
A. The Gobi Initiative--Phases I and II
The Gobi Regional Economic Growth Initiative (Gobi Initiative) is a 
USAID/Mongolia -funded program that began in 1999. It works in six regions 
(aimags)—Umnugovi, Dundgovi, Uvurhangai, Govi-Altai, Byanhonger, and Govi￾Soumber—and provides support to herder groups and cooperatives, non-herder 
enterprises, business associations, and local governments. 
The principal grantee for the project is Mercy Corps International; PACT is a major 
sub-contractor to Mercy Corps, responsible for communications and outreach. The 
project is now just over one year into its second five-year phase (Gobi Phase II; January 
2004-December 2008). Phase II builds upon the successes of Gobi Phase I, but focuses 
specifically on business development and promotion. USAID funding for Gobi Phase II 
was originally expected to continue through FY 2008; under a proposed operating year 
budget (OYB) scenario that would cut USAID/Mongolia funding by 25%, however, no 
additional funding would be added to the project after FY 2005. 
Phase I of the Gobi Initiative began in early 1999 as a civil society program for the 
Gobi region of Mongolia, but over time it evolved into a program to assist the herders 
of the region to undertake comprehensive measures to accelerate and sustain market-led 
economic growth and development. The strategy was to target informational, structural, 
organizational, and policy constraints affecting the herder population. By the end of 
Phase I, the Gobi Initiative was organized around two major program areas: (1) regional 
economic development, comprised of the business development, herder management 
and livestock improvement, and rangeland and water management components; and (2) 
market and business communications and information. 
Phase II builds upon the successes of the first phase, but expands the focus of 
business development services to all sectors of the Gobi economy, while still retaining a 
focus on the long-term economic viability of the herder population. Phase II is 
predicated on the belief that herders have largely succeeded in the production, valuation 
and selling of the raw materials from their herds, primarily cashmere. Phase II is also 
predicated on the business direction the herders, themselves, are initiating; many 
herders want to diversify and/or expand their production to areas other than herding. 
One of the lessons learned by the herders during the recent severe winters (zuud) in 
which many animals died was the importance of having other sources of income. 
The goal of Phase II is therefore to “develop and strengthen rural businesses” in the 
Gobi region. Three key program objectives are: (1) An increase in the number of new 
and strengthened productive Gobi businesses; (2) An increase in the production and sale 
of marketable animal products and crops; and (3) an increase in availability, access to 
and use of business information by Gobi entrepreneurs. Phase II activities include the 
following: 
• Agriculture and business training and technical assistance for herder groups and 
cooperatives to expand and/or diversify their businesses; 
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• Targeted “one-on-one” technical assistance for non-herder businesses to 
increase sales, profit margins and/or market share and add new profitable 
products and services; 
• Production input and market linkage support for all new/expanding businesses to 
ensure that they can access production inputs and secure markets; 
• Loan guarantees (through a program funded by the U.S. Department of 
Agriculture) for small producers to diversify and “scale up” their agribusinesses; 
• Capacity-building of local training and technical assistance providers, including 
private consultants, associations, NGOs, institutions and government offices; 
• Training and pharmaceutical/equipment support for rural veterinarians and 
veterinarian technicians; 
• Development and institutionalization of key rural business support mechanisms 
including forage forecasting, animal nutrition monitoring, and dairy product 
quality assurance systems; 
• Dissemination of business information and communication of business interests 
and needs. 
B. The GER Initiative 
The Growing Entrepreneurship Rapidly Initiative (The GER Initiative) is a 
USAID/Mongolia and U.S. Department of Agriculture (USDA) funded project. The 
USAID portion of the project is carried out through a cooperative agreement with CHF 
International. The project began in August 2002; it was originally slated to end in 
August 2005, but has since been extended to March 2006. As with the Gobi Initiative, 
under a proposed operating year budget (OYB) scenario that would cut 
USAID/Mongolia funding by 25%, no additional funding would be added to the project 
after FY 2005. 
The project goal is to develop and strengthen the economy of the peri-urban areas of 
Mongolia, and the project now works in four ger districts—in Ulaanbaatar, Darkhan, 
Erdenet, and Choibalsan. Peri-urban ger (traditional Mongolian tent homes) areas are 
fenced-in, unserviced housing plots that surround Mongolian cities. Inside each fenced￾in plot are gers and/or owner built houses that lack heat, water, and sanitation services. 
The program serves a peri-urban area population of around 570,000 people: 500,000 in 
Ulaanbaatar, 30,000 in Erdenet, and 20,000 each in Darkhan and Choibalsan. 
The GER project has two objectives. The first is to increase the number of 
productive peri-urban area businesses. The second is to increase employment in the 
peri-urban areas. GER is a demand-driven business development and employment 
services activity that responds to the needs of clients based upon clients’ request for 
services. The target clients are generally considered the “working poor” that are either 
interested in obtaining a job, or improving a business. 
The project focuses on 
• Supporting microenterprises to strengthen and expand their activities; 
• Supporting entrepreneurs who are creating new businesses; 
• Providing the unemployed with training and job matching services; 
• Promoting business linkages between microenterprise clients and larger 
businesses; 
• Helping microenterprises link effectively to commercial financial 
providers; and 
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• Improving the quality and accessibility of local business development and 
support services. 
Purpose of the Evaluation 
The purpose of this evaluation is to provide USAID/Mongolia with an objective 
external assessment of: (1) the appropriateness and effectiveness of current Gobi 
Initiative and GER Initiative activities; (2) whether the Gobi Initiative and GER 
Initiative should be involved in additional activities; and (3) the likelihood of sustaining 
Gobi Initiative and GER Initiative impacts after the completion of USAID funding. 
USAID/Mongolia also is soliciting concrete, implementable recommendations for 
improvements to the Gobi Initiative and GER Initiative. 
Detailed Statement of Work 
With respect to the Gobi Initiative and GER Initiative, the evaluation team shall: (1) 
assess the appropriateness and effectiveness of current Gobi Initiative and GER 
Initiative activities; (2) assess whether the Gobi Initiative and GER Initiative should be 
involved in additional activities; (3) assess the likelihood of sustaining Gobi Initiative 
and GER Initiative impacts after the completion of USAID funding; and (4) make 
concrete, implementable recommendations for improvements to the Gobi Initiative and 
GER Initiative. The evaluation team will: 
• Review previous evaluations conducted of the Gobi Initiative and the GER 
Initiative. 
• Evaluate the appropriateness and effectiveness of Gobi Initiative Phase II 
activities with respect to program objectives. These activities include: business 
plan development and implementation; cooperative formation and development; 
herder training and technical assistance; acquiring critical inputs; long-term 
technical assistance to non-herder businesses; short-term training/technical 
assistance to non-herder businesses; local capacity-building for training and 
technical assistance; market development; local government support for 
business; veterinary service sector development; animal nutrition monitoring; 
dairy sector development/food safety campaign; business information 
dissemination; and building local capacity for information dissemination and 
communication. 
• Evaluate the appropriateness and effectiveness of GER Initiative activities with 
respect to program objectives. These activities include: loan facilitation; 
business consulting; business training; business and civic information; business 
association development; employment matching services; and employment 
training. 
• Assess how appropriate the Gobi Initiative and GER Initiative goals and 
objectives are in the light of current political, and USAID programming and 
financial, realities. 
• Evaluate the appropriateness of the business development services models that 
the Gobi Initiative-Phase II and the GER Initiative have adopted with respect to 
the current Mongolian social and economic context. For example, are the 
services being provided by either program the correct ones to achieve practical 
and effective business development results? How well does the demand-driven 
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model for services of the GER Initiative work? Are there other business 
development models that would be more appropriate for either program? Are 
the employment services provided by the GER Initiative useful and necessary? 
• Determine whether the transition in the goal, objectives and activities from Gobi 
Initiative-Phase I to Phase II was appropriate. Determine whether the Phase II 
focus on (1) the expansion and diversification of herder led business 
opportunities (e.g., vegetable farming) and (2) non-herder business development 
assistance is appropriate. 
• Evaluate the effectiveness and opportunities for expansion and improvement of 
both the Gobi Initiative’s and GER Initiative’s activities with local government. 
Are these activities appropriate? Are there other activities which could/should 
be undertaken? Should this work be expanded? 
• Review and evaluate the effectiveness of collaborative efforts by the Gobi 
Initiative and the GER Initiative with other donor agencies, non-governmental 
organizations, private organizations (e.g., private financial institutions and large 
businesses), and the local and national governments. 
• Assess the sustainability of the business entities created or expanded by the Gobi 
and GER initiatives; the capacity of local trainers and other local people to 
continue their activities; and the willingness and capacity of the private sector 
(e.g., financial institutions) and government entities to facilitate or carry out 
these same activities. 
• Assess how much bank lending is likely to endure after the end of the two 
projects, and propose realistic ways to strengthen relations between project 
clients and the banks that lend to them. 
• Determine what will happen to the financial liability of MCI and CHF, if any, on 
bank loans that are still outstanding at the end of the respective projects. 
 
Deliverables 
A. There are to be briefings with USAID/Mongolia, Mercy Corps, and CHF 
International upon arrival in Mongolia, at the half-way point of the evaluation, and 
prior to leaving Mongolia. 
B. Three copies of a draft of the final report shall be submitted to the Mission for 
review and comment two working days before the team leaves Mongolia. Three 
copies of the final report are due within ten days of receipt of comments from 
USAID. The final report should contain a table of contents, an Executive 
Soummary, and should clearly identify the team’s findings, conclusions, and 
recommendations. Appendices should, at a minimum, list the people and 
organizations interviewed. 
Team Composition and Logistics 
A. Team Composition and Roles: The team will be composed of experts in conducting 
evaluations of this nature. A team leader will be assigned who has the ultimate 
responsibility for overall team coordination and development of the final report. 
The Team Leader is also responsible for ensuring that team members adequately 
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understand their roles and responsibilities and for assigning individual 
data/information collection and reporting responsibilities. 
The team will have expertise in the design and/or implementation of donor-funded 
business development services (BDS) programs. The team should also have 
regional expertise, especially in Mongolia or other parts of Central Asia. 
The team will be composed as follows: 
 
Role Source/Funding 
1. Team Leader Purchase Order 
2. Senior BDS Expert NEP 
3. Mongolian BDS Experts (2) Purchase Orders 
4. Translator/ Logistics Coordinator Purchase Order 
5. Driver Purchase Order 
B. Relationship to USAID/Mongolia Staff: The Evaluation Team Leader reports to 
Leon Waskin, USAID Representative, USAID/Mongolia. 
C. Logistical Support: USAID/Mongolia will provide work space and one dial-up 
connection for contractors’ own laptops. The contractor is responsible for obtaining 
all of its other logistical support, including a translator/logistics person, driver and 
vehicle, in Mongolia. USAID/Mongolia can identify and provide recommendations 
for local hires. 
D. Performance Period: The team members will initiate work in Mongolia on or about 
July 18, 2005, or as soon as USG and USAID travel guidance permits. The 
performance period includes two preparation days in the States, two days for travel 
each direction, four weeks in-country (the last week of which is to be used to write 
the draft report), and two days in the U.S. to finalize the report after receipt of 
USAID comments on the draft. A six day work week is authorized. The initial draft 
should be submitted to USAID/Mongolia for review and comment two working 
days prior to the departure of the team leader, unless otherwise agreed by 
USAID/Mongolia. The final report is due to USAID/Mongolia within 10 days of 
receipt of comments from USAID. 
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XI. Annex IV: Data Tables 
h. GER Initiative Training and Technical Assistance 
Types of training are broken out at the service level. Participants are not broken out in a 
detailed training. However the total Number of participants for Employment and 
business trainings can be seen in the “Donor Report” Here is a subsection of the report: 
TRAINING DATA Services Clients
Units (3
Hours=1
unit)
Hours Male Female
Total training provided 
(3 hours training = 1 
unit)
8197 6276 13,269.84 39,809
.52 3142 5055
Business related 5706 3840 6,458.24 19,374
.71 2228 3478
Employment related 2491 2436 6,811.60 20,434
.81 914 1577
Vocational Training 373 364 6,987.13 20,961
.40 111 262
Trainings All - Program to date 
Report date: 08/08/2005
Upon request of: Auditor2
Period: 08/01/2002 - 08/08/2005
Type of Training Number of 
Services
Total 
hours
% By 
Time
% By number of 
Services
EM - Soft Skills 2280 2,595.51 6.52 27.82
EM - Technical/Vocational 211 17,839.30 44.81 2.57
ME - Association 337 912.60 2.29 4.11
ME - Bookkeeping 1642 3,003.39 7.54 20.03
ME - Chicken production 81 254.79 0.64 0.99
ME - Customer Service 238 467.95 1.18 2.90
ME - Financial Statement Preparation 126 593.00 1.49 1.54
ME - Group Development Training 103 163.50 0.41 1.26
ME - Home-gardening 618 1,686.75 4.24 7.54
ME - Loan Preparation 639 1,778.45 4.47 7.80
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ME - Management 150 472.03 1.19 1.83
ME - Marketing 290 655.20 1.65 3.54
ME - Other 594 2,651.40 6.66 7.25
ME - Other agricultural 427 2,141.00 5.38 5.21
ME - Other Technical/Vocational 162 3,122.10 7.84 1.98
ME - Pig production 154 1,073.60 2.70 1.88
ME - Start up Business 145 398.95 1.00 1.77
8197 39,809.52 100.00 100.00
i. Gobi Initiative Training and Technical Assistance 
Training and Technical Assistance provided to herder clients, Jan-Jul 2005 
Table #1 
General classification of TA 
Number of TA 
provided in 
1st half-year 
of 2005 
UB 
consul
tant 
Local 
consul
tant 
GI 
officer 28
1 Financial management - accounting, record keeping 
and banking 
28 26 2 
2 Tourism operations - guest services, client / customer 
satisfaction 
6 6 
3 Sales and marketing - market identification, pricing, 
product packaging and promotion 
7 4 2 1 
4 General management - budgeting, human resource 
management, legal and tax issues 
 
5 Animal breeding - selection, breed characteristics, 
herd/flock record keeping, artificial insemination 
technology 
4 2 2 
6 Dairy milk processing - types of milk products, 
processing technology, use and maintenance of 
equipment 
13 2 11 
7 Vegetable/crop production - soil preparation, seed 
certification, planting methods, diseases and pests, 
harvesting, storage and processing 
42 1 41 
8 Felt making technology 6 6 
9 Fodder/forage production - soil preparation, selection 
of suitable crops, diseases and pests, harvesting, 
processing, storage (hay/silage) 
18 1 17 
 
28 Includes trainings/consultancies conducted by our program officers. 
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10 Cooperative development - management, structure, 
leadership, operations, marketing, record keeping and 
reporting, and regulatory compliance 
54 1 39 14 
11 Business start-up training - basic financial 
management, market research, sales methods, staff 
management, legal and tax issues 
12 4 10 2 
12 Veterinary training (weeklong course in UB) - 
modern pharmaceuticals, equine medicine and 
surgery, parasite control, zoonotic diseases, animal 
food hygiene and health (VET Net) 
7 5 2 
13 Specialized technical assistance - compressed fuel 
blocks, well repair, fuel operations, etc 
7 2 5 
14 Bakery/food processing - equipment identification, 
sourcing and maintenance, new product development 
4 4 
15 "Buryat" boot/felt boot making - design, use of new 
materials, stitching, decoration 
3 1 2 
16 Semi-settled livestock production - livestock 
intensification under Gobi conditions, design of 
livestock barns, supplemental feeding, grazing 
rotations for fenced pasture. 
3 2 1 
17 Meat processing technology 1 1 
18 Business plan development 3 3 
19 Camel wool sorting, combing, spinning and knitting 
technology 
1 1 
20 Chicken farming 1 1 
Total 220 29 168 23 
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General classification of TA Number of TA 
provided in 1st half￾year of 2005 
GS GA UG BH DG UH 
1 Financial management - accounting, record 
keeping and banking 
28 1 8 3 16 
2 Tourism operations - guest services, client / 
customer satisfaction 
6 4 2 
3 Sales and marketing - market identification, 
pricing, product packaging and promotion 
7 1 2 3 1 
4 General management - budgeting, human 
resource management, legal and tax issues 
 
5 Animal breeding - selection, breed characteristics, 
herd/flock record keeping, artificial insemination 
technology 
4 4 
6 Dairy milk processing - types of milk products, 
processing technology, use and maintenance of 
equipment 
13 2 4 4 3 
7 Vegetable/crop production - soil preparation, seed 
certification, planting methods, diseases and 
pests, harvesting, storage and processing 
42 1 3 6 20 1 11 
8 Felt making technology 6 2 3 1 
9 Fodder/forage production - soil preparation, 
selection of suitable crops, diseases and pests, 
harvesting, processing, storage (hay/silage) 
18 1 3 9 5 
10 Cooperative development - management, 
structure, leadership, operations, marketing, 
record keeping and reporting, and regulatory 
compliance 
54 9 7 8 14 9 7 
11 Business start-up training - basic financial 
management, market research, sales methods, 
staff management, legal and tax issues 
12 2 9 1 
12 Veterinary training (weeklong course in UB) - 
modern pharmaceuticals, equine medicine and 
surgery, parasite control, zoonotic diseases, 
animal food hygiene and health (VET Net) 
7 1 1 2 3 
13 Specialized technical assistance - compressed 
fuel blocks, well repair, fuel operations, etc 
7 1 2 1 2 1 
14 Bakery/food processing - equipment 
identification, sourcing and maintenance, new 
product development 
4 3 1 
15 "Buryat" boot/felt boot making - design, use of 
new materials, stitching, decoration 
3 2 1 
16 Semi-settled livestock production - livestock 
intensification under Gobi conditions, design of 
livestock barns, supplemental feeding, grazing 
rotations for fenced pasture. 
3 1 1 1 
17 Meat processing technology 1 1 
18 Business plan development 3 3 
19 Camel wool sorting, combing, spinning and 
knitting technology 
1 1 
20 Chicken farming 1 1 
Total 220 18 40 48 39 24 51 
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XII. Annex V: Inception meeting 
At the inception of the evaluation the team met with Mr. Skip Waskin, Jeffery Goodson, Margaret Herro, Sean 
Subsequent slides contained the following information: 
Team Members:
Jim Carlson, USAID NEP, 15 years development program experience has led 
evaluations in China, Vietnam and Mongolia. 
TSETSEN Dashtseren, MARBIS Consulting Company, CEO, August 2003 – present, 
recently authored: REPORT ON THE BUSINESS REGISTRATION SYSTEM OF 
MONGOLIA Study on the Regulatory Framework Affecting Mongolian Businesses 
Oyunbileg (Oyuna) USAID Mongolia, Economist, 5-year experience of working with 
USAID 
#1 Gobi Initiative: Effectiveness vs Program objectives 
MCI: Field trip to aimags to interview the herder and non-herder businesses￾questionnaire 
 meeting with local governor’s office and aimag chief livestock and agriculture 
specialists 
How effective is Information Dissemination? Spend ¼ of meeting, interviews on 
assessment of PACT 
CA, AR, AWP, Quarterly reports, and USAID Monthly Monitor 
#2 GER Initiative: effectiveness vs program objectives 
Visit operating branches in UB (6) 
Meet with clients 
Meet with local bagh governor’s office representatives 
Meet with Savings, Xac, and other banks 
Field trip to Darkhan and Erdenet 
Meet with local trainers, clients and bagh governor’s 
Inception Meeting 
of In-Progress Evaluation
July 19, 2005
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#3 Effectiveness of GI and GER in light of USAID program and current political 
realities 
Meeting with MP Zandanshatar,Bakei and Narantsatsralt 
Meeting with VetNet, Mongolian Cooperatives Union, and Ag Universities 
Meeting with USAID 
#4 Appropriateness of Business development services models 
Identify what are the key business development services models adopted by the Gobi 
and Ger Initiatives; 
Identify what are the main services currently being provided by the two programs; 
Analyze the social and economic context; 
Undertake comparative analysis based on the preliminarily chosen criteria for so called 
effective business results; 
Conduct interviews with potential benefiting groups; 
#5 Transition from Gobi Phase I to Phase II 
Identify the goals of transition and its rational 
Conduct performance analysis based on the following criteria (whether Phase II focuses 
on the following): 
The expansion and diversification of herder led business opportunities; 
Non-herder business development assistance is appropriate; 
Interview selected target groups; 
Compare the results of interviews with the results of performance evaluation. 
#6 Effectiveness of expansion 
Conduct interviews with local government with purpose to reveal their expectations 
from the activities of the Gobi and Ger Initiatives; 
Undertake external scanning to identify what are the social and economic context of the 
region and key factors affecting the economic and social development of the particular 
region; 
Identify the role of the local government; 
Undertake comparative analysis based on the results of findings interviews and external 
scanning. 
#7 Effectiveness of collaborative efforts 
Conduct interviews with selected representatives of 
–other donor agencies (possibly all donor agencies providing similar services or 
undertaking similar activities); 
–non-governmental organizations (at least with 3 or 5 NGOs); 
–private organizations (preferably consisted of micro, small, and medium sized 
enterprises); 
–Representatives of local and national government (on a selective basis); 
Interviews will be designed to reveal the common understanding existing among the 
aforementioned organization regarding the activities of the Gobi and Ger Initiatives; 
 Evaluation of the Gobi and GER Initiatives August 2005
Page 95 of 97 
Responding to Question #8 
#8 Assess Sustainability of business entities, the capacity of local trainers and others, 
the willingness and capacity of private sector and government to carry out same 
activities by: 
–Reviewing data collected by program offices. 
–Semi-structured interviews of randomly selected business. 
–Sustainability ranking in two sites. 
–Semi-structured interviews of private and government entities. 
Responding to Question #9 
#9 Assess how much bank lending is likely to endure after the end of the projects and 
propose realistic ways to strengthen relations between project clients and the banks that 
lend to them by: 
–Reviewing data collected by program offices. 
–Semi-structured interviews of randomly selected business. 
–Semi-structured interviews of bank officials. 
–Through interviews, identify project and non-project champions, failures, and positive 
deviants. 
–Review other lending support programs to identify successful Mongolian models. 
Responding to Question #10 
#10 Determine what will happen to the financial liability of MCI and CHF, if any, on 
bank loans that are still outstanding at the end of the respective projects by: 
–Semi-structured interviews of selected business. 
–Review data on businesses and their sectors’ growth. 
–Review bank portfolios.
XIII. Annex VI: Bibliography 
USAID/Mongolia Strategic Plan, 2004-2008 
GER Initiative Reports 
GER (Growing Entrepreneurship Rapidly) Initiative Work plans submitted to USAID 
 
Ulaanbaatar Rapid Needs Assessment 
Erdenet Rapid Needs Assessment 
Darkhan Rapid Needs Assessment 
Choibalsan Rapid Needs Assessment 
GER Initiative Quarterly Reports Q2 2004 - Q2 2005 
 Evaluation of the Gobi and GER Initiatives August 2005
Page 96 of 97 
Gobi Initiative Reports 
Cooperative Agreement #442-A-00-99-00016-00 Final Report submitted to USAID 
Gobi Initiative Phase II Year One Quarterly Reports 
Gobi Initiative Phase II Year Two First Quarter Report 
Other references 
UNDP Sub Sector Review of Micro finance in Mongolia 
SOROS Foundation Harmonization of Activities in Small and Medium Business 
Development and Micro-Finance 
NSO, World Bank, UNDP Main Report of “Household Income and Expenditure 
Survey/living Standards Measurement Survey”, 2002-2003 
Government of Mongolia-UNDP. Human Development Report, Mongolia, 2004. 
September 2003. 
Tsetsen Dashtseren, Report on the Business Registration System of Mongolia: Study on 
the Regulatory Framework Affecting Mongolian Businesses. January, 2005. 
April 20,2006 
Leon S. Waskin 
USA1 D Representative 
USAlD Mongolia 
Dear Mr. Waskin, 
CHF International appreciates USAID-Mongolia extending us the opportunity to formally respond to the 
'Evaluation of the GER and Gobi Initiatives' conducted in July and August 2005, The evaluation was performed 
three years after program implementation and more than one year after CHF commissioned its own mid-term 
evaluation. By August 2005, the GER Initiative had matured to the point where an evaluation of its core activities 
- strengthening microenterprises and increasing employment - was not only warranted, but welcomed by CHF. 
Accordingly, CHF provided the evaluating team with open access to staff, partners, clients, and data as well as 
detailed written feedback on the draft evaluation (please see Atlachment A). 
We awaited the final results so that they could inform our planning process for the extension of the GER Initiative. 
However, while the evaluators make several points in the report with which we agree, we have identified 
methodological issues, factual errors, and data that would benefit from a clearer context. We hope that our 
response will assist USAlDIMongolia in appropriately applying the evaluation to the future course of the GER 
lnitiative and other USAlD activities to develop economic opportunities in Mongolia, 
CHF similarly appreciates the opportunity to formally respond to the final evaluation. Our response below is 
organized to first highlight the methodological issues which we have identified and then provide section by section 
darifications, responses, and supporting evidence. 
Methodological lssues 
The assessment team faced a considerable challenge in evaluating two large USAID programs, each 
implementing a wide range of interventions in locations throughou the country within just four weeks. Their broad 
scope of work encompassed assessing the effectiveness of core program activities, work with Tocal government, 
collaboration with other donor, non-governmental, and private sector entities, as well as of the future sustainability 
of GER supported enterprises, services, and bank lending, CHF understands that the evaluation methodology 
was not scientfic, yet utilized available resources, combining quantitative data from project reports and databases 
with qualitative information from interviews of program stakeholders. Certain methodological issues, however, do 
affect whether or not statements contained in the evaluation can be substantiated. 
First, the evaluation does not provide a list of consistent questions posed to clients and other interviewees. In the 
absence ofthis information, it is difficult to discern whether statements made and conclusions drawn in the 
evaluation stem from repeated responses to consistently conducted interviews or from the incidental observations 
andlor opinions of the evaluators. For example, in recommending that the GER lnitiative promote safety and 
clean production, the evaluator provides only one example, that of a GER lnitiative bookkeeping services client 
who was regrettably injured through a workplace accident. The evaluation does not state whether workplace 
safety was systematically considered in all 39 client visits. 
Second, the evaluation team relied upon a very small sample of GER lnitiative clients. On July 31, 2005, just 
before the evaluation, the GER lnitiative had 20,422 clients, of wfiich 8,690 were micmenterpreneurs and 9,108 
were seeking employment training and matching services, The evaluation team was only able to interview a total 
of 39 GER lnitiative clients and business groups. This sample size represents less than -2% of GER fnitiative 
clients. In addition, given the wide differences ktween microentrepreneurs and those participating in 
employment services, CHF feels a larger sample, divided into sub-samples, was warranted. 
Specific Responses fo Findings 
The Team's Findings on the GER Initiafive: Page 6 of the evaluation states the GER lnitiative has been 
supporting many trader businesses with little estimated promise for business growth. This theme is further 
mentioned on page 40 under the section entitled 'How sustainable are the businesses supported?' CHF 
understands that traders in Mongolia operate on low margins and do little to add value to the economy or 
generate employment. Regardless, support to these microentrepreneurs is important and valuable because the 
majority of the GER lnitiative target population will fit into the trader category at some point during their lives. 
According to 2003 data from the Ministry of Trade and Industry, over 80% of registered private businesses are 
microenterprises and 42% of all private businesses conduct trade as a primary activity and 51 % as a secondary 
activity. Informal businesses which lack investment capital or collateral far loans are even more likely to be 
engaged in trade. In addition, most businesses in Mongolia are h'rghly seasonal and many business owners 
operate two or three blrsinesses during the year, making it difficult lo draw lines to separate traders from setvice 
providers and manufacturers. 
Page 7 of the same section terms the GER Initiative's inroads in changing commercial bank practices as 'slow.' 
According to client loan data gathered by CHF, from 2003, when the project began working with banks, through 
2005, fixed asset loans have gone from 9.2% in 2003 to 24% in 2005, interest rates have dropped from 3.29% to 
2.78% on average, and loan terns have been extended from 6.36 months to 10.07 months. 
Also on page 7, the evaluators conclude that the GER lnitiative could do wotk on providing incentive-based 
training to banking staff and on financial management to clients. While the GER lnitiative does not formally train 
partner bank loan officers, it does work hand in hand with them during the process of loan facilitation and in 
implementation of the syndicated lending product, the Capital Augmentation Fund, This process exposes bank 
staff to cash flow projections and analysis as well as to the characteristics of Ger Area businesses. The program 
also provjdes significant bookkeeping and financial management training to entrepreneurs. 
Sibling Rivalry: While this section on page 19 of the evaluation focuses on Khaan and Xac Banks rather than on 
the GER Initiative itself, CHF reiterates, as originally voiced in our response to the draft evaluation, that the GER 
lnitiative assists clients in choosing the most appropriate loan product and successfully applying to the bank 
which most closely fits the client's need and ability to access credit. 
Appropriateness of Services - Loan Facilifetion: Page 33 of the evaluation states that of 885 outstanding bank 
loans to GER Initiative clients, 49 were in troubfe and five in default. At the current time, of 3231 loans facilitated, 
six have defaulted, As of December 31, 2005, the default rate on GER Initiative-facilitated loans was 1.3% in 
Ulaanbaatar and 0,7% in the secondary cities. Thls contrasts with an overall default rate of 8.3% in Ulaanbaatar 
and 1.4% in the rest of the country and provides evidence for the value added provided by the loan facilitation 
services, particularly in U faanbaatar. 
Appropriafeness of Services - Business Training: This section, on pages 35-36, could have benefited from 
greater detail and supporting evidence in three arenas, First, CHF questions how the evaluators came to the 
concEusion that the increasing popularity of GER Initiative trainings may be partially due to the perception that 
trainings by foreign organizations are of higher quality. In fact, the previous section on business consulting 
showed tha! GER lnitiative clients were willing to pay even higher fees to the program rather than obtain free 
sewices from other providers. In addition, GER lnitiative training partidpants frequently come back and pay fees 
to participate in other trainings. This more naturally leads to the conclusion that client demand and loyalty is 
based on demonstrated benefits rather than perception. 
Second, the evaluators state that the GER Initiative should seek effective collaboration with local employment 
offices. The program does collaborate with the local employment offices, helping clients access training vouchers 
for those Employment Office-supported trainings which are of good quality and targeted to vocations with real 
market demand. At the time of the evaluation, clients had accessed 200 trainings funded by vouchers worth a 
total of $81 71. In February 2006, the employment office tor the W laanbaatar Bayangol District recognized the 
lnitiative as the District's second best employment generator. 
Third, the evaluators correctly indicate that the GER lnitiative does not do training-specific follow-up and also 
accurately state that significant investment in such follow-up is not necessary given that many training clients also 
access other services for which follow-up monitoring is conducted. Specifically, the GER lnitiative methodology 
emphasizes client participation in more than one service. Of the 594 businesses improved through August 2005, 
97% had received more than one service, making it difficuh to directly attribute improvements to any single 
service. The GER lnitiative monitors all business and employment clients after six months and thereby caplures 
most training participants in client-specific, rather than training-specific, follow-up, 
Appropriafeness of Services - Business Groups / Associafions Development: This section could have also 
benefited from examples to support the evaluation team's conclusion that the outcomes of the GER Initiative's 
relatively new business groupslassociation development activities (introduced in July 2004) are unclear. The 
examples cited show positive outcomes including increased scale of production and 'soft' outcomes such as an 
increased sense of affiliation and confidence. These examples match what the GER lnitiative has seen in action. 
Appmprfateness of Services - Business Enformation and Linkages: The GER Initiative would like to correct the 
statement that the program's trade fairs are often conducted with the Chamber of Commerce. Of 13 trade fairs 
organized, sponsored, or co-sponsored by the GER Initiative, two were in conjunction with the Chamber of 
Commerce while a local artisan NGO parlnered on a crafts fair in Ulaanbaatar and the Agricultural Extension and 
Agriculture Departments of the Government of Mongolia partnered on the program's agriculture fairs. Further, in 
response to the example of a client who paid a fee to participate in a fair but made no sales, it is GER lnitiative 
policy to charge all clients for trade fair participation. Such a policy not only enhances sustainability but also 
encourages clients to more thoroughly assess and leverage the benefits of trade fair participation. GER lnitiative 
clients participating in the 13 trade fairs held by the time of the evaluation generated $42,842 in sales as a result 
of participation. 
Appropriateness of Services - Employment Mafching: 
These types of services are much more complicated than the evaluator documents. We feel the evaluator didn't 
understand our services or the Mongolian context of employment. 
1. The employment sunrey referred to in the document between June 2004 and July 31,2005 was not meant 
to detail our six month placement retention rates. The 11 % retention rate refered to in the document was 
erroneous as the number included those clients who had been ptaoed in their jobs within the previous six 
months (Feb - July, 2005) and were therefore could not possibly have stayed in the job for six months. 
Also, we began tracking 6 months placements in January 2005 after a USAID programmatic review in late 
2004. Therefore all clients placed in temporary and seasonal work txfore January 2005 -work that lasts 
for less than six months - were not identifed and could not be removed from the calculation. 
2. It is inappropiale ta compare us to the Employment office's numbers when they work with the entire 
populat~on, Generally they choose to place people in jobs from the downtown or apartment areas who are 
easier to place in jobs because they have a better education (86% of all high school drop outs are from the 
Ger Areas from the 2004 urban poverty and in-migration survey report done by the UNDP and GoM) and 
are more likely to be on a career track. Also, the Employment offices don't monitor their clients so it is 
interesting that they commented on their retention rates at all. GER reports our numbers and retention 
rates to them. 
3. Since Janualry 2005 GER has not used newspaper advertisements to find jobs for clients as stated in the 
lewd. We have made several changes to our services over the 2,5 years that are improving retention 
rates including: 
a. increasing training of potential employees. In 2003 we did not train any of our employment clients 
before placing them in jobs in 2005 we trained 46 %. 
b. developing strong relationships with ugoodkemployers. In 2003 we had 8 relationships with 
employers (no formal; contracts eslablishd) by 2005 we now have 50 relationships (10 formal 
contracts established). These relationships have also helped lower the number of temporary and 
seasonal jobs our clients take. 
c. training for larger employers on why and how to treat employees fairly. In 2005 we began training 
our employer partners in Human Resouces Management and 59 employers participated, 
These changes have increased our retention rates. For last quaher, our retention rates of 316 clients 
matched to jobs was 66% monthly (from FY 06 Q 1) and 37% for six months placements (523 clients 
from FY 05 Q4. These numbers allow for temporary less than one placements (8% of all placements for 
FY 06 Q1) and seasonal less than six month placements (1 8% of all placement for FY 05 Q4). 
How Susfainable are the Businesses Suppoxted?: Page 39 of the evaluation states: 'In no case did the evaluation 
team on its own identify a failing or in-trouble business, although these do exist by the project's own admitted 
small lean default rate. Surely this is at least in part due to the fact that the GER Initiative's interventions are 
relatively new. After another year or so, it is highly possible that more businesses will eventually fail.' CHF agrees 
that, just as enterprises around the world fail, so will some of those participating in the GER Initiative. However, 
we question the appropriateness and helpfulness of the evaluation team's conjecture as to lhe reasons they were 
not able to identify a failing business. We would have welcomed specific findings and recommendations to 
increase the sustainability of the businesses we support. 
Working with Others: CHF believes that Section vi entitled 'Working with Others' on page 43 and the related 
conclusion an page 45 of the evaluation inaccurately portray the GER Initiative's extensive collaboration with 
other organizations and institutions serving Ger Area residents. A detailed chart of GER lnitiative collaboration 
with Mongolian government organizations, private sector companies, international and Tocal non-governmental 
organizations, and other donor programs was unfortunately omitted from the final evaluation document. This chart 
is provided here as Attachment 0. While we appreciate the evaluation team's recognition that the lnitiative is 
working well with local governments, we would have welcomed further recommendations on the 'mm for 
improvement' found by the evaluators. We would also have appreciated specific examples that led the evaluation 
team to determine that collaboration with other donor programs and nongovernmental agencies 'has progressed 
unevenly and with mixed results'. Despite not having formal col!aboration agreements with other donor programs, 
the GER lnitiative regularly exchanges information, shares lessons learned, opens GER Initiative training 
opportunities to outside participation, and encourages GER lnitiative client participation in external training 
ap~ortunities. 
GER Projec? Management end Siaff Capacify: The evaluators state that difficulies in manipulating the CHF￾developed Project Reporting System prevented them from performing planned statistical analysis they had 
planned on GER lnitiative client data, At the time of the evaluation, the Project Reporting System had only 
recently been completely customized to include the data fields and reports generation capabilities most relevant 
to GER lnitiative staff and client management and monitoring of results. CHF staff were still in the process of 
inputting data on thousands of clients. CHF apprecidtes that the evaluation team found a formula error within the 
data management system; this error has since been corrected. The PRS now contains data on 28,000 clients. 
The evaluation team also notes that, while they dld not carry out a capacity needs assessment of GER lnitiative 
staff, they did notice areas where staff could learn more. The supporting example is the request of two program 
employees for the evaluation team to explain the formula for calculating internal rates of return, a measure which 
is currently not used by the program. To place this in context, after phased expansion, the GER Initiative employs 
more than 125 people, 55% of whom are women and 33% of whom are residents of the Ger areas. While staff 
coming from Ger Areas may have less business skills, CHF has found that their level of motivation and 
understanding of the program's clients more than compensates. CHF projwt management has emphasized staff 
development throughout the life of the program and has also aligned job responsibilities with the amount of time 
employees have been with the program. 
Conclusion 
CHF once again thanks VSAlDiMongolia for its support of the GER lnitiative since 2002 and its interest in 
learning from the program's results. We look forward to continuing our cooperation in developing the economic 
opportunities of the residents of peri-urban Mongolia. 
~argarkt Werro 
CHF International 
CC: Jeff Goodson 
Scott Yetter 
Attachment A 
August 16, 2005 
To: Jim Carlson, USAID Evaluator of the GER Initiative 
Cc: Jeff Goodson, Deputy Director USAID Mongolia 
Skip Waskin, USAID Representative Mongolia 
Scott Yetter, Regional Director, CHF International 
Margaret Herro, Country Director, CHF International / GER Initiative 
Kelli Mullen, Program Officer CHF International 
From: Neil McCullagh, Deputy Director, CHF International / GER Initiative 
Re: Draft Evaluation Comments 
CHF welcomes the opportunity to comment on the August 15th draft of the evaluation of the Growing 
Entrepreneurship Rapidly Initiative (GER Initiative) in order to inform its final form. CHF recognizes 
the challenge that the evaluation team faced in evaluating two large programs operating in distant 
locations within a month’s timespan. Our comments and suggestions below are made with the 
understanding that the August 15th document is a draft which will be further refined and finalized. 
Given this understanding and the limited time available to respond to the draft, we have prioritized our 
comments to focus on facilitating the clear communication of GER Initiative’s scope, activities, and 
impact. Some of the areas that CHF notes below as currently unclear to the reader may simply be of 
need of editing to make the statements clear. CHF’s actual position on those statements will depend 
on how the statements are edited. Therefore, CHF respectfully requests the opportunity to review and 
officially respond to the final draft of the evaluation. 
We have organized this response to first provide general comments and clarifications that pertain to 
the document as a whole and second to provide section-specific comments and clarifications. In 
addition to the responses and information provided here, CHF offers its assistance through the 
provision or review of text which could be added to the evaluation document in order to provide a 
more detailed introduction the GER Initiative. 
We welcome any concrete, detailed recommendations for improvement of GER Initiative 
implementation, extension, and sustainability that the evaluation team can provide. 
 
General Comments: 
1. CHF requests that the document be edited to correctly refer to the name and abbreviation of the 
program – the Growing Enterpreneurship Rapidly Initiative (GER Initiative). CHF has branded the 
program as such, with the logo seen on this letterhead, as well as acknowledgements of USAID and 
USDA funding, appearing on all program outreach materials. 
2. CHF also requests that the evaluation refer to CHF International, the appropriate acronym for the 
Cooperative Housing Foundation, which is our name of legal registration. Community-Habitat￾Finance is a motto which we use to quickly summarize the major areas in which CHF works. 
3. CHF believes that a more detailed introduction to the GER Initiative is needed if the 
evaluation will be available to external audiences unfamiliar with the broad reach and depth 
of services of the GER Initiative. We can either provide this introduction to the evaluation 
team or review an introduction written by the team. Within this introduction, CHF would like 
to see: 
• A description of the scale of the program which speaks to the ability of the GER 
Initiative to respond to a large number of clients (we have offered training or 
consulting services to over 9000 clients in the last two years) located in four cities and 
served by branch offices in the vicinity of their homes and/or businesses; 
• A description of the specific services evaluated in this document; 
 
Section-specific Comments: 
Executive Summary – given that the Executive Summary is typically finalized after all other 
sections, CHF provides the comments below in relation to both the draft Executive Summary and to 
the other sections from which the summary is drawn. 
1) We are pleased to note the positive findings of the evaluation team concerning the satisfaction of 
GER Initiative clients and the usefulness of offered services. CHF hopes that the evaluation team 
will include mention of these positive findings in the final Executive Summary. 
2) The Executive Summary states that the “GER could further develop ways to influence local 
government.” Later in the document, the evaluation team notes that the GER Initiative has 
developed, and submitted to the USAID/Mongolia Mission, a concept paper related to local 
government encouragement of private sector development. CHF requests that this second 
statement be also referenced in the Executive Summary, which currently provides the impression 
that local government is outside the interest of the GER Initiative. 
3) The Executive Summary currently states that “at present, local trainers and other local people will 
not likely continue their activities after the project.” It is not clear what is meant by or included in 
this statement, therefore, CHF suggests that it be further expanded upon to describe what activities 
are meant and why it is believed they will not continue. While CHF agrees that sustainability of 
business development services is difficult worldwide, we have also found that high-quality local 
trainers and consultants are in demand in Mongolia and will continue to be in demand with or 
without the GER Initiative. 
 
4) The Executive Summary currently states that “GER should not increase its financial support to 
clients and strengthen cash flow lending and other relations between project clients and banks.” 
With the current text and punctuation of this draft sentence, the evaluation team’s meaning is 
unclear. CHF believes that the evaluation team supports the GER Initiative’s ongoing efforts to 
strengthen relationships between clients and commercial banks and to encourage banks to move 
towards cash flow lending by demonstrating the credit worthiness of GER Initiative clients. If that 
is the case, then we suggest that the sentence be edited to make this more clear. 
5) The Executive Summary states that “collaborative efforts by the GER Initiative with other donor 
agencies and non-governmental organizations have progressed unevenly and with mixed results.” 
While CHF is unclear under what standards of measurement this statement should be interpreted, 
we do believe that the GER Initiative has a good track record in this regard. For example, the 
GER Initiative has supported the initiation of new donor programs through the provision of 
information, advice, and referrals. Some of these programs include UNDP’s Unleashing 
Entrepreneurship, the Nordic Fund / GOM Incubator Project, ADRA’s Microfinance Project, and 
GTZ’s Training Centers. Additional information can be provided upon request. 
6) The Executive Summary states that “only financial institutions are showing some willingness and 
capacity to facilitate or carry out these same activities. Government-related agencies have 
questionable capacity and willingness.” CHF believes this statement is currently inaccurate, 
despite the explanations later provided by the evaluation team. Specifically, we would like to 
point out that: 
• Banks are interested in Loan Facilitation as well as Training and Consulting and 
information services because all of these services contribute to the development of a more 
educated business-savvy customer base. 
• Employment Services – independent service providers have appeared and are offering 
GER-like employment matching services for a fee. 
• Employment Services – The employment department is interested in the ongoing 
relationship with GER Initiative and, depending on the local area, the collaboration is 
often very close, thereby building the capacity of the local employment department to 
directly offer the service. 
7) The funding streams for the GER Initiative are inaccurately represented, the following is a 
summary that should correct the inaccuracies: 
8) Under the “Additional Comments” the statement that “Development of staff and partners to better 
understand BDS could increase” should be further qualified and if necessary split into two 
comments. 
Introduction: 
9) In the third paragraph of the introduction, the reference to linkages to “foreign” and domestic 
buyers currently could give the impression that the GER Initiative is focusing efforts on export 
promotion. Given the client base of the GER Initiative, an export focus is not practical at this time, 
though occasional linkages have been made. The current focus is on creating linkages in 
Mongolia. 
Section B More competition or Mud slinging: 
10) CHF believes that the attention paid to the relationship between Khan and XAC Banks is 
excessive and immaterial to this evaluation. Furthermore, we disagree with the assertion that the 
GER Initiative has allied itself with Khan Bank, to the detriment of XAC Bank. We request that 
the evaluators focus on describing the ability of the GER Initiative to assist clients in choosing the 
most appropriate loan product and successfully apply to the bank which most closely fits the 
client’s need and ability to access credit. Further information on the GER Initiative’s bank 
partnerships and loans facilitated per bank is available upon request. 
Section C – Part 2 – GER: 
11) Support to Enterprises and Economic Development (SEED) was the predecessor to GER 
Initiative. The evaluation currently incorrectly refers to the SEE program. 
 
12) The introduction to the GER Initiative here should be expanded in order to provide the reader with 
the background knowledge to place the evaluator’s findings and recommendations in context. 
Particularly, a description of the scale of the program and of the services evaluated would be 
helpful. 
For example, the section on results includes a subsection on the sustainability of GER Initiative￾facilitated loans that would be more clear if an enhanced descriptionof the USDA-funded Capital 
Augmentation Fund was either provided here in the introduction or within the section commenting on 
the CAF. The CAF can be described as: 
Funding Source 2002 2003 2004 2005 2006 
USAID (August) 
$2 million USD 
 
USDA (Wheat Funds) (June) 
$ 2 Million 
USD 
(June) 
$699 Thousand 
 (March) 
$1.55 Million 
USD 
 
The Capital Augmentation Fund (CAF) is a syndicated lending program that is run by the GER 
Initiative. The fund is used only to assist those successful businesses that have sufficient cash flow to 
support increased borrowing, but do not have the collateral requirements that are needed under the 
existing bank requirements. The fund lends only through banks and has multiple purposes: 1) to assist 
businesses to grow by increasing their available credit from existing banking institutions and 2) to 
encourage banking institutions to do some lending that is not 100% dependent on collateral. 
13) Paragraph three of this section states that “the key characteristics of GERI makes it difficult to 
give a complete detailed description of all that it is doing to promote business activities in the Ger 
Areas.” CHF is pleased that the evaluators recognized and appreciated the multi-faceted, 
integrated approach of the GER Initiative. However, as currently written, the above sentence is 
unclear and open to varying interpretations. We suggest as one possible re-write: 
“The GER Initiative offers a core set of services, listed above, however in addition to these services, 
the GER Initiative offers a wide variety of other services including providing Khaashaa valuation in 
all the Ger Areas in UB, tax and legal support, Community days to introduce Ger Area residents to 
commerce in their own neighborhood, etc. Because the GER Initiative services are 100% demand 
driven, the program is constantly responding to client needs with results focused solutions.” 
14) The paragraph describing the staffing and office locations of the GER Initiative refers to service 
provision by business advisors and outreach workers. The official titles of these staff are Business 
Advisors and Resource Advisors. 
15) The last paragraph of this section describes the external mid-term evaluation of the GER Initiative 
commissioned by CHF. We believe the current characterization of CHF’s response to and 
acceptance of the evaluator’s recommendations is generally accurate, with one exception. The 
GER Initiative does collect demographic information on clients, which is stored in our online 
reporting system. The GER Initiative also collects information on businesses that improve over 
time as an essential part of the reporting for the program. The evaluator’s recommendation was 
not accepted in full due to the scope and duration of the monitoring recommended. 
Section 4 - Business Development Services of Others 
16) The evaluation references that XAC Bank has “set up its own GER Initiative in four branches in 
UB and one in Erdenet.” While CHF is aware that XAC has opened branches in the Ger Areas, 
we are unaware of any services being offered other than regular bank services. 
Section III. Findings on the GER Initiative - Results 
17) This discussion and accompanying chart on fees collected by the GER Initiative for services 
provided needs further clarification regarding the distinction between service fees and bank 
interest fees. The chart currently in the draft evaluation shows only service fees and incorrectly 
labels the “Other” category as Bank Fees when they in fact include fees for Books Purchased, 
Employment Registration, Employment matching, Information Services. A corrected chart 
including bank interest fees for the same time period is provided below. 
Service Income /April-June 2005/ 
 UB Darkhan Erdenet Choibalsan Total 
1 Training 458,800 152,550 213,100 132,965 957,415 
2 Consulting 560,300 322,900 315,600 75,950 1,274,750 
3 Other 782,300 199,900 489,400 135,000 1,606,600 
4 
10% facilitation 
income 3,168,279 252,103 639,402 131,800 4,191,584 
 Total 4,969,679 927,453 1,657,502 475,715 8,030,349 
GER Initiative Results -Services -Business – Business Training 
18) The evaluation currently speculates that the GER Initaitive’s vocational trainings are probably 
more successful compared to basic skills training given the high need for improved technical skills 
in Ger Areas. CHF would like to caution that vocational training and basic skills training not be 
compared so easily as they serve very different objectives. We do agree with the evaluators that 
vocational trainings have been successful. 
19) CHF is pleased that the evaluators have noted the growing popularity of, and the value placed on, 
GER Initiative trainings. One additional reason for this, as brought out in CHF’s monitoring, is 
the simplicity of the training. Trainings focus on providing the most needed information, in the 
practical manner noted in the evaluation. 
20) The evaluation states that training clients are not monitored by the GER Initiative as agreed upon 
after the mid-term evaluation. CHF is able to provide further information regarding this statement 
upon request. The GER Initiative does monitor training clients, although improvements are 
possible. 
21) The evaluators recommend collaboration with the Employment Office’s voucher program to 
enhance sustainability of GER Initiative trainings. The program does currently collaborate with 
the employment office to use vouchers or the Employment Fund. Due to the high demand for 
construction workers in Mongolia, voucher resources have been redirected towards vouchers for 
construction training. The GER Initiative recently identified 15 clients for construction training. 
GER Initiative Results – Services – Employment Matching 
22) CHF disagrees with the evaluator’s opinion that most of the job seekers served by the GER 
Initiative are seeking only seasonal employment. The single most common comment that we hear 
from our employment matching clients is that they are seeking consistent long term work with a 
good employer. The job market does require a great deal of short term workers. In the case of 
many businesses, including construction, this short term work is an intense income generating 
period for workers and thus one of the best available income generating opportunities for GER 
Initiative clients disinclined to be entrepreneurs. 
23) CHF would like to highlight for the evaluator’s consideration some of the additional benefits of 
the employment matching service that are not visible in the draft evaluation. In relation to impact 
on individual employment seekers, the service builds increased confidence and increased 
knowledge of worker’s rights and responsibilities. The service also has a positive influence on 
working conditions by working closely with large employers to be more responsible. 
GER Initiative Results – Services – Business Groups and Association Development 
24) CHF is excited by the results of the GER Initiative’s work with business groups over the past year 
and is pleased that the evaluators recognized the increased confidence and trust among business 
group participants as compared to the general population in the Ger Areas. CHF believes this 
success is directly related to our deliberate choice to focus primarily on collaborative economic 
activities with the formation of formal entities as secondary. 
GER Initiative Results – Intermediate Outcomes 
25) The last short paragraph of this section states that “GER should continue to push for improved and 
innovative – for the Mongolian context – practices of its clients, e.g. help them understand safety 
and environmental protection practices.” CHF requests that this statement be further elaborated to 
show what the evaluators believe to be appropriate for the size and sophistication of GER 
Initiative client businesses. 
Potential Legacies 
26) As stated above, CHF does not believe that “Local trainers and consultants will likely not continue 
their activities after the project” is an accurate portrayal of the market for trainers or consultants. 
The GER Initiative works with a number of training partners that have thriving businesses. 
Similarly, we regularly face the challenge of not being able to hire the consultants that we would 
like to use because they are busy in private engagements to other projects as well as private 
business. As CHF works with USAID and USDA on the future activities of the GER Initiative, we 
will be looking closely at the ability of Business Advisors to continue as independent consultants 
after the GER Initiative. 
How sustainable are GER Facilitated Loans? 
27) The second paragraph’s mention of the 10% fee paid by banks to the GER Initiative for facilitated 
loans is currently unclear. The service fee is 10% of loan interest fees, not 10% of the overall 
loan. 
28) This section references the Capital Augmentation Fund as CAF before it has been properly 
introduced. One suggested introduction is included above in this response. CHF requests that, at 
the least, the evaluators state that the CAF is funded by USDA. 
29) The Capital Augmentation Fund (CAF) is actually syndicated lending product rather than a loan 
guarantee. 
GER Program Management and Staff Capacity 
30) The correct name of CHF’s monitoring system is the Project Reporting System (PRS). The 
evaluation incorrectly refers to it as PSR. 
Conclusions and Recommendations 
31) As stated above, CHF welcomes concrete, detailed recommendations for program improvement 
and extension along with any supporting examples that can provide further understanding of the 
recommendations. The current text related to the GER Initiative refers to the coverage of the 
program in the GER Areas. Given the high number of people that we have worked with, we 
request that the need to expand coverage be clarified. 
CHF hopes that the comments and clarifications provided here will be of assistance to the evaluation 
team in finalizing the evaluation. We look forward to the opportunity to review and respond to the 
final version. 
Attachment B 
PARTNER LIST 
NGOs & Projects 
The name of organization How we work Contact person 
Mongolian Women’s Farmer 
Association Support to their chicken farmer trainings Byatskhandai, First Lady 
MONEF Job advertisements in the Ger Area. Ganbaatar, Country 
Director 
Eh San We jointly coordinate artisan trade fairs Ts.Oyun, Chairperson 
Mongolian Chamber of Commerce 
and Industry Clients participate in their trade fair Nergvi 
Legal School of National University 
of Mongolia Legal students provide legal advice in our offices Tuya, Training Center 
Director 
Mongolian Cook Association Jointly organized bakery training Otgonbat, Director 
World Bank Stove Project Assessed their product's marketability and 
participated in their workshop. 
Oyuntsetseg, Program 
Manager 
JFPR/Expanding employment 
opportunities for Disabled People 
Linked ger area disabled people to their project and 
provided training to their clients. Otgontsetseg, Manager 
V.E.T. NET Supply training and accounting books to their 
veternarian clients. 
Richard L Ballenger, 
Business Manager 
ILO- informal economy, Powerty 
and Employment Project 
We participated in their SIYB, another training and 
an artisan consultant training. They used our 
clients for their trainings. 
Shuren, Project Manager 
UNDP - Super Insulated housing 
project 
Information Exchange, Publish articles about their 
project in newsletter 
Myagmar, Project 
Manager 
Industrial Survey & Land 
Registration Project Provided us maps in our offices for khashaa survey Erdenemunkh, Project 
Manager 
Eviin hvch NGO implementing 
Japanese 
Jointly organized Trade Fair Provided bookkeeping 
training and books to their clients Nyambuu 
Norwegian Lutheran Mission Contributed to our Agri Trade Fair, exchange 
information Altantuya, Manager 
Extention Centre Agriculture TACIS 
Project 
Information exchange and hire their agribusiness 
teachers Delger, Coordinator 
Accion Contra La Faim Train their clients in savings and consumption Victor Kiaya, Coordinator 
UNICEF - Songino Kharkhain 
Womens Project Train their clients in business concepts, startups Project Manager 
Financial Institutions 
The name of organization How we work Contact person and 
Position 
Savings Bank Nasanbuyan, Lending 
Officer 
KHAN Bank Niel Isbrantsen, Director 
XacBank Soronzonbold, Division 
Director 
Credit Mongol NBFI 
Loan matching and CAF Loan to GER clients 
Support Fairs and other GER activities 
Tsolmon, Exec Director 
 SME and Large Business Employment and Linkages Partners 
The name of organization How we work Contact person 
Mongol Vision LLC Gantsetseg, HR Manager 
Gobi Tushee LLC Erdenetsetseg, Manager 
Erdene Suvarga Enh-Undral, Manager 
Chingeltey district’s Public Service 
LLC 
Amarjargal, Manager 
Bum LLC Mandah, Owner 
Diorva Mongol LLC Nomin, Manager 
Popway LLC Batjargal, HR Manager 
MMB LLC 
Employers - Hire GER clients 
Batbold, Owner 
Talhan tseh Owner 
City Shop LLC Shurentsetseg, HR 
Managar 
"Erel" Company Chuluuntsetseg, HR 
Manager 
Khos Irves Security office Tuya, Trainer 
Avraga Institute Tsevelmaa, HR Manager 
Selenge knitting LLC Taivan, Administrative 
Business Plaza Oyun, Administrator 
Buuz banshnii tseh Boldchimeg, Manager 
Erdenezam LLC Oyun, HRM 
Huchitzam LLC Mandah, Manager 
Baabar LLC Sergelen, Manager 
Housing Service Narantsetseg, Manager 
Mongol Kiayuan LLC Delgermaa, HRM 
Well trade LLC Munguntuya, Manager 
Auto House LLC Davaadorj, Director 
Altay Constuction Munkhzul, HRM 
MMW Company Owner 
Avzaga trade LLC Byambasuren, HRM 
Bridge construction Amgalanbaatar, HRM 
Coco desert LLC Tuul, Owner 
Cronus LLC Altankhundag, Engineer 
UB Deli Orkhonbaatar, Cook 
Everyday supermarket Odbayar, HRM 
Monro Impex LLC Sarsntsetseg, Director 
Mongol Amical LLC Tsevelsuren, HRM 
Zig Zag Group Bayarmaa, Manager 
Nomin Co.Ltd Zolzaya, HRM 
Minii Delguur supermarket network Jargal, Manager 
Shine Delkhii Holding Oyunkhand, Manager 
Noyon buuz Tuvshinbat, Owner 
Happy café Altannavch, Owner 
Shanlun company Ganbat, Translator 
DOZT Baigalmaa, Engineer 
Bishrelt shop Tsengelmaa, Owner 
Eastman Glory Knitting Company Monkhoo 
Batbayalag company Batchimeg, Director 
Erdenet suljee Uurtsaih, Manager 
Erdenet Atar urguu Enk-Amgalan, Director 
Erdenet carpet company Urankhishig, HR Director 
Jaran us Serjmaa, Director 
Khangay Security office Altanbagan, Manager 
Gobi LLC Jargalmaa, Trainer 
BOSA LLC Battogtoh, Trainer 
Good Door LLC 
Employers and Trainers - Train and Hire GER 
clients 
Altansukh, Director 
"Magic Suit" Sewing company Oyungerel, HRM 
Erdenet Michid Sukhbaatar, Director 
Duulga international 
Employers and Linkages Partners - Hire GER 
clients and Provide a linkage Opportunity 
Punsaldulam, Manager 
Atar urguu Company Training Partner Munkhtuya, Technologist 
Erchu LLC Mishigdorj, Director 
AOSS sewing factory 
Linkages Partners - Provide Sales and/or Input 
Linkages to our Clients Suvdaa, Director 
"Bukhug" Co.ltd Surenkhorloo, Manager 
"Bukhug tulga" Co.,Ltd Noot 
"Tse" bar network Byambaa, Director 
DBB Battsengel, Owner 
Flour factory Bolorchuluun, Director 
Khishig supermarket Sunjidmaa, Director 
CIS French restaurant Francois 
NEKHII Sheepskin LLC Zoljargal , Vice director 
Cowboy Meat LLC Enkhbat 
Tsagaan Tavilan Uuganbayar, Director 
Mongol Ger Hujirt Company Odgerel, Director 
Erdenet cashmere Tsedensodnom, Director 
Mining company Baasan, Director 
Power station Employment and Public Works Partner Alimaa, HRM 
"Mass" Co.,Ltd Community day and Linkages Partner Naraa, Director 
Government Organizations 
The name of organization How we work Contact person 
Sukhbaatar, Songino Kharkhin, 
Chingeltei, Khan Uul, Bayanzurkh 
District Employment Offices and 
Employment Offices in Dornod, 
Erdenet and Darkhan 
Signed MOU with the central employment office 
however the relationships in UB are not stable. It 
depends on the people in the EO. In Dornod, we 
organize public works. In Darkhan, we exchange 
information on job positions and unemployed. In 
Erdenet, jointly-held human resource management 
training, to provide vocational training to the GER 
clients , jointly-work on job matching 
unemployment people. 
Mungunchimeg, Training 
Officer and Enhtaivan, 
Employment Officer 
State Supervisory Department Bayarmaa, State 
Inspector 
53 Ger Area khoroo Governors in 
UB 
Annual meetings, information boards, client 
referrals and assistance in khashaa survey data 
collection. 
Tumurbaatar, Horoo 
Governor 
City governor office of Dornod Jointly Organize Trade Fairs Nasandelger, City 
Governor 
Land office of Dornod aimag Jointly organize Land Privatization Work Damdinbazar, Land Office 
8 baghs in Dornod Annual meetings, information boards and client 
referrals. 
Enkhbold, Bagh Governor 
Agriculture and Food Departments 
in Darkhan, Erdenet and 
Choibalsan 
Information exchange, Jointly Organize Trade 
Fairs, Agriculture Trainings 
Delger, Agronomist 
6 baghs in Darkhan Annual meetings, information boards and client 
referrals 
Enkhmongol, Horoo 
Governor 
Soum gov-organization in Erdenet Amarjargal, Deputy 
Governor 
Aimag gov-organization in Erdenet 
 Annual meetings with GER results presentations. 
Jointly organize trade fairs and trainings. 
Sharkhuu and Nansalmaa 
8 baghs in Erdenet Annual meetings with GER results presentations, 
information boards, client referrals and assistance 
in khashaa survey data collection. 
Bah Governors 
Gobi Comments.txt
Subject: FW: PDF version of GER&Gobi Evaluation
-----Original Message-----
From: Sean Granville-Ross [mailto:sean@mercycorps.org.mn] 
Sent: Wednesday, March 22, 2006 4:18 PM
To: Waskin, Leon (Mongolia/OD); Goodson, Jeffrey (Mongolia); Johnston, Cory 
(Mongolia); Mendsaihan, Hasbaatar
Cc: 'Steve Zimmerman'; bayan@mercycorps.org.mn; 'Stevan Buxt'; 'Paul Jeffery'
Subject: FW: PDF version of GER&Gobi Evaluation
Dear Skip, 
Please find below consolidated comments from the Gobi Initiative team.
Regards,
Sean
(1) page 6 - we are not sure that we agree with the statement that "...the current 
likelihood of sustaining cutting-edge BDS services after USAID funding ends remains 
slim". Even the evaluation states (page 59), that "...it is likely that some 
consultants may continue to provide services to GI clients after GI ends". Thus we 
might concur with a diminished possibility of sustaining "cutting-edge BDS services"
but remain confident that the delivery of "effective BDS services" will continue.
(2) page 8 - we are supporting/participating in the pilot livestock insurance scheme
(to the extent that our respective geographies overlap), but the pilot is moving 
very slowly and there are some doubts as to whether or not it will actually be 
functioning by the end of Gobi II.
(3) page 8 - we agree that RBN, when taken as a whole, is a sustainability 
challenge, but we believe that the key components can be sustained in some form or 
another. Specifically, we believe that "Market Watch" will continue as a "public 
service" product, funded by government and/or other institutional donors. We also 
believe that the concept of using adapted entertainment formats to carry important 
business (and social) messages will be institutionalized within Mongolian mass 
media. Although the specific RBN business product may not continue, certainly in 
its current format, the popular use of creative and effective "message delivery" 
content will lead to more such programming in the future. In 2006 we have free 
programming with TV 9 and we are working with their journalists - part and parcel of
the TV programming may become sustainable if it is successful and can be picked up 
by TV 9. As for MNTV / Mongol Radio programming - it remains to see what happens 
with the public broadcaster and if the institution can remain truly independent and 
meet the needs of public broadcasting and educational public awareness in this 
country. 
(4) page 9 - as noted in previous comments on the evaluation, we agree with an 
(eventual) loan guarantee phase-out, but not within the implied timeline. Despite 
what the banks have said that they will do, they still have not significantly 
modified their lending practices to concentrate greater attention on business plans 
and less on borrower collateral. They are taking steps to train their branch 
lending personnel, but our recent evaluation of our loan guarantee mechanism (LGM) 
revealed that there is still a long way to go before the banks can be relied upon to
lend based on the projected viability of the business and a valid character 
assessment of potential borrower "bankability".
(5) page 10 (and pages 63/64) - we disagree with the term "legacy institutions". GI
will leave behind important legacies, including improved rural client/commercial 
bank linkages, more widely available and accessible local BDS services, 
locally-owned annual market events, and, at least in some areas, better local 
(government) support for the private sector and more public/private sector dialogue.
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Gobi Comments.txt
 GI has, however, deliberately stayed away from the concept of a successor 
"institution".
(6) page 18 - "marginalized" is still a good description of Gobi clients, at least 
from an economic point of view. They are disadvantaged but they were also unable to
access financial services, appropriate business and technical training and technical
assistance, and the information (market prices, changes in legislation/ policies, 
national trends, etc) that is essential for any business operation. They are, 
therefore, outside the mainstream of the Mongolian private sector which has, since 
independence, been based almost solely within Ulaanbaatar, Darkhan and Erdenet. 
(7) page 57 says "...more targeted efforts could be made to help local officials 
play a facilitating role for private sector development" There is no suggestions as 
to what these 'targeted efforts' could be. There is also no comment on what has been
delivered to the local government through the GI local government support activities
in years one and two. 
(8) page 59 - as noted in previous comments on the evaluation, we take exception to 
the word "subsidy". Since interest rates set by banks are normally significantly 
influenced by client risk, the availability of cash collateral to secure loans is an
effective way to diminish that risk. Banks operating in a truly competitive 
environment would realize this and compete for these "grade A" clients (cash 
collateral plus a vetted business plan) and set their lending terms accordingly. 
The term "subsidy" would only be applicable in instances in which lending rates were
fixed. This was largely the historical practice in Mongolia (pre-Gobi II), 
particularly in the rural areas, but is not the norm in (well) developing economies.
(9) page 62 - "..the team recommends GI strive even more to give ownership to local 
offices, and more importantly, to clients themselves." The program in year three has
already taken strides to address this recommendation, with all herder business plans
with loans of less than MNT3 million being reviewed and approved by the aimag 
offices. 
(10) page 62 - ".. The team sees a great need for GI now to create, with clients, a 
process whereby clients can initiate, and revise as needed, their own business 
plans, year-by-year." The program officers are currently working hard involving all
the aimag-based staff and existing clients to revise the whole business planning 
process from selection of clients through to the development of business plans to 
approval of the business plans in preparation for the fourth year (2007) of herder 
client selection and business planning. 
(11) page 65 - it would be useful to further highlight the statement "...one reason 
for the poor performance of donor projects in developing BDS is that many have been 
run through the government". We believe that a significant factor contributing to 
the success of GI has been its ability to operate independently of government 
control and interference (i.e. the "Project Implementation Unit" format).
(12) page 66 - we're not sure what is meant by "..lack of quality relevant baseline 
data"?
(13) page 66 - the section on USDA could imply that USDA funds are not being used 
effectively. Although we acknowledge that different USG agencies have different 
procedures when awarding and monitoring grants, we don't apply any lesser standards 
to the design and implementation of our USDA-funded programs. In fact, we tend to 
appreciate the flexibility that USDA has shown with respect to program design. The 
increasing tendency of USAID to over-regulate program design parameters, following a
"need to control" and "one size fits all" approach, often sharply limits the 
effectiveness of those programs. Fortunately, we have had significant support from 
both USAID/Mongolia and USAID/Manila with respect to Gobi II, and that is reflected 
in its creative and innovative program design and in the virtually problem-free 
implementation. 
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