Summary
Background and Description

Despite strong macroeconomic growth in recent years, Mongolia has struggled to translate this growth into increased household welfare, especially for the poor. The disconnection is largely explained by (i) the heavy reliance on the mining sector, which accounts for only a small share of employment; and (ii) the low productivity of the livestock sector, which is Mongolia’s largest employer and supports a quarter of the population (IMF 2019). Mongolia is one of the least populated countries in the world, which makes the provision of essential services (such as health, education, heating, water supply and sanitation) to rural residents difficult and expensive. Livestock-based livelihoods are vulnerable to many sectoral weaknesses, as well as exogenous shocks and stresses. Value chains face technical challenges in meeting basic quality, animal health and sanitation standards, as well as challenges related to market access and price fluctuations. In addition, extreme weather events, particularly dzud (severe winter weather disasters), have triggered episodes of catastrophic livestock mortality, while pastoral livelihoods are increasingly threatened by rangeland degradation and climate change. climatic.

In 2002, after a particularly harsh dzud in which almost a third of the country’s livestock perished, the Mongolian government and the World Bank embarked on the three-phase Sustainable Livelihoods Program (SLP). The program aimed to address the vulnerability of pastoral livelihoods and increase public and private investment in rural communities in Mongolia. This is a project performance evaluation report of the first and second phases of the program.

• The first phase (SLP I, 2002–06) was designed to pilot mechanisms to reduce risk and diversify rural livelihoods in eight major aimags (provinces; World Bank 2002).1 SLP I had three components focused on Pastoral Risk Management (PRM), Microfinance Awareness and Community Development (CDD). The PRM component supported soum (district) level pasture management, pastoral livelihoods and weather risk forecasting. The microfinance outreach component supported a Microfinance Development Fund (MDF), revolving loan funds, and a livestock index insurance program that later became an independent World Bank project (2005–16 ). Finally, a Local Initiatives Fund supported a community mechanism to identify and implement investments in basic infrastructure and social services in rural and peri-urban areas.

• The second phase (SLP II 2007-2013) extended these mechanisms to the national level, covering all 21 aimags. The SLP II continued the PRM component and included support for a Livestock Early Warning System (LEWS). Outreach to microfinance continued through the MDF, but revolving loan funds were dropped due to unsatisfactory performance. The Local Initiatives Fund was replaced by a Community Initiative Fund (CIF), which also provided funds for sub-projects selected by the communities themselves.

• The ongoing third phase (SLP III 2014–active), although not part of this project appraisal, was designed to fully integrate the project mechanisms within the government to ensure their sustainability. It focused entirely on the Local Development Fund (LDF, replacing the CIF) and complementary institutional strengthening at community, soum and national levels.