Group shot of the 4th volunteers and organizers
On July 2nd the American expat community in Mongolia organized, and held, an afternoon BBQ and celebration to commemorate the USA’s 235th birthday (despite our banner proclaiming it to be the 234th). It was held on the 2nd as it was a Saturday and naturally all of us would be at work on Monday the 4th. The event was organized by a 14 year Mongolian vet Brigitte Cummings, a well known/infamous character in the expat community and a polarizing figure (due mainly to her not being afraid to speak her mind), and held at the Blue Sky Resort which is surrounded by its own rumors of controversy stemming from shady, preferential real estate dealings involving the former Mongolian President.
The resort is 12 km (most of it by dirt road) south and east of the city and is the country’s first ski hill (inaugural season winter ’11) with a golf course under construction at the base (the county’s 2nd course). We’re getting pretty high class out in these parts! The day consisted of burgers, brats, 25+ kgs of potato salad, sodas, beers, football (both kinds) and lots of sun under the Mongolian sky and ski towers.
The wind didn't cooperate much for this shot
The hungry crowd consisted of embassy folks (from several countries), volunteers, Peace Corps, miners and bankers, Mongolians, Canadians, Australians and more. I spent most of the day on the grill and estimate we served up northwards of 200 burgers and close to that number of brats.
Music wise this was by far the most patriotic 4th of July I had ever experienced with a play list full of marine band renditions mixed with contemporary artists and songs with patriotic connotations. An expat from Utah even sang the full version of the National Anthem; there’s three verses, who knew?
Grillin' on the 4th
After the BBQ wrapped up the day finished in an almost surreal manner with a volunteer dinner at a restaurant owned and operated by the North Korean government (not sure that was a great patriotic choice to patronize…) and then fireworks later that night. The fireworks naturally had nothing to do with the 4th of July and I still have no idea what they were for or who put on the show. But it was a great coincidence of timing and I enjoyed them none the less for being intended for a different audience.
4th of July dinner at NoKo
A little fire with your food never hurts the festive atmosphere. I hope everyone back in the US had an excellent and enjoyable 4th of July holiday. Cheers from Mongolia!
The sun setting west of UB
One of the regular activities that has worked its way into my weekly routine is the UB Hash. Every Tuesday night we meet in front of the Bayangol Hotel, jump in a bus and head southeast of the city. If you’re not familiar with “hashing”, or the Hash House Harriers, it’s a pretty entertaining read.
The UB Hash is a bit different from the norm in that we don’t really hash. That would be the simplest way to put it. A standard evening finds us arriving at our location ~7pm giving us an hour before we reconvene by the bus. Some folks run into the hills, others hike, and still others just hang out by the bus, socializing and enjoying the views and fresh air outside of the city.
Those of us that run don’t have a hare, or a trail. Unfortunately we don’t have the time on these evenings to set one. Instead we head straight up into the hills, which entails .5km of 8-10% grade straight off the bus. Great way to get warm. After that, we run up and down the ridges of the surrounding hills until it’s time to head back for the nightly round up.
Twilight adds some color to the end of the hash
Once back by the van sandwiches are broken out, along with a little mini keg, the likes of which I’ve never come across in the sates. Looks like this and is an excellent size for small gatherings. On average we have 15-20 peopel ranging in age from 8-70+, with the bulk of the group usually made up of 20-something, volunteer expats. Once everyone has had a quick bite, and grabbed a juice or a beer, everyone circles up. At this point we take turns stating names, origins, length of stay in Mongolia, reasons for being in Mongolia and whether or not we are “available”.
This last point is very important to our hash general, Brigitte. Brigitte is an American citizen of German/Bavarian origin who has lived in Mongolia for 14 years and runs a German bakery. Her age is anybody’s guess, but I’d wager no less than upper 60’s and wouldn’t be surprised if it were closer to 80. Despite that her enthusiasm for the hash, beer, and talking shit about Mongolian bureaucracy and corruption, knows no bounds. She pulls zero punches and has no shortage of crazy stories from her experiences around the world. Born in Germany, lived in England, Switzerland, Italy, the US (where she married an American), the Philippines, Japan and Mongolia. She has one natural born son who lives in France and married a French lady (don’t bring the daughter-in-law up if you know what’s good for you) and two adopted daughters, both from the Phillipines, who have married an American and an Italian(?) respectively.
A look up the valley at some of the hash hills
Anyway, Brigitte’s leadership and razor sharp commentary keep things interesting, and the hash has been an expat mainstay for 17 years. It’s a fantastic escape from the city and a great incentive to get some regular exercise and fresh air. It’s also great avenue to meet new people and learn about what others are doing during their time in the country. From embassy workers, to NGO folks, Australian volunteers, to miners. If you find yourself in UB and are looking for a good social outlet, with the opportunity for a bit of exercise, you can hardly do better.
The base of the hills, looking back at the city
I'm on a horse
I went horseback riding over the Mongolian plain. I think that statement pretty much stands alone. Enough said. There’s really no need to elaborate on the experience of the open landscape, the communion between man and animal, channeling the spirits of the nomads who have traveled this vast land in years long gone, or riding towards a broad horizon under an endless blue sky.
Not that I really felt any of that. Maybe a little. I spent most of my time focusing my efforts on the following goals:
1. Trying not to look stupid
2. Trying to improve the communication and teamwork between myself and my horse
3. Trying to mitigate how stupid effort #2 made me look
4. Cursing Holly, an experienced Aussie rider who made it look so easy, under my breath
5. Not falling off the horse. This is probably actually #1.
The herd
In all seriousness, riding on the vast Asian Steppe really is a special experience. The horses themselves are absolutely incredible. Much smaller than those horses us Westerners are accustomed to; it’s difficult to believe that these are the horses that carried the Mongolian armies to victory and were instrumental in creating the largest land empire in history. These guys make up for their diminutive size with their hardiness and stamina. Surviving a land that does not provide an overabundance of feed, not to mention to the extreme temperatures ranging from regular winter time lows of -40 and summer time highs exceeding 35 degrees. Truly an impressive animal and one that has earned my respect even if they are stubborn creatures that refuse to go downhill and seem inclined to snap their legs in marmot holes so long as it resulted in bucking me.
A little bit of the Steppe
The landscape found on the Steppe seems tailor made for dreamers, poets, thinkers, and, nomads. It’s vastness speaks on a primal level and suggests of limitless potential while also putting the smallness of the individual in stark perspective in the face of the greater world. To travel this place in the dusty footsteps and hoofprints of the indomitable nomads and horses that came before us is truly a special experience. One that I will not soon forget and hope to repeat again.
I mean, look at these horses below. They’re just so tiny and adorable. How awesome does that look? Seriously.
Riders crossing the ridge
A Look into the Indian Crisis
“A thinker sees his own actions as experiments and questions as attempts to find out something. Success and failure are for him answers above all.”
It is a turbulent time in the microfinance sector and a lot of questions and criticisms have been raised. Practices have been called into question, regulations have been passed and one of the pillars (if not the pillar) of microfinance as we know it has been toppled. Are the accusations, rumors and finger pointing all deserved? Will regulations being pushed through in India, and elsewhere, solve these issues or has the pendulum swung from prudent reform to stifling overreaction?
As the dust settles, and everyone tries to sort out the impact and implications of all this recent activity, we will likely find ourselves in a new era for microfinance and related development sectors (at least in India initially). With genuine atrocities being attributed to lending practices in the India state of Andra Pradesh and the coerced departure of Muhammad Yunus from the Grameen Bank by the Bangladesh government, microfinance has been in the headlines quite a bit in recent months and, for the most part, not in a positive light.
A virtual tornado of press coverage exploded out of Andra Pradesh last fall when the story broke that indebted Indian farmers were committing suicide by the dozens due to high debt and the pressure they were under from the lenders to meet their repayment obligations. While it now appears that much of the finger pointing and blame dumped on the microfinance industry was sensationalized or exaggerated, there is no doubt that several fundamental issues with MF practices in the state have been thrust into the spotlight as a result; including: an over-saturated market, creating cutthroat competition; a lack of oversight which allowed loan officers to harass borrowers with little or no consequences; a looseness over the term “microfinance” in general and no regulatory structure to oversee the organizations operating under this umbrella term; the non-existence of a credit bureau, which contributed to a lack of communication between the different MFI’s and meant that lenders had no insight into a borrower’s current credit situation. One effect from this last problem specifically, is that lenders began to take out additional loans from different MFI’s to make payments on their initial loans, which naturally led to an escalating spiral of increasing debt and repayment obligations.
Andra Pradesh boasted the highest concentration of MFI operators per capita in the world (still does, though it remains to be seen how many will survive the current sanctions) and the industry seemed to be in a state of nirvana. Many of the larger MFI’s which began as non-profit organizations evolved into commercial institutions, some going public with IPO’s exceeding $1 billion US. Capitalizing on the momentum, hype, and good publicity that microfinance had received over the preceding decades these large institutions, and hundreds of smaller ones, drove massively rapid expansion. The sector grew from a portfolio of $252M in 2005 to over $2.5B in 2009 by some estimates, and this dizzying, seemingly ceilingless, rate of growth reminded a few observers of a similar scenario in the US housing economy and several sources foreseeing a bubble. In the end, it was too much, too fast, and without a corresponding increase in infrastructure and oversight for the sector it was not sustainable.
That high level of concentration and rapid rate of growth resulted in ever escalating pressure on loan officers to increase their loan portfolio and carve out as much market share as they could grab. Without an effective regulatory system in place, loans were increasingly disbursed with diminishing regard to the borrower’s ability to carry the debt, let alone if they were already carrying balances from competing lenders. The result? People took advantage of this “easy” credit and borrowed from multiple sources, lenders failed to properly evaluate potential borrowers and the stage was set for a self propagating system of increasing debt. As the pressure on loan officers continued to grow they made increasingly riskier loans. When borrowers were unable to make repayments loan officers escalated their recovery techniques. As pressure was passed from the loan officer to the borrower some turned to other lenders to acquire the funds to repay the initial loan. Obviously if borrowers are taking out supplemental loans to pay off existing loans they have lost the “road out of poverty” that microfinance is supposed to provide in theory. This is not how the sector is supposed to work.
A simplistic way to think of this situation:
Competitive market + little regulation > pressure on loan officer > bad quality, high risk loans > inability to make repayments > increased pressure on borrowers > multiple loans > oversaturated market > overstressed, over served population > sector collapse/crisis.
There are certainly additional factors and influences at play on the ground that go beyond the scope of this post we will have to gloss over in the interest of brevity. But many of the larger issues have been raised. How do you implement an effective regulatory system that will be able to keep pace with the rapid growth rates being realized throughout India and other countries? How will the heavy handed ordinance, suspending all MFI loan disbursement and collection activities, impact both the existing MFIs and the population they are serving? In an effort to protect the poor from coercive practices has the government gone to far and deprived the silent majority of a much needed service? Will India’s new direct cash transfer system have an impact on either poverty or the microfinance sector?
A lot remains to be seen in India and the world in general with regards to the direction of microfinance. The illusion of the silver bullet is wearing off and increasingly studies and documentaries are calling into question the effectiveness of the sector in general. Even in areas with better regulation, and without the extreme lengths reportedly resorted to by collection officers, doubts have been raised regarding the baseline principle that microlending can indeed help pull people out of poverty. And, while most have little doubt that microfinance (practiced correctly) can be a hugely impactful tool in the fight against poverty, I for one sincerely hope that a deep look at the core principals and current best practices will lead to valuable changes moving forward. The goal of course is to achieve positive reform and not to kill, or handicap, the industry. Naturally, this is easier said than done.
Taking into consideration the changes coming and all of the questions swirling around microcredit I want to take a look at the microfinance product that I am working on in Mongolia and ask some hard questions regarding its effectiveness and whether or not it is truly reaching the vulnerable populations at the bottom of the ladder. As this post has become over long as it is I will dive into this in a second post later this week. In the interim I’d love to hear feedback, questions and thoughts on microfinance and where the industry is headed.
“Idealism is what precedes experience; cynicism is what follows”
For those interested in learning more about last year’s microfinance crisis in India here is an early case by case report on the suicides, reported cause, loan amounts, etc.
“Not all those who wander are lost”
So, I woke up in Mongolia. North of China, south of Siberia. The Asian Steppe. The middle of nowhere. Home of the Gobi Desert, nomadic husbanders of livestock, eagle hunters, traditional dishes piled high with mutton, milk tea, Buddhism, and ever increasing encroachment of outside development, culture and norms. How does one ever find oneself in such a place?
With the benefit of hindsight I can see that my road began many years ago in Kathmandu, Nepal while on a holiday. It was my first extended trip in what would be considered a developing world country and while there I dropped in on a friend working for the World Food Programme.
After traveling the country solo for several weeks I returned to Kathmandu and spent several evenings discussing the work my friend was doing with the WFP late into the steamy Nepalese night. I was only vaguely aware of it at the time, and definitely didn’t appreciate the implications it would mean for my life, but a seed was planted in the depths of my mind during these late night dialogues.
Over the ensuing several years that seed began to slowly develop and influence my thinking. I found myself reading books by economists, aid workers and founders of NGO’s, attending fundraising events, and doing a lot of increasingly dangerous thinking. These activities gradually led to hosting and throwing fundraisers myself, leading human rights groups in meetings with US Congressman and further travel in the developing world. First in Eastern Europe and then in Central America. I can see now that it was inevitable I would eventually leave my job to follow my growing idealism in pursuit of a “better world” for all.
And now, here I am. Working as a Vittana Fellow in Ulaanbaatar with the Mongolian MFI, XacBank. My goal is to create, and market, a student loan product that will enable those to whom a university education was previously a financial impossibility, obtain their degree. To remove the bumps in the road and make the unattainable, attainable.
In the next nine months the hope is to reach 2500 new students and, through a combination of microfinance and education, improve their future prospects. Education has the ability to empower, to set one free, to build, to rise to a higher plane. One hopes that in achieving an education that one learns how to achieve.
“The whole purpose of education is to turn mirrors into windows.”
The fight against poverty here in Mongolia will not be over in nine months time, and it won’t be solved solely by sending youths to university. But one can chip away at seemingly impossible tasks and in the process hope to create something good. While it is important to keep in mind one student is unlikely to change the course of a country, it is just as important to realize that an education can give a person the opportunity to do just that. Personally I am looking forward to my own education here in Mongolia, and let come what may.
Mongolian hero Sakhbaatar leading the way
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