Partnering with Vision Fund Mongolia -- Habitat for Humanity Int'l 1
Partnering with Vision Fund Mongolia
By Wong Hiew Peng
Following the Mongolian government’s land privatization law in May 2003, families were allowed to own land and many benefited from working with Habitat for Humanity to build their own houses. Yet there are many more families in real need, especially those living in the ger districts.
While more than half of the country’s population live in urban areas, according to a United Nations report, poverty is concentrated in the ger districts on the outskirts of the capital Ulaanbaatar and also in the aimag and soum centers, as a result of chronic unemployment and low wages.
The distinctive ger districts are long strips of fenced-in land plots that surround a city. Within such districts are gers, the traditional round felt tents that Mongolians have lived in for centuries, or ramshackle structures being set up by families. More than half the population of the capital Ulaanbaatar and at least half of the population of provincial capitals live in these areas. Families who live in the ger districts also have inadequate access to amenities such as electricity, water, healthcare and education.
Many of the families living in the ger districts have a hard time meeting daily expenses, let alone having the resources to build a new house. Getting a loan from the bank is difficult as the impoverished families can not offer acceptable collateral.
Given the extreme poverty found in these districts (the average monthly income for each family is between US$100 and US$150), HFH Mongolia knew it had to develop more than a house-building program. For those families who have land but live in dilapidated housing conditions, Habitat’s solution is house renovation. But the cost of renovation can still be prohibitive, at about US$500. (It costs US$2,300 to build a new Habitat house in Mongolia.)
Enter Vision Fund Mongolia, the microfinancing institution of fellow international nongovernmental organization World Vision. A partnership with Vision Fund Mongolia made sense as Habitat had worked with World Vision in the cities of Ulaanbaatar, Erdenet and Darkhan. Set up at the end of 2004, Vision Fund Mongolia gives small loans of up to US$300 for business and other needs with repayment periods ranging from three to 12 months. In 2006, Vision Fund Mongolia disbursed US$1.2 million to more than 6,800 clients.
After a two-year dialogue, HFH Mongolia and Vision Fund Mongolia teamed up in April 2007 to build 150 new houses and renovate another 150 houses. The partnership aims to alleviate the poverty of families living in the ger districts and to improve their living conditions through microfinance. Loans to the families are dispensed from a US$231,000 grant from Vision Fund, while Habitat takes care of the construction and renovation side. Families are jointly selected by Habitat and Vision Fund.
To date, 10 houses have been completed under the Habitat-Vision Fund partnership. Construction and renovation of the remaining houses will continue after the winter season. The partnership with Vision Fund will also pave the way for families to have continual access to financial services that enable them to improve education, health and income-generating ability. Families receiving loans from Vision Fund will become members of the fund and can apply for further loans from the fund for other purposes, based on their repayment track record.
There are, however, challenges. Chief among them is cost. When HFH Mongolia first began operations in 2000, construction was concentrated in one area, on land awarded by the government. The Vision Fund partnership will see Habitat building in different communities, giving rise to higher transportation and labor costs. Families selected to receive Habitat houses are required to repay the loan with a 10 percent administrative cost as well as factoring in inflation and the 1.6 percent monthly interest to be paid to Vision Fund. To address the issue of higher cost, the memorandum of understanding between Habitat and Vision Fund includes a clause that provides for all parties involved to increase their respective contributions if the house cost increases due to inflation or more expensive raw materials.
In the words of Charles Joliffe, HFH Mongolia’s national director: “If poverty housing is to be dealt with and successfully, it can only be done so in partnership with others who have a stake in the communities we all serve and wish to develop.”
Wong Hiew Peng is a writer and editor with HFH Asia/Pacific. She worked in the newspaper industry in Singapore before joining HFH in 2006. She may be contacted at HPeng@habitat.org.
 Report of the Special Rapporteur on the Right to Food, Jean Ziegler, on His Mission to Mongolia (14-24 August 2004), page 9.
 Aimag and soum are the equivalent of a province and a district respectively.