Dave Lawrence's blog

Photo courtesy of Steve Burt through a Creative Commons license

A few years ago, I spent a few days in a ger (yurt) in what seemed like the end of the world—Baruunburen district in Mongolia’s Selenge province. It took more than seven hours to get there from Ulaanbaatar, via Erdenet, Mongolia’s third-largest city. The paved roads gave way to dirt ones, but even these faded away until they were nothing more than tire marks in the grass. We took the final leg of the journey on horseback through a small, rain-gorged river, and finally arrived at a ger, a white speck in a huge, green valley surrounded by hills that went on forever.

A little later, I checked my phone to see if there was a signal. There wasn’t. Then my host pointed to a nearby hilltop and explained that I could catch a signal from there, so off I went. It took about 20 minutes of vigorous climbing to get the top, but it was worth it. The view was spectacular, and sure enough, I caught a stray signal. I pinched off a few text messages to my wife, a continent away in Ukraine.

Photo courtesy of christahasenkopf.com

I recently read a quote by Edward Glaeser, an urban economist, in the latest issue of IFC’s quarterly journal on Public-Private Partnerships (PPPs), which caught my attention:

Statistically, there is a near-perfect correlation between urbanization and prosperity among nations. As a country’s urban population rises by 10 percent, the country’s per capita output increases by 30 percent.

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Jumlahnya terus meningkat. Pada awalnya dilaporkan 13.000 jiwa. Keesokan harinya menjadi 25.000. Lalu dilaporkan kembali 58.000. Di penghujung minggu, pada tanggal 1 Januari 2005, jumlah korban tsunami di Asia telah mencapai 122.000. Dan jumlah tersebut terus meningkat, tidak ada satu orang pun yang tahu kapan jumlah tersebut akan berhenti meningkat.

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The number just kept getting bigger and bigger. At first it was a staggering 13,000. The next day, over 25,000. And then, 58,000. By the end of the week, on January 1st, 2005, the death toll of the Asian Tsunami had reached 122,000. Yet the number kept climbing, and nobody knew when it would stop. 

The President of Mongolia, Elbegdorj Tsakhia, sat at the table behind a Greek salad. We were at a lunch hosted by the Corporate Governance Development Center, an NGO which brings international best practices in corporate governance to Mongolia. Also present were the Minister of Education, the Director of the Financial Regulatory Commission (FRC), the Deputy Chief of Party of the USAID-funded Economic Policy Reform and Competitiveness Project (EPRC), which helped to establish the Center with the Institute of Finance and Economics, and CEOs of leading Mongolian firms. Several International Finanace Corporation (IFC) clients were among them.

The salad looked delicious, but it would have to wait. President Elbegdorj was speaking about the role of corporate governance in Mongolia. "Corporate governance is important for Mongolia's competitiveness," he said. I was delighted. I've been waiting a long time for this moment.

This morning, my kids stood waiting for the school bus, crying. The bus was late, and they had been outside for about three minutes. No wonder. The temperature outside was -39 degrees Celsius. I thought we had bundled them up enough; they had so many layers on that they looked like astronauts. But they were still freezing.

This winter is especially cold. It's in the 30 degrees below zero every day, and has dipped below -40°C.  In some parts of Mongolia, it has fallen below -50°C. There is frost on the windows of our office.

Children breathe thick, toxic smog from thousands of stoves in Ulaanbaatar's ger districts, which are home to 60 percent of the city's population.

There’s no capital city anywhere in the world with a housing problem like Ulaanbaatar, Mongolia. Imagine a city of one million people. Then imagine 60 percent of them living in settlements without water, sanitation or basic infrastructure, often in traditional Mongolian felt tents, known as gers. Then imagine these people relying on wood- or coal-burning stoves for cooking and heating, with fuel costs eating up 40 percent of their income. Then imagine the discomfort of having to get up in the middle of the night when it’s -35 degrees Celsius to go to the bathroom – outdoors.

Worst of all, imagine you and your children breathing the thick, toxic smog from thousands of stoves 24 hours a day, seven days a week. Unfortunately, this is not imagination, this is the real situation for over a half million people living in the ger districts of the capital. Not a pretty picture.

The project in Mongolia reduced poaching and stabilized the Taimen fish population, preserving natural resources.

Anyone who has been to Mongolia will tell you that it is a staggeringly beautify country. One of the most beautiful parts of the country is in the Khuvsgul region in the north of the country, which includes a fabulous lake and the Eg and Uur rivers. The region contains an intricate and rich ecosystem, with a surprising variety of fish (pdf) and other species.

It was a surprise to discover, shortly after arriving to Mongolia, that the International Finance Corporation (IFC) had been running a conservation project in this region for five years. Funded by the Global Environmental Fund (GEF), the project worked to protect the Eg-Uur watershed and a threatened fish species, Hucho Taimen while also providing income to local communities.

Restaurants in Mongolia can face fines for not having the right number of forks.

Mongolia's done a good job in reforming its business environment since the collapse of communism in the early 1990s. In Doing Business 2009, the country ranked 58th out of 181 economies and outperformed its neighbors, Russia and China, by significant margins. Well done. But that doesn't mean that things are easy for small businesses here. The overall business environment is a serious drag on Mongolia's development prospects, and the situation keeps getting worse as the financial crisis sinks its claws into the economy.

One area fully in Government control is business inspections. This is an important function: inspections protect the health and safety of the general public. But when inspections run wild, they can become a major burden to businesses, especially small ones. Inspections can impose large costs on businesses in terms of time and money, encourage firms to bribe their way out of violations, and even encourage entrepreneurs to operate in the shadows. That means less tax revenue and potentially dangerous products and services being offered to the public.

Is this a problem in Mongolia? Absolutely.

In my 12 years at the International Finance Corporation (IFC), I've been involved with a lot of different projects. Many of them were successful, some were not. But none of them were as satisfying as the Aceh Shrimp Project, which closed last month. If you've ever hit a bull's eye when playing darts, imagine that feeling multiplied by 100. That's what this project felt like.

Aceh is an autonomous province on the northern tip of Sumatra, in Indonesia, with a population of 4.2 million. It has a colorful history of resistance: they gave the Dutch colonists major headaches, and fought against the Indonesian government for three decades. In December 2004 the Tsunami struck, leaving 165,000 people dead or missing in the space of 30 minutes. This led to the biggest reconstruction effort in history, including IFC's work to build up the private sector, funded by AusAID (pdf) through its Australia-Indonesia Partnership for Reconstruction and Development (AIPRD).

Shrimp is a key sector in Aceh, a livelihood for 100,000 people. In the 1990s, Aceh's shrimp sector was slammed by white spot disease, which devastated shrimp harvests.