Mongolia's New Cooperative Herder Loans Draw Vote-Buying Claims

As Mongolia's October 2024 local elections approach, the government's "New Cooperative" programme has become a focal point of debate. With a recent injection of 500 billion tugrik (USD 134m) doubling its budget to 1 trillion tugrik, the initiative aims to support the nation's struggling Mongolian herders through subsidised loans. However, its timing and scale have raised concerns, sparking accusations of vote-buying and questions about long-term economic impacts.

The programme's popularity is undeniable. Designed to bolster Mongolia's economically vital but environmentally fragile herding sector, demand has far outpaced expectations. By early September 2024, the initiative had already allocated 495.3 billion tugrik (USD 132m) to 14,381 herders, with another 96 billion tugrik (USD 25.6m) in applications under review. The initial annual budget was exhausted in mere months.

Proponents call the initiative a crucial lifeline. This year's dzud, a devastating weather phenomenon unique to Mongolia, claimed over 7 million livestock, threatening to accelerate the ongoing rural exodus. Between 1995 and 2023, over 700,000 people migrated to Ulaanbaatar, with 16 to 19 percent directly attributed to dzud events. The "New Cooperative" programme offers herders a chance to modernize and adapt through access to low-interest loans capped at 50 million tugrik (USD 14,700) each.

Critics, however, view the initiative's timing with skepticism. The influx of cheap credit weeks before local elections has fueled accusations of political manipulation, especially given that herders represent a significant voting bloc. This skepticism is compounded by delays in cooperative approvals, potentially leaving some without vital support until after the election.

With the government bridging the gap between the subsidised 6 percent interest rate and the 11 percent market rate, questions about fiscal responsibility are mounting, especially given Mongolia's existing economic vulnerabilities.

The New Cooperative programme poses a familiar problem for developing nations. It has to meet a pressing need without compromising future stability. For Mongolia, the stakes extend beyond economics to national identity. Success will depend on transparent implementation, real oversight, and a plan for the risks the credit creates.

Scrutiny will grow in the coming months. Whether the programme becomes a model for rural development or a warning about election-season credit depends on how the loans are used and repaid.