AusAID-Mongolia Partnership

Considered one of the fastest-growing economies among developing countries, Mongolia is expected to post a 15.7 percent improvement in real gross domestic product this year. But growth has not translated into development gains: the government has yet to address challenges such as poverty, inequality and environmental sustainability. Two-fifths of the population is currently living below the minimum standard, and as much as 54 percent of those in rural areas are poverty-stricken. Further, more than half of Mongolia’s population live in rural communities that are scattered across the country, thereby making delivering social services a challenging task. As a result, 70 percent of the rural population does not have basic sanitation services and 50 percent does not have access to potable water. Mongolia’s economic growth is driven mainly by investments in the country’s mining industry, which currently accounts for 20 percent of GDP. The government aims to develop the industry further and bank on its expansion as a way to reduce aid dependency and help meet its Millennium Development Goals. The country is also seeking assistance from Australia to promote sustainable mining and create regulatory frameworks to respond to environmental challenges. Funding levels Although the Australian Agency for International Development’s contributions are dwarfed by Japan, the largest aid donor to Mongolia, the Australian government’s commitment to assisting the country’s economic and social development is seen through the continued increase of aid from 2009 to 2013. Development funding to Mongolia is set to increase next year but AusAID intends to consolidate aid into a few larger programs where the agency has a comparative advantage and can make the biggest impact. It will continue to coordinate closely with Mongolia’s government, civil society, private sector and other donors to assure coherence in implementation of programs and strategy. AusAID also maintains a working relationship with the World Bank and the United Nations in Mongolia. Funding priorities Over the past three years, AusAID has invested $29.6 million in Mongolia. It has focused assistance on funding a scholarship program, financing studies on the Mongolian mining industry and contributing to a fiscal rescue package to streamline social services. AusAID is prioritizing the same sectors in its latest program strategy. The 2012-2016 Australia-Mongolia Program Strategy has three strategic priorities: - Human resource development to bridge the skills and leaderships gap and empower people to contribute to the country’s development. - Mining for development to ensure strong governance in the sector, equitable distribution of revenues, and an environmentally and socially sustainable mining sector development. - Supporting vulnerable communities in the rural areas through the provision of better quality water and sanitation facilities. In line with the first priority, AusAID annually provides funding for the Mongolia Australian Scholarship Program which started in the mid-1990s.The program gives promising Mongolian nationals the opportunity to study in Australian universities and creates qualified professionals in the health, education and private sectors. Devex analysis Recent high-level exchanges between Australia and the Asian country that began with the establishment of the Mongolian embassy in 2008 reflect the strong relationship being cultivated by both parties. Further, Australia is leveraging its long experience in and technological know-how of the industry in helping Mongolia develop its mining sector. The donor government’s strong interest in strengthening Mongolia’s mining industry is bolstered by the need to improve the business climate for 180 Australian small and medium enterprises with an active presence in the Asian country. Earlier in 2009, large Australian mining companies Rio Tinto and Ivanhoe Mines signed a deal with the Mongolian government to develop the largest new copper and gold project in Oyu Tolgoi. Australia is also committed to assist the Mongolian government in translating economic growth to positive development outcomes for the local population. Both parties have signed bilateral agreements in the areas of health, education, technology transfers and institutional strengthening. Contact: Tel: (61-2) 6178-4000Fax: (61-2) 6178-4880Post: GPO Box 887, Canberra, ACT 2601, Australia Join the Devex community and gain access to more in-depth analysis, breaking news and business advice — and a host of other services — on international development, humanitarian aid and global health.