Mongolia Launches Green Agribusiness Fund to Back Herders and Rural Firms

The fund has been established with $92.6 million from the Green Climate Fund under the ADB-supported Aimag and Soums Development Investment Program.

The Asian Development Bank (ADB) has launched a new financing initiative designed to bring more investment into Mongolia's rural economy while helping herders, cooperatives and agribusinesses manage growing pressure on the country's vast grasslands. The Green Inclusive Regional Agribusiness Fund (GIRAF) will provide financing for sustainable livestock businesses, rangeland management and rural enterprises that often struggle to secure affordable credit through conventional financial channels.

The fund has been established with $92.6 million from the Green Climate Fund under the ADB-supported Aimag and Soums Development Investment Program. Another $25 million is expected from commercial banks, bringing private financial institutions into a model built around greener livestock production and stronger rural livelihoods.

New Financing Options for Mongolia's Rural Businesses

Access to finance remains a major obstacle for many herders, cooperatives, small businesses and livestock enterprises, particularly when lenders require collateral that rural borrowers may struggle to provide. GIRAF is designed around this challenge, offering concessional loans, microfinance, credit guarantees and innovation grants rather than relying on a single financing model.

The fund will initially deploy $37.5 million, including a $3 million grant, with credit guarantees expected to reduce collateral requirements for eligible borrowers. Grants will support green innovation, while financing will be directed toward businesses capable of improving livestock value chains without placing greater strain on Mongolia's natural resources. Enterprises that maintain commercial partnerships and benefit-sharing arrangements with herders and herder cooperatives will receive priority.

ADB Country Director for Mongolia John Juhyun Jeong described GIRAF as a new way of financing resilient rural development, linking financial support with sustainable livestock production and better management of rangelands. The wider benefits are expected to include new employment, stronger local economies, reduced land degradation and desertification, and greater resilience to disasters.

Protecting Grasslands That Support Jobs and Livelihoods

The environmental side of the initiative is particularly important in Mongolia, where temperate grasslands cover about 82% of the country. These landscapes support livestock production on an enormous scale and remain closely connected to the livelihoods of rural communities.

Livestock accounts for roughly one-quarter of Mongolia's employment and more than 10% of its gross domestic product, making the health of the sector important far beyond individual herding communities. Desertification and deteriorating rangelands are placing increasing pressure on these ecosystems, creating economic risks for families and businesses that depend on livestock.

GIRAF will connect access to capital with practices that support sustainable rangeland management, land restoration and more resilient livestock production. The approach could allow rural enterprises to generate greater value from livestock products while reducing pressure to expand production in ways that further damage grazing areas.

Technology will also play a central role in tracking whether investments produce the expected results. A digital traceability and monitoring system using geospatial information and remote-sensing technologies will follow funded activities and measure their environmental and socioeconomic impact, giving financial institutions and development partners clearer evidence of how investments affect land, businesses and rural communities.

Thousands of Rural Enterprises Could Benefit by 2034

The scale of GIRAF is expected to grow substantially over the coming years. By 2034, the fund is projected to support around 500 small and medium-sized enterprises and cooperatives, along with approximately 1,000 microenterprises operating across Mongolia's rural economy.

For herders, this could mean stronger connections with businesses that process, market and add value to livestock products. Cooperatives could gain better access to capital for equipment, services and sustainable production practices, while smaller rural enterprises could receive financial support that would otherwise remain difficult to obtain.

The broader model links rural finance with the condition of Mongolia's land, recognising that stronger livestock businesses depend on productive grasslands and that protecting those landscapes requires viable livelihoods for the people who manage and use them. If the financing reaches businesses capable of sharing benefits with herders while improving land management, GIRAF could help Mongolia build a livestock economy that creates more value from existing resources while restoring landscapes and strengthening rural communities.