MAIN Seminar Theme No. 3 - How Can we Gain in Order to Serve on the Long Term? Managing the Costs

This paper presents the development of the credit unions - Cooperative de Crédits pour le Soutien aux Petites Units de Production (CCSP) - in Lao PDR. It discusses the development of the CCSP network as durable financing structures in the hands of local businessmen's groups.

The paper discusses:

• Creation of the basic savings and loan structures;
• Building up of the development capacity of the CCSPs through the creation of a refinancing fund in partnership with international donors;
• Improvement in the performance and profitability of the CCSPs by allowing the CCSP network to acquire a majority of the shares and to establish itself as the leading majority group of shareholders of the refinancing fund.

Further, the paper enumerates the key principles that are required for building a strong network:

• Allowing for autonomy - operational and financial - from the outset;
• Setting a rate of interest combining profitability and fairness;
• Regularly assessing the network's performance.

Finally, the paper identifies the three main difficulties faced, and suggests long term solutions for:

• Unpredictability of exchange-rates;
• Restrictive regulations;
• Insufficient liquidities - CCSP network is too small to mobilize enough deposits and savings to finance loans.

The paper concludes with a detailed comparison of three CCSPs operating in Lao PDR.