Paper
Microfinance in Rural Lao PDR: A National Profile
A comprehensive survey of lending, borrowing, savings and the linked institutional activity
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115 pages
This paper presents a survey of the formal and informal credit institutions operating in Lao PDR. The paper:
- Assesses the supply and the demand of financial services in the country;
- Describes the macro policy environment.
The report presents findings that help frame the critical questions for future financially-based economic development strategies.
- Household findings:
- Saving strategies are broadly distributed;
- Savings are rarely converted to deposits;
- Low level of debts to assets;
- Limited credit access;
- Reliance on different sources for working capital and fixed asset loans;
- Within family loans are largest rural credit sources.
- Banking sector findings:
- Limited bank outreach in rural areas;
- Uniform terms and conditions;
- Failure to supply micro-loans;
- Limited deposit mobilization.
- Informal sector findings:
- Rapid growth of Village Revolving Funds (VRF);
- Varying terms of loan disbursal between donor/NGO;
- Lack of saving mobilization strategies in most projects with credit component;
- Limited sustainability and restricted role of VRFs.
The report concludes that following steps must be taken for the future:
- Promotion of financial sustainability through positive interest rates;
- Improvement in the regulatory environment;
- Improved co-ordination and clearer objectives in implementation of financial strategies;
- Prioritization of saving mobilization.
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