Microfinance Industry Report: Lao People's Democratic Republic

This overview of the microfinance sector in Lao PDR is based on an assessment by the Banking With the Poor Network (BWTP Network) of the Citi Network Strengthening Program.

Microfinance was introduced in Lao PDR in the late 1980s. An analysis of the microfinance sector in Lao PDR reveals: 

• Satisfactory regulatory environment;
• Strong, long term commitment from some international development organizationsp;
• Relevant knowledge, experience and understanding of key government officials;
• Government policy statements that favor development of a strong and sustainable, market-oriented microfinance sector;
• Strong demand for sustainable and accessible financial service providers;
• Institutional push for creation of sustainable microfinance service providers;
• Upcoming coordination and advocacy in the form of an informal working group.

The study also reveals weaknesses in the sector. They include:

• Lack of human resources and knowledge gaps at the meso level;
• Lack of knowledgeable trainers, consultants, accountants and solutions;
• Inconsistencies in the enabling and regulatory setting for financial service delivery to lower income households, micro and small businesses; 
• Low capacity of staff of Bank of Lao PDR;
• Lack of supportive infrastructure, such as information technology.