07au-5052 Strengthening the Credit Union movement in Lao PDR
| budget |
€ 512.172,65 |
status |
execution |
| start date |
01-01-2008 |
date end |
31-12-2011 |
| location |
Central and Southern Lao PDR |
country |
lao people`s democratic republic |
| financer |
Agriterra |
| executor |
Association of Asian Confederation of Credit Unions |
intervention level |
sub-national |
| Programmes |
| IFAP 08: Ensure secure access to resources | work area 08: Banking and Credit sector (including Insurance) | |
| description |
ACCU would like to to contribute to the development of a sustainable market-oriented rural financial system in Lao PDR to contribute to poverty reduction. Therefore the purpose of this project is to support the establishment of a credit union support institute to enable the development and replication of a sustainable (...more...) |
| description |
ACCU would like to to contribute to the development of a sustainable market-oriented rural financial system in Lao PDR to contribute to poverty reduction. Therefore the purpose of this project is to support the establishment of a credit union support institute to enable the development and replication of a sustainable micro savings and credit portfolio to service poor and rural low income groups.
The specific objectives are:
1. Establish a Credit Union Support Institute
2. Development of technical resources for credit unions
3. Consolidation of existing VSCG’s
4. Improved capacity of Savings and Credit Unions
5. Strengthen BoL SCU monitoring capacity
The expected results of this project are:
Result 1: Credit Union Support Institute established
Result 2: Development of technical resources for credit unions
Result 3: Consolidation of existing village savings and credit groups
Result 4: Improved capacity of Vientiane Savings and Credit Union
Result 5: Strengthen Bank of Lao PDR SCU monitoring capacity
Result 6: Elaboration of an enabling environment for cooperatives (in collaboration with ICA) (...less...) |
| results & observations |
The promotion of Saving and Credit Unions (SCU) in Lao PDR started by ACCU as early as 1992. As a result of 14 years advocacy and lobbying with the Bank of Lao PDR, the bank regulated savings and credit cooperatives as a microfinance services provider since 2008. The concept of (...more...) |
| final results & observations |
The promotion of Saving and Credit Unions (SCU) in Lao PDR started by ACCU as early as 1992. As a result of 14 years advocacy and lobbying with the Bank of Lao PDR, the bank regulated savings and credit cooperatives as a microfinance services provider since 2008. The concept of SCU is still relatively new in Lao PDR. Only in 2004, the central Bank of Laos came with a regulation and bylaws for SCUs. But until now, no cooperative law has been put into place in Lao PDR, though efforts to lobby for this are on its way. The issue of leadership with regard to SCU is difficult as the concept is new and people do not yet feel ownership.
During the first half of 2009 a project office was established and a team started to work. Mid 2009 the team was strengthened by a Dutch advisor who will work on this project for at least two years. Most of the activities in the second half of 2009 focused on capacity development of target Village Development Funds (VDF) and their consolidation. There is a reluctance to change the VDF into formal SCUs. ACCU has trained several committee and village members to clarify them on concept, structure and operations of VDFs and SCUs, and the differences between these two types of organisations. Key performance areas were selected and they were given special focus, such as membership contribution, savings and share capital.
There has been very limited progress in organising the second tier Association of Savings and Credit Unions (ASCU). The focus is mostly on the primary level of SCU: promotion, strengthening and development of SCUs in order to have a solid enough base to establish ASCU and to continue the services to SCUs. Initial discussions, information exchange and research on the establishment of a second tier ASCU have taken place but it is to early yet to establish ASCU. There is no regulation or bylaw for the registration and license of financial associations. Present regulations do not allow cooperative members to become member of an SCU, only natural persons can be.
ACCU started with the translation of a credit union promotion DVD from Nepal into Lao PDR language. It is expected to become available in the first quarter of 2010.
In order to improve the capacity of Luang Prabang Savings and Credit Union (LPSCU) ACCU continued the discussion with LPSCU on delinquency management and improvement of its governance system. ACCU offered its support to LPSCU in the form of training and in depth study of her operations.
ACCU built linkages with the Bank of Lao PDR and created awareness about the project. ACCU introduced the concepts of SCU regulation and internal policies (bylaws) to the target VDFs. There are only a very few VDFs ready for registration under the formal SCU laws, which decreases the need to monitor them closely from the side of BoL. Another reason is the variety of stakeholders besides ACCU that are already actively involved and related to BoL.
The present context in Lao PDR of an underdeveloped market and regulatory framework for financial cooperatives and the presence of many international agencies makes it necessary for the actors to continually change and adapt its strategy and find innovative ways to project implementation. It is the only route to fulfilling their objectives.
Opinion of projects officer:
This project has started one year later than originally anticipated. After this first year it can be concluded that progress has been slow, although it must be highlighted that planning has perhaps been too ambitious. The transformation of VDFs to SCUs will take a lot of time, and the establishment of a second layer ASCU will also take more time, as grass-root level SCUs are still too weak. The approach of ACCU (bottom up, work with already existing groups) seems the right approach. Coordination with government and other development actors working in the same field is important. The need for ongoing dialogue and awareness rising among stakeholders is hence emphasised. It is expected that ACCU will gradually be able to transform and strengthen the SCU, in accordance with the formal and legal SCU principles as approved by the government. It is worthwhile to support this challenging initiative and the project will be continued in 2010 according to plan.
(...less...) |
| specialisms |
| Banking and credit sector (incl. insurance) | |
PROPOSAL
| Agri-agency | Own contribution executor | Other parties | Total requested budget |
|---|
| Agriterra | ACCU | | |
| € 0,00 + € 0,00 | € 0,00 | € 0,00 | € 0,00 |
The project is based on the experience of Association of Asian Confederation of Credit Unions (ACCU) and SNV Netherlands Development Organisation (SNV) in Lao PDR. The underlying objectives of the project are to:
1. Provide sustainable support to member-based organisations operating under the credit union model.
2. Strengthen Bank of Lao PDR monitoring capacity of credit unions.
This project will address the need for a Credit Union Support Institute to provide sustainable services to members/clients into the future. This institute will complement an existing project in southern Lao PDR which is focused on providing support to one SCU in Seno District, Savannakhet and replicating the model three times. It is envisaged that the institute will focus on providing technical assistance, auditing, inter-lending and also act as a linkage to BoL. This project is being implemented by Microfinance Centre with advisory support from SNV and the Rabobank Foundation. The later of these organisations both belonging to the Dutch-based Agri-Pro Focus network, which will be used to share experiences throughout the project. |
GOALS
