- LuxDev's Regional office
- Vientiane Regional Office
- Local Development
- PIC 4
- 2016 - 2020
- Implementation period
- 11 May 2017 - 10 May 2022
- Total duration
- 60 months
- Total budget
- 30,000,000 EUR
- Contribution breakdown
- Luxembourg Government
LAOS - Village Credit Scheme helps improve lives of the poorest of the poor.
"Life has been tough since my husband become a disabled person. A few years ago, I wanted to start a household business but no one would give me money beause I had no guaranty for the loan. Then, fortunately I received a first loan of 500,000 kip from the village credit scheme which enabled me to raised some pigs and sell them out for a good price. I have now borrowed 3,000,000 kip from the village credit scheme to grow my pig raising business. So, thanks to the credit scheme, if things go according to plan, I hope I could earn more income to support my whole family through the next batch of pig selling."
Nad Vongprya, a member group of village credit scheme, Bolikhan district, Bolikhamxay province.
A small loan can lift a poor out of poverty. The story of Bounthavy Daungphachanh, rice farmer.
Laos has seen a rapid macro-economic progress in the past decade with annual GDP growths averaging 7.8%. Nevertheless, the country is still considered a Least Developed Country, ranked 138 of 188 nations in the United Nation’s Human Development Index, and 132 in terms of per capita GDP. Inequality has also increased, including a widening gap between urban and rural areas, particularly the remote upland areas, populated largely my ethnic minority groups. Upland communities have generally lower income, education, health, nutrition and other social indicators compared to urban and lowland communities. This is partly linked to physical isolation, difficult access, and low agricultural potentials, but also to resource competition, environmental degradation and weak public service delivery. Most upland villages still rely on traditional land-use systems, which are increasingly difficult to maintain owing to competition for, and regulations on, the use of natural resources. Despite improving access to roads, electricity and public services, many communities have had difficulties breaking into a more modern economy, land use practices and employment opportunities. Upland villages are therefore often in a precarious economic, social and environmental situation. Recent government policies and plans have emphasised the need to deal effectively with poverty and related problems in such disadvantaged areas.
The ‘Local Development Programme for Bokeo, Bolikhamxay, Khammouane and Vientiane Province’ supports the government’s poverty reduction strategy for upland rural development. It focuses on the 14 poorest districts in four provinces, particularly 230 target villages with a population of 150 000, 76% of whom are ethnic minorities.
The Project supports practical community development combined with governance strengthening for poverty reduction. This two-tiered approach means that the government systems can be informed and improved through demand-driven priorities, field evidence, and actual practice, while the practical development work can benefit from better application of policies, programmes, regulations and public services.
Most of the 23 million Euro budget from the Government of Luxembourg is supporting community development and infrastructure access in the 230 target villages. The community development is based on participatory village development plans, and on funds averaging 35 000 EUR per village that are managed and used democratically by the community for economic, social and environmental activities. These may include community investments in for instance sanitation, upgrade of schools, land management, agricultural extension, training, credit schemes and special support to destitute households. In addition, funds are available for infrastructure development, mostly education facilities and improved water supply systems, identified and constructed to fulfil the Lao Government’s poverty reduction targets for access to education and clean water.
The governance strengthening focuses on improving the systems and capacity of government staff for more effective poverty reduction. This includes improved planning, monitoring, evaluation, donor coordination, investment management, and information systems. Based on the development activities selected in the target villages, the governance component is also able to strengthen the use of sector policies and technical interventions for effective service delivery. The project also supports and engage in policy dialog through participation in sector working groups and other network, knowledge management, and through hosting an annual conference on rural development.
The project is executed jointly by the Ministry of Planning and Investment and by Lux-Development, the bilateral arm of Luxembourg Development Cooperation. The Provincial Planning and Investment Departments and District Planning Offices are coordinating the field implementation. For technical support, relevant sector departments are engaged, particularly in agriculture, education, health and public works. Village Development Committees in the 230 villages are responsible for coordinating at the community level, and for managing the village development funds.
The project is very broad in terms of interventions, partners, and geographical scope. It has also built in flexibility in the choice of activities to best respond to the needs and opportunities arising from the field level and the stakeholders. To deal with this complexity, the project is guided by four overall principles
Poverty focus: To ensure that the project contributes to poverty reduction, the target villages are selected among the poorest and most disadvantaged villages in the four target provinces. The project support pro-poor activities that are most likely to have a positive impact. This is done through village poverty analyses, participatory selection of activities, and by using the government poverty indicators and targets for prioritization of infrastructure investments. Success is measured through poverty indicators and targets, including targets defined by the communities. The aim is to use 70% of the project funds for actual investments in the target villages, which is essential for achieving the goal of bringing most of the target villages above the poverty line by 2021.
Alignment: To ensure ownership, efficiency and capacity strengthening, the project uses Lao national systems for carrying out the work. This means activities are managed by government agencies according to their regular mandates - using the government systems for planning, management, procurement and reporting. Plans are linked to national planning, monitoring and evaluation systems. To ensure that the alignment is carried out in practice and that the partners can take full responsibility and credit for the work, around 80% of the budget is channelled through government partners at village, local and national level.
Integration: The development activities are determined by the villages’ needs and opportunities for poverty reduction. Once these needs have been identified, the project is able to engage relevant government partners, private service providers and civil society organizations in the practical work. The project also supports the Lao Government’s decentralization policy by engaging stakeholders at village, district, province and national level according to their stipulated role. This functional and hierarchical integration is held together by participatory village development planning carried out by the communities with support from the local Planning Departments, which outline the activities, budgets and involved stakeholders. These plans are further incorporated in the district and province plans for coordination and oversight.
Capacity strengthening: The Governments of Laos and Luxembourg acknowledges that there are gaps in the capacity of the public sector and the target communities to carry out the project. Project implementation is therefore closely linked to capacity strengthening of the government staff and community members, and to organizational and institutional strengthening particularly regarding the practical application of government systems. Structured capacity development plans are made for all major project interventions, and supported by training, coaching, experience exchange, in-country study visits, technical assistance. To ensure sufficient accountability, transparency and reporting, Lux-Development’s project team is carrying out certain technical, administrative and financial functions and compliance checks, but with the aim to gradually phase out this role as the local capacity increases.
The project targets and modalities are ambitious, but we have reason to believe we can pull it off. From 2010 to 2016, the Lao Luxembourg Cooperation Programme carried out a similar project in Bolikhamxay Province. The 7.6 M EUR project focused on 60 poor upland villages in the more remote uplands, where most people at the start of the project lived on less the 0.7 USD per day. After six years, practical achievements included 396 community projects carried out through village development funds; 46 community-owned credit schemes; 78 schools, water supply systems and other constructions; as well as training and awareness campaigns in 90 villages. Furthermore, about 100 governance strengthening activities were supported throughout the province. As a result of this support and other socio-economic development, the number of target villages officially classified as poor dropped from 60 in 2010 to only 3 villages in 2016. A key to this success was the fact that almost three-quarters of the budget was spent on practical village development. Apart from the tangible development results, the project helped institute practical means of local democracy, participation and empowerment, which is key for the future sustainable development in the villages.
LAOS - Responding to COVID-19 in rural areas
The Government of Luxembourg has granted 1 million EUR to support people in disadvantaged villages in Laos to cope with the economic and health consequences of the COVID-19 pandemic. The support is channelled through the Local Development Programme – LAO/030, which is working with 150 000 people in 229 poor target villages in the four provinces of Bokeo, Bolikhamxay, Khammouane and Vientiane.
Household representatives awaiting the start of the distribution of rice, and transfer of cash to destitute households, © LuxDev
While Laos has so far been spared from serious health impacts of the COVID-19 pandemic, with only 22 known cases and no deaths, the economic impact has been devastating to an already vulnerable economy. The economic fallouts have, as usual, hit the poorest people disproportionally hard. This is the case in the remote upland areas where most of the population lives on less than a US Dollar a day, eked out from marginal farming and supplemented by occasional wage work, remittances from migrant working family members, and small-scale trading. These income sources have diminished and left tens of thousands of people in peril following the lockdowns, the closing of international borders, and the economic slowdown caused by the pandemic.
One lady from a destitute household receiving an envelope with 40 EUR in cash. In addition, the family received 60 kg of rice to help bridge the hunger period up to the next harvest 3 month later, © LuxDev
These problems are painfully evident in the LAO/030 target villages, having been selected in the first place for their high poverty rates and vulnerability. Hence, poverty, remoteness, difficult road access, cultural and language barriers, and generally low education levels make the communities ill equipped to cope with the potential spread of the coronavirus and its economic impact. Furthermore, most villages witnessed disastrously low rice yields in 2019 because of adverse weather conditions. In normal years, most people would cope with food insecurity through off-farm work in Laos or even in Thailand. However, the COVID-19 pandemic has undermined such opportunities, while the regular trading in agricultural, handcraft and non-timber forest products have either stopped or seen increased transportation costs that undermines the economic return for farmers. The economic impact of the pandemic means that many people are facing hunger and malnutrition, which will only increase the vulnerability of the population in case of a COVID-19 outbreak.
Rice is transferred from import containers to small truck more likely to reach the village on the muddy monsoon roads, © LuxDev
Rice sacks are stacked in the community school ready for distribution to most food insecure families, © LuxDev
To help alleviate these problems in the LAO/030 target villages, in June 2020 the Government of Luxembourg decided to provide a 1 million EUR additional grant. The objective of the response is to mitigate infection rates, mortalities, and food shortages in the 229 target villages. To ensure the transparency and community ownership to the COVID-19 response, the funds are channelled through the Village Development Fund mechanism established by LAO/030 Project since 2017. This means that the village, district and provincial authorities are cooperating on the need identification, procurement, and implementation through already established mechanisms based on participatory principles.
Staff from the provincial Planning and Investment Department confirm villagers’ identity and entitlements, © LuxDev
Village, government and project representatives keep track on the distribution to ensure compliance with the community’s need assessment, © LuxDev
Various relevant community-led health and food security interventions were identified, which can potentially be supported depending on the local needs, including:
Cash transfer to destitute households for immediate relief;
- Food distribution to households facing severe food shortage and lacking the means to buy food until the next harvest;
- Distribution of soap, disinfectants and backpack sprayers for disinfection of houses;
- Materials for isolating sick or suspected sick people in schools or community halls, such as bedding, nails, plastic sheeting, individual water containers, mosquito netting;
- Water storage containers and water purification where the regular drinking water supply is running low;
- Facemasks and gloves for people taking care of sick or isolated people;
- Emergency funds for hospitalization, transport, and food during hospitalization in case of referral of sick people to health facilities; and
- Awareness raising and Information material on COVID-19 prevention and control.
According to the community priorities, most of the funds are used for food supplies to help the most vulnerable families cope with food shortages exacerbated by the economic fallouts of the pandemic. In comparison, about one quarter of the funds are allocated for hygiene purposes and the prevention of other diseases to help the villages prevent and control a potential COVID outbreak.
Chomsee Community school, built in 2019 with support of LAO/030 and the site of the food and cash distribution to the most vulnerable families of the village, © LuxDev
Community leaders from each of the villages have identified the families most in need of support. This helps ensure that the support goes to the families most in need. They are grouped into destitute, severely food deficient, and food vulnerable households, and are accordingly supported to different extents. On average across the 229 target villages, an estimated 25 % of the population will receive some level of food support, while the 1-2 % destitute families will in addition receive a cash transfer of about 40 EUR for imminent needs. For the general population, the support focuses on ensuring that the communities have access to hygiene products and knowledge on how prevent the spread of the coronavirus in the families, schools, public offices and health centres.
Aerial photo of Chomsee Village in Bokeo Province. To the right, the new Luxembourg funded school where the rice and cash transfer was organised in August 2020, © LuxDev
The COVID-19 situation and the response by the LAO/030 Project, local authorities, and the communities, have increased the awareness of the need for better disaster preparedness, whether linked to pandemics, natural disasters, or long-term climate impacts. As such, it is likely that disaster preparedness will be an important consideration for future support to local and national development planning.
LAOS - A small loan can lift a poor rice farmer out of povertyA story of Bounthavy Daungphachanh
Being a rice farmer, I used to be very poor and I did not have enough food for myself and my family for the year. With little money, no labour and no knowledge on how to improve the soil and the variety of rice, we had very low harvests. So I decided to apply for a loan from the village credit scheme and my first request for a 3,000,000-kip loan was accepted. I used that money to improve the yields by hiring more workers to plant and look after my rice fields, by getting a tractor and by buying more fertiliser to use in my rice fields. Thanks to the credit scheme, I am now able to grow rice seasonally and have good harvests. Now I have enough to eat and a better livelihood.
To find out more about Bounthavy’s story, watch this video:
The village credit scheme, or village bank, is part of LAO/030 Local Development Programme’s efforts to help lift the poor out of extreme poverty and to bring them over the national poverty line. The Programme works in 14 of some of the poorest districts of Bokeo, Bolikhamxay, Khammouane and Vientiane provinces, encompassing 229 villages and counting together 150 000 people, 70% of whom come from various ethnic groups.
LAOS - Village Credit Scheme helps improve lives of the poorest of the poor. A story of Naed Vongprya
Life has been tough since my husband become a disabled person. A few years ago, I wanted to start a household business but no one would give me money beause I had no guaranty for the loan. Then, fortunately I received a first loan of 500,000 kip from the village credit scheme which enabled me to raised some pigs and sell them out for a good price. I have now borrowed 3,000,000 kip from the village credit scheme to grow my pig raising business. So, thanks to the credit scheme, if things go according to plan, I hope I could earn more income to support my whole family through the next batch of pig selling.
Nad Vongprya, a member group of village credit scheme, Bolikhan district, Bolikhamxay province. © LuxDev 2019
To find out more about Naed’s story, watch this video:
The Village credit scheme is part of LAO/030 Programme’s effort seeking to help the poor getting out of extreme poverty and bring them over the national poverty line. The Programme works in 14 of the poorest districts of the Bokeo, Bolikhamxay, Khammouane and Vientiane provinces and particularly in 229 villages counting together 150 000 inhabitants, 70% of whom are ethnic groups.
LAOS - Luxembourg continues to support poverty reduction in Laos
The LAO/030 programme supports poverty reduction in disadvantaged upland areas through practical development combined with governance strengthening. The primary beneficiaries are 150,000 people, mostly ethnic minority groups, in 229 villages with high poverty rates. The programme also works with Caritas Luxembourg, who is supporting Provincial Nutrition Committees in Bolikhamxay and Vientiane province to alleviate the high rural malnutrition rates. Collaboration with another Luxembourg NGO, ADA, focuses on improving poor people’s access to financial services.
The programme focuses on four approaches:
- community-led development for practical and strategic priorities;
- governance strengthening in local development and poverty reduction;
- delegation to all administrative levels and sectors according to their mandates;
- policy dialogue, knowledge management and networking informed by practical development work.
Watch more detail of the programme here: https://youtu.be/elvCpVbq4bA
LAOS - Luxembourg provides support on nutrition in Bolikhamxay and Vientiane Province
The Local Development Programme LAO/030 and Caritas Luxembourg join hands in supporting the nutrition sector in the Lao PDR.
An Executing Agreement (EA) on Nutrition convergence support in LAO/030 target provinces between LuxDev, Luxembourg Development Cooperation Agency and Caritas was signed on 8th February 2019 at the Embassy of Luxembourg in Vientiane Lao PDR.
The EA was jointly signed by the Managing Director of LuxDev, Mr Gaston Schwartz and the President of Caritas Luxembourg, Mrs Marie-Joseé Jacobs. The signing ceremony was attended by Mr Sam Schreiner, Chargé d’Affaires of the Luxembourg Embassy in Vientiane, and by senior Lao officials from the Ministry of Planning and Investment and the Ministry of Health.
This joint support is part of an ongoing development effort of the Luxembourg Aid and Development’s contribution to poverty reduction in Laos, including malnutrition and hunger.
The overall objectives of the Nutrition convergence are to:
- strengthen the coordination among government agencies and civil society in nutrition;
- build capacity of local authorities and Lao civil society; and
- assist in awareness raising of nutrition at community level in the programme target areas in the two provinces.
The total budget for this project is 312,740 EUR. It will run from February 2019 to December 2020.
This collaboration focusses on improving nutrition through better coordination of the Lao Government’s multisectoral nutrition convergence approach. Caritas will support the provincial nutrition committees in two of the Lao-Luxembourg target provinces, Bolikhamxay and Vientiane.
Caritas already has experience with similar work in Xiengkhuang Province, and thereby brings both expertise and credibility to the table. Caritas will also be able to facilitate the inclusion of other NGOs and non-profit associations in the network coordinated by the provincial health departments.
At the same time, the Local Development and the Health Programmes are funding numerous nutrition-related activities in the two provinces, which will benefit from the enhanced coordination by the provincial authorities. These investments will also give leverage to the joint work towards real impact on nutrition in poor communities supported by Luxembourg Aid and Development.
LAOS - 7 reasons why the Local Development Programme LAO/030 uses village development funds to overcome poverty
In late November 2018, Regional Office in Vientiane Laos, as part of the mid-term evaluation team, visited several villages in Bokeo province (north of Laos) where the programme LAO/030 is working with 52 poor and multi-ethnic villages to improve better livelihood through Village Development Fund approach.
On the way to the target villages, we spoke to Mr Sisouk Khounvithong who is the Provincial Programme Coordinator about the village development funds and its planning in general.
Question: Why are village development funds supported by LAO/030 programme important in improving people’s live in the target villages?
Answer: In my view, they are, in many ways because:
1. Each community decides to use the fund based on their real need in a transparent and democratic way; 2. Each community decides, in consensus, to use the fund to help the poorest of the poor in their villages; 3. Each community selects representatives themselves who they can trust and handle the funds; 4. The fund directly meets community needs based on village development potential (geographically and local knowledge); 5. Village planning and its identified activities come from voices of all group (adult men, women and the poor) of people in each community; 6. The village development fund benefits both poorest of the poor households and community as a whole. So, no one is left behind;
7. Each village manages the funds with direct technical support from district authorities.
Village Development Fund Committee member explains the village activities implementation plan to the Mid Term Evaluation Team at Khae village, Parktha District, Bokeo province
Villagers vote for their Village Development Fund Committee and its activities, Piengthueng village, Pha Oudom District
Village Development Fund Committee selection result and village activities priorities and ranking, Piengthueng village, Pha Oudom District, Bokeo
Most of the villagers in Tor Lae, Bokeo province are raising local bees as part of their income generating activity from generation to generation.
Mr Sisouk Khounvithong, on the front row second right, is the Provincial Programme Coordinator and the Deputy Director General of Provincial Planning and Investment Department of Bokeo.
Laos – “Nothing ever becomes real until it is experienced”High-level field visit within the scope of LAO/030 Local Development Programme in Laos
The Lao Luxembourg Cooperation Programme will launch the “Local Development Programme for Bokeo, Bolikhamxay, Khammouane and Vientiane Provinces – LAO/030” in May 2017. This 23 million EUR programme will support poverty reduction in more than 200 villages in the poorest districts of the four target provinces. The project is based on the highly successful Bolikhamxay Livelihood Improvement and Governance Project - LAO/021 Project carried out in 2010-16, which contributed substantially to improving living standards in 60 target villages through innovative poverty reduction strategies.
To help the new programme get off to a good start and to create a common understanding of the planned principles and modalities, the Bolikhamxay provincial authorities arranged a four-day field visit to the LAO/021 project area, including discussions with people in eight of the former target villages.
The participants included representatives from the Ministry of Planning and Investment (MPI), the four provincial planning departments of LAO/030, staff from three districts visited, and project staff. Notably, the Director General of MPI’s Planning Department, Madame Phonevanh Outhavong, and the Director-General of LuxDev, Mr Gaston Schwartz, participated in the visit, along with the LuxDev Regional Representative, Mr Olivier Hecquet.
At a practical level, the study tour gave an opportunity to observe some of the tangible results of the LAO/021 project, including village development funds, credit schemes, district micro-finance institutions, and rural infrastructure such as schools, water supply schemes, and bridges. This established a framework for discussions on the innovative principles for decentralisation, participation and empowerment at province, district, and village levels. Through these mechanisms, the LAO/021 project delegated 56% of its budget to Lao implementing partners, used Lao government structures throughout the project and spent 72% of the funds on village-level interventions with a direct poverty focus. Moreover, the project promoted capacity development through learning-by-doing, supported by targeted training, coaching and technical assistance. These modalities will be adopted and further developed in the new LAO/030 programme.
While decentralisation, participation and local democracy are firmly embedded in the Lao government’s policies, their actual application requires further advocacy and practical examples to ensure that the implementing government agencies have full confidence and understanding of their use. In this regard, the field visit offered an excellent opportunity for discussion among the group of composed of both strategic decision makers and practical implementers. The presence of the two Director-Generals gave further weight to the importance of building LAO/030 on shared values and principles, which is essential for executing a highly decentralised and multi-sectorial programme.
The LAO/030 programme will, over the coming 5-6 months, develop action plans to align the support with the local development plans of the four target provinces. Guidelines and initial capacity development will also be carried out in order for practical activities to commence in earnest at the start of the dry season in September, when the remote target villages are accessible and farmers have completed their busy cropping season.