Lao PDR: Banking as a solution

Microfinance responds directly to triggers of risky migration and vulnerability to traffickers by buffering financial shocks and helping to increase family income by enabling people to start, expand or purchase supplies for businesses. However, the Government of Lao People’s Democratic Republic does not allow non-government organizations to offer financial services; and the reach of formal financial institutions is limited to mostly urban demand. Although studies have shown that even the poorest people in Lao communities have a capacity and desire to save, there have been few interest-earning and safe options available to them. A 2003 study showed that only 11 per cent of the rural population had access to formal financial institutions, and only 1 per cent had bank deposits. In addition, productivity in the agriculture sector, which is the livelihood source of 83 per cent of the population, is low due to low levels of investment. Studies have found that women own and operate most of the registered small businesses in the country, but limited access to market information, technical training and financials services hamper their entrepreneurial activities.