In 1986, Lao People’s Democratic Republic (PDR) began its transition from a centrally-planned to a market-oriented economy amidst uncertain prospects for rapid and sustainable economic development. Despite considerable developmental challenges, Lao PDR is on an increasingly sustainable growth path, with the opportunity to build on reforms achieved so far. Over the past decade, poverty reduction has been addressed directly through service provision rather than through growth. Lao PDR’s 2012 Human Development Index gives the country a rank of 138 out of 187 countries.
How We Are Helping?
UNCDF has been helping Lao PDR to meet its development challenges through joint programming with UNDP on local development finance and inclusive finance.
A UNCDF-supported programme, Governance and Public Administration Reform - Saravane, was designed to pilot improved district-level public expenditure management and financing, and support the Government in implementing its inter-governmental fiscal relations policy framework. Recommendations and lessons generated from this programme fed into a second phase, known as Governance and Public Administration Reform for Strengthening Basic Service Delivery: District Development Fund component (GPAR/SBSD: DDF), which builds upon and replicates successful initiatives at central and provincial levels, and attempts to address policy concerns. UNCDF has also recently approved a new programme, Strengthening Capacity and Service Delivery of Local Administrations (GPAR SCSD), which aims to improving the capacity of the civíl service at national and sub-national level to better manage and deliver services to the poor.
In inclusive finance, since June 2010 UNCDF has worked jointly with UNDP to support the Bank of Lao in broadening access to land, markets and economic services. Making Access to Finance more Inclusive for Poor People addresses key issues of capacity and infrastructure at the macro, meso and micro level, improving the policy and regulatory environment while strengthening the financial sector infrastructure as well as the capacity of financial service providers. With support from the Bill & Melinda Gates Foundation, The Least Developed Countries Fund for savings-led market leaders for inclusive finance (MicroLead), provides loans and grants to leading microfinance institutions and financial service providers on a competitive basis.
Moreover, UNCDF, Sida and AusAID have developed the Mobile Money for the Poor programme (MM4P) to support branchless and mobile financial services in Nepal to demonstrate how the correct mix of financial, technical and policy support can assist in scaling up sustainable branchless and mobile financial services that reach the poor in very low-income countries.
To address the climate change challenge in Lao PDR, UNCDF is piloting its “Local Climate Adaptive Living Facility”. The facility, known as LoCAL, increases climate change adaptation financing while strengthening the capacity of local governments and of the local climate change adaptation planning process through a system of performance-based grants.