Objective of the project

Promote the financial inclusion of the Laotian people, especially low-income populations, through the consolidation and professionalization of the inclusive finance sector.

Project Managers

Léa Merino
Wendy Medrano Lazo


Lao Microfinance Association (LMFA)



Strengthening financial inclusion in Laos

In Laos, ADA is working to promote financial inclusion for low-income populations through the consolidation and professionalization of the country's inclusive finance sector.

The microfinance sector is experiencing varying degrees of development across Southeast Asia. According to the World Bank, in 2014, the share of the population of over 15 years of age who held an account with a financial institution was 36 % in Laos and only 22% in Cambodia.

Although there has been a significant increase in recent years in Laos, the microfinance sector is often still in its starting stages and it is largely dominated by informal structures such as village banks. Given limited capacity, supervisory mechanisms have yet to be developed.

In the country, MFIs have grouped together in a professional association: the Lao Microfinance Association (LMFA).

The Lao Microfinance Association (LMFA) was founded in May 2007 as the national microfinance industry network. As of December 2016, the association had 92 members, including 74 regulated microfinance institutions as well as donors, bi/multi-­lateral agencies, NGOs, service providers and resource persons working in microfinance. 72% of registered MFIs in Laos are members of the network.

ADA - LMFA : a partnership for more than 10 years

ADA has partnered with the Lao Microfinance Association (formerly known as Lao Microfinance Working Group) since 2010. The main objectives of this first partnership, which lasted until 2017, were to professionalise the association and improve both its member services and sector-wide communication and transparency.

At the end of 2016, the association underwent an evaluation of its governance and activities. The results of the evaluation were positive and proposed a set of recommendations for the improvement of the LMFA’s operations.

The 2018-2020 project: strenghtening financial inclusion in Laos

In light of this, ADA has looked to extend its support to the financial inclusion sector in Laos for the 2018-2020 period, keeping the LMFA as the key partner on the ground.

The project 2018- 2020 focuses on 5 results as follows:

  • Result 1Support to the professionalization of the microfinance association by reinforcing the LMFA’s position as the key representative body of microfinance practitioners in Laos;
  • Result 2Implement an advocacy strategy to ensure an enabling environment for the sound development of financial inclusion in the country;
  • Result 3Increasing the LMFA’s outreach to include more players of the inclusive finance sector, particularly the Village Banks;
  • Result 4Capacity-building for members, by developing the LMFA’s offer of services, including social performance management and the promotion of client protection principles;
  • Result 5Knowledge management, through the creation and dissemination of information on the sector.

The project will end by 31 December 2020.

Evolution of the project over 2018-2019

Since the beginning of the project in 2018, many of the activities have been implemented accordingly with the objectives. Training programs have been conducted regularly and MFIs have benefitted from technical assistance on social performance.

The support strategy to Village Banks has been developed and new partnerships have been created.

The advocacy strategy was one of the delayed activities but in June 2019, the first Advocacy Strategy Workshop was organised in Vientiane. The event highlighted the role of associations in engaging a diverse group of stakeholders capable of promoting concrete solutions. Other capacity building activities, especially trainings, have been implemented according to plan.

LuxDev LAO/030 project: providing technical assistance for the creation of Village Banks


In 2019, ADA and LuxDev initiated a collaboration within the framework of the LuxDev LAO/030 project (2017-2021) in order for ADA and its long-standing partner LMFA to provide technical assistance for the creation of Village Banks in the 4 provinces in which LuxDev operates. The first phase of the project covered the second semester 2019 and was then extended for 2,5 years until its term at the end of 2021.

2nd semester 2019: first phase of the creation of the Village Credit Schemes

Village Credit Schemes

Over the past 15 years, LuxDev established and supported rural development projects around 46 Village Credit Schemes (VCS) located in 3 districts of the Bolikhamxay Province (Bolikhan, Khamkeut and Vienthong) through the LAO/014 and LAO/021 programmes. The LAO/021 also contributed to set up a Technical Team which aimed at providing ongoing support to the 17 VCSs located in the Bolikhan district.

The LuxDev LAO/030 programme (2017–2021) plans to establish new VCSs in approximately 115 target villages in the 14 poorest districts of the 4 provinces of Bokeo, Bolikhamxay, Khammouane and Vientiane. For this purpose, ADA, with the support of the Lao Microfinance Association (LMFA), was commissioned by LuxDev to initiate the first phase of the creation of the VCSs during the second semester 2019, which consisted of checking the conditions and the readiness of the villages and establishing with them the first governance principles.

2020-2021: pursuing the process of implementation of the new Village Credit Schemes

Village Credit Schemes

Following the achievement of this phase, LuxDev has asked ADA and LMFA to pursue the process of implementation of the new Village Credit Schemes (VCSs) and to establish the necessary infrastructure and organisation in order to ensure the proper functioning of the VCSs (new and existing) and their sustainability in the long term.

The project will strive to reach the following 3 results:
- Result 1: The VCSs provide adequate loans and financial services to all village members;
Result 2: The VCSs are supported by qualified Network Support Organisations (NSO);
Result 3: The VCSs and the NSOs have reached financial and technical capacity and sustainability.

This project has a duration of 2 years to align it with the LAO/030 and will be extended to another 2 or 3 years afterwards.

The project’s outputs are the following ones:
Output 1: Finalisation of the Village Credit Scheme (VCSs) set-up in 3 provinces
Output 2: Establishment of the NSOs
Output 3: Integration of the VCSs into their NSO and Registration of the NSOs as SCU/MFI entity with the BoL (Bank of Laos)
Output 4: Ensure the sustainability of the networks: product adaptation and financial growth
Output 5: Monitoring and Support to the NSO