VIENTIANE, Lao PDR, October 25th, 2010 — World Bank Group President, Robert B. Zoellick, commended Lao PDR for its impressive economic growth and successes in overcoming poverty and promised continued support for the country’s development programs.
“In less than a generation, the incidence of poverty in Lao PDR has gone from almost half the population to just over a quarter. Lao PDR’s commitment to development has brought electricity to most households, schools to most children, and roads to many villages that were once inaccessible,”said Zoellick. “The Bank Group stands ready to help the government build on these successful efforts,”he added.
Zoellick’s comments came at the end of a two day visit to the country, during which he met senior officials including President Choummaly Saysone and Prime Minister Bouasone Bouphavanh. The economy of Lao grew, on average 6.4% over the past decade and poverty declined from 46% in 1993 to 27% in 2008.
In his first visit to the country as World Bank president, Zoellick also visited the Nam Theun 2 (NT2) hydropower project site, which was built with World Bank Group support and is located about 400 kilometers outside the capital, Vientiane.
“Nam Theun 2 project has been transformative for Lao PDR and is helping deliver a development dividend for the country’s poor people with funding for textbooks, roads to connect remote villages to markets and deliver power to rural homes,“ Zoellick said. “It is helping the country to increase public spending on overcoming poverty and boost environmental management programs, while providing significant support for the economy.”
Since the start of commercial operations in April, the Government of Lao PDR has received about $5.6 million from the sale of electricity generated by the Nam Theun 2 hydropower facility. So far about $2 million has been channeled into spending on education in poor districts; $1.7 million for rural roads; $1 million for public health; with the rest of the funds devoted to rural electrification and the environment.
“The Bank is committed to providing continued support to the Government of Lao PDR to make NT2 an excellent example of socially and environmentally sustainable hydropower for the long-term. I encourage the Government to apply the lessons from NT2 as it demonstrates how a large scale project can help deliver real benefits to fund poverty reduction and development programs,” Zoellick said.
Residents living near Nam Theun 2 have seen their lives change as a result of the project. Sok Khampha, a farmer, said: "So much change around us; in the new village we have better houses, a road to market leading to better trading opportunities.”
Souk Gnommany, a fisherman, said the hydropower project has provided him with better access to resources: “We have water, electricity, no need to light candles anymore. The way of making a living is easier. In the old village we had to walk two kilometers to access to water; now it is just a short distance from our house"
In addition to visiting local villages on his trip, Zoellick also went to the Nakai Nam Theun National Protected Area, the largest protected area in Lao PDR and one of the most important areas for biodiversity in Southeast Asia. The commitment to protect this conservation area, nearly seven times the size of Singapore, was a requirement for NT2’s approval.
Zoellick also congratulated the Government on its impressive reform agenda, outlined in the 7th National Social Economic Development Plan that has the goal of graduating from Least Developing Country (LDC) status by 2020. He also encouraged senior government officials to continue to strengthen the management of natural resources, diversify the economy, and address vulnerabilities.
During his visit, Zoellick met representatives from civil society organizations working on biodiversity conservation and environmental protection in Lao PDR. Talks touched on issues of improving sustainable use of natural resources. Zoellick travels from Laos to Nagoya, Japan, where biodiversity will be discussed by a coalition of global partners. Zoellick encouraged Lao PDR to work with the World Bank and other tiger range countries on their Global Tiger Recovery Program, which will also be a topic in Nagoya. The World Bank Group is committed to ensuring social and environmental safeguards of its projects, and close coordination and cooperation between these organizations and the World Bank is an important part of that work.
“Sustainable use of natural resources is essential for poverty reduction and economic growth,” Zoellicksaid. “Biodiversity and ecosystem services also contribute to environmental sustainability, which is one of the Millennium Development Goals and a central pillar of World Bank Group assistance,” he added.
To get a first-hand view of the current business environment and opportunities for private sector development in Lao PDR, Zoellick took part in a round table discussion with representatives of the private sector. He noted the significance of a recently approved $15 million loan to Electricité du Laos by the IFC, the private sector arm of the World Bank Group. Working with the Bank’s fund for the poorest, the International Development Association (IDA), the project aims to promote access to electricity for rural people.
Zoellick’s visit comes as the World Bank Group is working closely with the Government on a Country Partnership Strategy for Lao PDR for 2011-2015 in consultation with development partners, the private sector, and civil society. The new Strategy will support the Government’s 7th National Social and Economic Development Plan.
Lao PDR joined the World Bank in 1961. Since then, the Bank has provided about $1 billion in financing, $762 million in credits, and $238 million in grants to Lao PDR. The Bank’s portfolio in the country consists of 21 projects, including the Nam Theun 2 (NT2) project.
From April 30 to September 30, the government has received about $5.6 million of revenues from the NT2 project. The funds are being put to use:
- The government is constructing 105 kilometers of rural roads in Savannaket (Nong district), Saravan (Smoay and Ta-oay districts) and Sekong (Kaleum and Darkchuang districts) provinces to connect remote communities to the district roads network for improved market access for remote villages.
- In the poorest 47 districts, NT2 revenues are financing a program on improving mother and child services along with providing surgery items. Money is being spent on training to health care staff, medicines, medical equipment, and financing a health equity fund.
- In education, NT2 revenues are financing textbooks, teacher guides, teaching equipment, and providing zinc roofs for year 4 classrooms in poor districts. These expenditures are an integral part of the government's Education Sector Development Program, which was launched 2 years ago.
- Funding is also being used for the government’s rural electricification program in more than 15 villages across Champasack, Laung Prabhang, Savannakhet, and VTE capital provinces.