Washington, D.C., June 9, 2014 – The World Bank’s Board of Executive Directors today approved US$10 million grant and a US$10 million credit from the International Development Association (IDA) to support the growth and expansion of small and medium enterprises (SMEs) in Lao PDR by providing access to long-term credit.
SMEs are an important part of the economy of Lao PDR and employ a large part of the population. Yet, less than 20 percent of SMEs can access to long-term credit, which makes it difficult for them to grow and compete against other SMEs in Asia. The newly approved SME Access to Finance Project will provide long-term funds to enable SMEs to purchase new equipment, expand their business premises, upgrade their technology, and scale up their business operations. The project will be implemented by the Department for Small and Medium Enterprise Promotion (DOSMEP) under the Ministry of Industry and Commerce.
The project will focus on providing line of credit to commercial banks to enable them to provide long-term credit to SMEs in local currency. In this project, the IFC and the World Bank will also support the establishment of a risk-sharing facility to encourage commercial banks to lend to SMEs with limited collateral. In addition, the project will provide technical assistance to strengthen DOSMEP’s ability to formulate and implement public policies that promote access to finance for SMEs.
The SME Access to Finance project is aligned with the Government’s National SME Development Plan, and the Trade and Private Sector Development Roadmap. The Project is a critical part of the World Bank Group's Country Partnership Strategy 2012-2016 with Lao PDR, which aims to enhance competitiveness and connectivity by supporting diversification of trade and private sector development and an efficient regulatory framework for private sector.