Microfinance in Rural Areas – Access to Finance for the Poor


Frauen und Männer im ländlichen Raum haben besseren Zugang zu nachhaltigen Finanzdienstleistungen
Women and men in rural areas have better access to sustainable financial services


The AFP Program has been supporting the development of village banks in the Lao PDR since 2009 to improve the access to financial services to the population living in rural areas. The Project is active in 6 provinces and has successfully established 7 Microfinance Institutions, referred to as Network Support Organisations (NSOs) and is reaching more than 300,000 rural members through about 800 village banks (VBs). VBs are community managed savings- and credit groups and are accompanied by NSO personnel for support and supervision. At the macro level, the Project is working with the Bank of the Lao PDR (BoL) to improve framework conditions for the provision of sustainable financial services. One of the core aspects is to embed the NSO-VB System into the Lao legal framework to sustainably secure the poor people’s savings.


  • Macro-Level: Policy Level (BoL)
  • Meso-Level: Institutional Level (NSO)
  • Micro-Level: Individual Level (Village Bank)


The rural and poor population of the Lao PDR


  • 6 out of 7 NSOs are operating profitably (financial sustainable)
  • Women have easier access to financial services in rural areas (female single village bank accounts above target)
  • Village Bank members have access to an annual financial literacy training (capacity building for individuals)




Many villagers in Laos engage in farming to cover their daily expenses. The village banks of the GIZ-AFP Program allow villagers to conveniently access financial services to deposit their savings or to take loans for income-generating activities. In this case, a village bank member has increased his family’s income by using savings and borrowing additional money from the village bank to invest in equipment to generate additional family income. The village bank client has enhanced the family’s economic status step-wise and is very thankful for this opportunity.

I, Mr. Mai-Inseng, am a village bank member in Luang Namtha. My family engaged in farming and later started selling oil in my village to earn extra income. After my family had saved up some money, we needed more money to make an investment to rent a fishpond and feed pigs. Therefore, I consulted with my family to get a loan of 50,000,000 kip (approx. 5,000 EUR) from the village bank the NSO just established at that time. I was very happy to have the village bank helping us to increase the family’s income by 60,000,000 Kip/year (6,000 EUR).

The village banks also disburse emergency loans to members in case of unexpected events, such as sickness or accidents. Access to emergency loans is possible within a short time (even if no regular village bank meetings occur) and with lower interest rates than regular loans. The loan product shall avoid that affected families do not fall into severe poverty.

I, Mr. Khamchanh living at Thiew village, am selling rice noodles and fried banana in the evening. I have been a village bank member for 2 years now. In early January 2019, an unexpected event happened to my family, as my eldest son was involved in a motorcycle accident, causing bad injuries that had to be treated at the provincial hospital urgently. During that period, we were short of money and could not pay the medical bills to the hospital. Luckily, we could borrow an emergency loan from the village bank with lower interest rates. We are very thankful.




11 May 2009 - 31 May 2022

Commission Agency