Lao PDR SME Access to Finance Project — World Bank Credit Line and Risk-Sharing Facility for Bank SME Lending

The Lao PDR SME Access to Finance Project (P131201) combined a US$10 million IDA credit and a US$10 million IDA grant, structured as a US$15 million line of credit plus US$5 million in technical assistance, to help Lao commercial banks extend long-term financing to SMEs that otherwise struggled to access credit — at approval, fewer than 20% of Lao SMEs could obtain long-term loans.

Ease collateral constraints for SME lending via a risk-sharing facility routed through participating banks, and strengthen the Department for Small and Medium Enterprise Promotion's (DOSMEP) SME policy capacity through technical assistance.

The project ran from September 2014 to mid-2020 (later extended, with a related emergency-support project following), channelling funds through three participating banks (ST Bank, LCN Bank and Sacom Bank) under the risk-sharing facility, alongside technical assistance and staff training for DOSMEP.

The World Bank's own mid-term review (as of 30 June 2017) recorded 42 SMEs approved for US$4.4 million in sub-loans across the three participating banks, with 21% of beneficiaries female — exceeding the project's 20% target — and zero non-performing loans reported at that point. Separately, Lao-China Nanyue Bank (LCNB) reported to Chinese state media that it had approved nine SME loans totalling over 11 billion kip (about US$1.35 million) by December 2016. On the capacity-building side, 30 DOSMEP staff were trained against a target of 20, and more than 430 officials and stakeholders took part in related training between 2015 and 2017.

The Bank's own mid-term documentation is candid that the project's first year was slow due to limited implementing-agency capacity and delays selecting participating banks, and a separate World Bank Group evaluation of SME lines of credit generally notes a lack of evidence that this instrument reliably benefits SMEs — a caution that applies directly to this project's modest reach of 42 firms against a national SME financing gap.