Laos

A mountainous and landlocked country, Laos is not lacking in assets. For some fifteen years, the country's economic activity has been very sustained, driven by an economic model based mainly on the exploitation of natural resources (mining, forestry and hydraulic resources). In 2018, this dynamic slowed down when the country was hit by devastating climatic events (drought, floods) which heavily penalised production in the agricultural and manufacturing sectors. The COVID-19 pandemic and the subsequent global economic slowdown strongly affected the Laotian economy in the first half of 2020.

AFD has been supporting Laos in its sustainable development for over 25 years. It finances projects implemented by public authorities, civil society or the private sector, mainly in the agriculture, rural development, biodiversity, heritage protection and development and justice sectors.
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Statuettes, Laos
AFD and Laos: Supporting rural development and developing heritage
Statuettes, Laos

Supporting rural and agricultural development

Coffee shoots Laos

Supporting rural and agricultural development

Over 65% of the population living in rural areas, meaning that it is fundamental to eradicate poverty in these zones. AFD has been a longstanding partner and combines support for public policies, field actions and capacity building for local actors. The aim: to improve living conditions by increasing the quantity and quality of agricultural production, supporting sustainable agricultural practices and promoting market access.

Our action:

  • To accompany the agro-ecological transition by promoting practices, concerted local land-use planning, and the networking of agro-ecological actors. Lao facilitated the Initiative for a regional Coaching of Agroecological transition in Southeast Asia (LICA) with the aim of homogenising regulations and support mechanisms for agroecology in order to develop a common ASEAN position.
  • Support local authorities in planning and building small rural infrastructure. The construction and rehabilitation of small irrigation schemes for the benefit of poor families is being carried out in northern Laos to support the Lao government's policy on poverty reduction by increasing agricultural production capacity through sustainable water supply.
  • Strengthening value chains. AFD has been supporting the emergence of a quality coffee sector on the Bolovens plateau since 1998 and has supported the creation and development of the Coffee Producers' Cooperative (CPC). Support for the CPC has enabled it to demonstrate to the Lao government that well-organized family producers can become key players in the sector. The replication of the CPC model is a development axis for family coffee producers supported by the Prime Minister of Laos.  AFD has also been supporting the tea sector since 2019 with the aim of improving the living conditions and incomes of small tea producers and developing structured governance of the sector in Laos.
  • AFD has been supporting the development and promotion of Geographical Indications (GIs) in the region since 2000. In Laos two GI products have been registered with our support: “petit poussin” rice and Boloven coffee.
  • Promote agriculture that is sensitive to nutritional issues
  • Develop agriculture, livestock farming and fishing for the populations of the Nakai plateau, displaced following the construction of the Nam Theun 2 dam
  • Reconcile conservation and economic development by working with the populations of landscapes rich in biodiversity such as Nam Et Phou Loeuy, Nam Kading, Phou Sithone and Xe Champhone.

Preserving heritage

Ho Prabang, pagoda of the royal palace, Luang Prabang, Laos

Preserving heritage

Laos has long remained away from the tourist circuits. However, the country is full of heritage riches. From a few hundred tourists in the 1990s, it has grown to nearly 5 million visitors (foreigners) in 2019. This attraction constitutes both an opportunity for local economic development and a potential threat to the preservation of sites and landscapes.

AFD supports authorities in the balanced management of UNESCO World Heritage sites. AFD has been working to preserve and develop the heritage of Luang Prabang, the former capital of Northern Laos, since 1998 with a view to reconciling tourism and traditions.

Since 2012, AFD support in this sector has been extended to the sector of Vat Phu Champasak where many pre-angkorian temples can be found (Champasak province). AFD has allocated €6M in financing to better preserve the Vat Phu Champasak site and to create and implement tourist attraction sites. This will help to improve living conditions for local inhabitants and encourage them to preserve their cultures and traditions.

From 2021, cooperation actions in this sector will also be extended to Savannakhet, a central province of the country, which possesses many elements of historical and cultural wealth.  

Supporting the NGO network

Rice paddy, Laos

Supporting the NGO network

The NGO network is very active in Laos. AFD provides financial support via a Civil Society Initiative Facility to six of them for a total of nine projects, five of which are implemented in Laos alone, and four multi-country programs that include activities in Laos:

  • The Laos Cooperation Committee (CCL) supports rural communities in Phongsaly through projects on nutrition, as well as a project on tea production and biodiversity. The CCL is also helping to diversify agricultural production and facilitate market access, while promoting environmentally friendly (or agro-ecological) practices in Oudomxay province.
  • GRET supports the sustainable participation of civil society in the co-management of sustainable bamboo and rattan supply chains. It is also involved in a project on commons and governance, which will produce diagnoses and recommendations on the impact of the 'commons' approach on shared governance and on the support methodology.
  • Aide Odontologique Internationale (AOI) improves oral health through the analysis of fluoride toothpastes, prevention and control of infections in hospitals, and capacity building of dentists and practitioners, in close collaboration with the Department of Curative Medicine. Over the past 2.5 years, emphasis has been placed on supporting district hospitals in the capital city of Vientiane in their infectious disease prevention and control activities.
  • Tetraktys involves and integrates communities in the ecotourism development of the Konglor Cave in the villages of Konglor and Natane in Khammouane province.
  • AgriSud strengthens the skills of the populations of the Viengkham district in the Luang Prabang province, to combine production, management and protection of natural resources.
  • AVSF is strengthening farmers' organisations and civil society for the agro-ecological transition of territories, for sustainable and equitable commodity chains.

Supporting the justice sector

Supporting the justice sector

France is one of the Laotian authorities' oldest partners in this sector. It has supported the modernisation and functioning of the justice system through the implementation of successive projects, with the assistance of several French actors. The Laotian partners recognise this support and appreciate the professionalism of French institutions and experts. In 2019 AFD allocated €1.5M of financing to support judicial institutions by providing human resource support to the Ministry of Justice and the high judicial authorities (Office of the Supreme People's Prosecutor - OSPP - and the Supreme People's Court - PSC) to promote effective, equitable and timely access to justice for populations.

Our other activities

Vegetation, Laos

Our other activities

AFD also finances regional projects with activities in Laos. It is present alongside:

  • The NGO Wildlife Conservation Society (WCS), in addition to the national ECILL project for community management of protected areas in the Indo-Burmese hotspot (Myanmar, Cambodia and Laos).
  • The Mekong River Commission (MRC), in charge of dialogue between the countries of the region for the management of the Mekong River, on which some 65 million people depend.
  • GRET and its 26 partners for the implementation of the ASSET programme on the agro-ecological transition of food systems.
  • The Pasteur Institute of Laos and its first European standard laboratory, as well as the ECOMORE 2 project, focusing on the emergence of diseases linked to climate change, in particular dengue fever and leptospirosis, and a complementary component linked to COVID-19.
  • AFD Group, via PROPARCO, supports local economic activity thanks to the ARIZ guarantee, a risk-sharing tool to encourage banks to lend to small and medium-sized enterprises and microfinance institutions. To date AFD is working with the Banque Franco-Lao (BFL) and ARIZ has facilitated over 7 million euros in loans to SMEs.
  • Finally, PROPARCO, AFD Group's private sector financing subsidiary, has granted several loans to development projects in Laos. Proparco has participated in financing a telecommunications company (loan repaid today), two hydropower dams (Nam Theun 2 and Theun Hinboun) and an agroforestry project (Burapha) via a USD10M loan allocated in 2018. The latter loan enabled the company to extend the area of Eucalyptus and Acacia plantations in Vientiane Capital and Vientiane province.

In addition, AFD has been financing projects identified and implemented in developing countries by French local authorities for several years via the Facility for financing initiatives of French local authorities (FICOL). In Laos, financing totalling €1 136 000 has been allocated in 2019 by AFD to co-finance a partnership project between the Syndicat Mixte de l'Espace de Restitution de la Grotte Chauvet (SMERGC) and Khammouane province to support the latter in obtaining the UNESCO World Geopark label for a targeted area in the Khum-Khan and Nakai districts (€631 500). Secondly, a cooperation project between the Centre Val de Loire Region and the province of Luang Prabang has been set up, targeting the promotion of access to drinking water, hygiene and sanitation (€504,440).

220
million euros committed since 1994
76
projects funded
1994
start of AFD’s operations in Laos

Laos has made considerable progress in development over the last two decades, reducing poverty by more than half between 1993 and 2019 while at the same time GDP grew by an average of 7.3% per year, reducing malnutrition and improving education and health outcomes. However, the country is still classified as a Least Developed Country (LDC).

Nevertheless, Lao PDR has assets: important mineral, forestry and hydroelectric resources, low agricultural production but very characteristic agricultural land and a political will to distinguish itself by the quality of its products. In order to further reduce poverty and boost prosperity, the country will need to implement reforms to support greener and more inclusive growth, diversify income sources and encourage private sector participation while managing its vulnerabilities to the effects of climate change.

AFD has been active in the country since 1994. The high level of public debt (70.9% in 2020) limits AFD's intervention to financing in the form of grants exclusively.

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