The Laotian agribusiness sector is dominated by family-owned SMEs, which are severely constrained in their growth by a lack of access to affordable credit. The financial sector in turn is reluctant to lend to agribusiness perceiving this sector as highly risky. Through the interventions of the Project as described below, the risk averseness of the financial sector will progressively lower and the access to credit in the target provinces of Laos will gradually improve.
Moreover, the focused promotion of climate friendly investments will modernize the target value chains and increase their competitiveness eventually benefiting the target beneficiaries – smallholder farmers. Focus on environmentally sustainable technologies will contribute to a gradual shift towards climate friendly technologies in the agricultural sector.
Overall impact of the program:
The program’s impact is improved agricultural competitiveness. The outcome is productive and resource efficient agribusiness value chains developed in the project areas (Khammouane, Salavan, Savannakhet, Vientiane Capital, Champasak and Sekong provinces).
Specific objective of the consultancy assignment:
Financial support will be provided to qualified agribusinesses through a matching grant scheme (MGS). AFC will administer the MGS and the smallholder financing scheme. For this purpose, a Financial Management Entity (FME) will be established and managed by AFC. In addition, the FME will design and carry out an awareness raising and capacity building program for the Laotian financial sector.
The project combines two approaches:
- Direct financial and technical support to the agricultural sector in form of grants for selected value chains (rice, vegetables and bio fertilizers); and
- Strengthening the capacities of the financial sector in agricultural lending.