Supporting resilience of Lao MSMEs in response to COVID-19

The Lao People’s Democratic Republic (Lao PDR) has in recent years seen strong economic growth which has contributed to reduced poverty and improved living standards. However, the country is still facing challenges when it comes to its socio-economic development. With extreme poverty falling from 46 percent in 1992 to 23 percent in 2012/13 and to 18 percent in 2018/19, the elasticity of poverty to GDP growth in Lao PDR was significantly lower compared to most neighbouring countries. Consumption growth had also been historically lower than GDP growth, with consumption growth of the bottom 40 percent lagging particularly behind . The country is part of the group of Least Developed Countries (LDC). With the COVID-19 outbreak, which has resulted in a global health emergency and economic crisis, Lao PDR’s development trajectory is at risk and the country could potentially face devastating consequences. The micro, small and medium-sized enterprises (MSME) sector in Laos constitute the backbone for job creation and employment, accounting for more than 80 percent of employment in the country. The sector is already severely impacted by the COVID-19 pandemic, which has caused a nation-wide lockdown. However, if provided with support, the Lao MSME sector could play a vital role in responding to the COVID-19 crisis and in driving a sustainable and resilient recovery. As a response to the COVID-19 outbreak, the ILO is promoting the resilience and recovery of Lao MSMEs. The project leverages ILO’s prior experiences supporting women- and men-owned MSMEs in Laos, which has resulted in a strong existing network of business associations, financial institutions, worker’s organizations and government institutions, to forge a strong, collaborative and needs-based response. Specifically, the project entails: - Working with financial institutions and other partners to support formal and informal women- and men-owned MSMEs in accessing cash, credit and other financial services; - Supporting efforts to provide continued and reliable information related to COVID-19 support measures and contribute to a more enabling environment for entrepreneurship development and MSMEs; and - Delivering business development services to women- and men-owned MSMEs and aspiring entrepreneurs, including to the informal sector, to build business and financial management skills, financial literacy, promote entrepreneurship and stimulate new innovative and sustainable business ideas. The project contributes to ensuring that the Lao MSME sector more quickly recovers from the COVID-19 crisis and contributes to the revival of the Lao economy. In the longer term, the project contributes to facilitate economic activity and decent employment as well as to poverty reduction by strengthening the enabling environment and providing support to Lao women- and men-owned MSMEs.

Project symbol

LAO/20/02/CHE

Admin unit

CO-Bangkok

Start date

01/12/2020

End date

31/07/2022

Total allocation

826733

Total expenditure

Status

Closed

784356

Development Partners

Switzerland, Swiss Agency for Development and Cooperation

Country/Countries

Lao People's Democratic Republic

Outcomes

Outcome 4: Sustainable enterprises as generators of employment and promoters of innovation and decent work