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Promoting an interest in interest
Explaining the concept of paying interest on savings is one task facing the German Enterprise for International Cooperation (GIZ), which has started a project to expand access to finance in rural villages of Vilabouly District, Savannakhet Province.
For some rural communities in the project area, paying interest on savings is an innovative concept. In the past, some community members were reluctant to save money in any sort of fund. Some did not trust such a savings system, while the concept of paying interest was completely new to others.
The new initiative, which aims to overcome such challenges, was launched on April 6 at a ceremony in the district.
The project is a public private partnership between GIZ and Minerals and Metals Group Lane Xang Minerals Limited Sepon Operations (MMG LXML Sepon), the gold and copper mine.
The aim of the cooperation is to help alleviate poverty by providing financial services to poor people in a sustainable way. If people are able to save and borrow money, and also access support for small business development, they may be able to consider a range of livelihood options and thereby improve the quality of their life.
“This is a good example of how private and public partners can benefit from working together,” said Director of GIZ's microfinance project Klaus Prochaska.
“MMG LXML Sepon wants to draw on our expertise to help lay the groundwork for viable livelihoods that assist villages now and into the future without being dependent on the mine. GIZ wants to expand access to finance for poor communities in Laos.”
“We firmly believe that successful development cooperation needs private sector involvement,” he said.
MMG LXML Sepon has provided US$265,000 to trial the microfinance project across 38 villages in Vilabouly district. By November of this year, each of those villages will have their own village bank. At that point, the two partners will discuss an extension of the cooperation with the district administration.
GIZ has helped establish village banks in 322 villages in Attapeu, Bokeo, Luang Namtha and Xayaboury provinces, reaching almost 25,000 families. Total savings in the banks stand at 10 billion kip.
vientiane times
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