Project Summary: Financing for SME Access to Credit
This project aims to enhance access to finance for Small and Medium Enterprises (SMEs) by providing long-term funding to financial institutions. It includes components such as a line of credit facility for SME loans, provision of technical assistance for capacity-building, and support for SME banking strategies. The project has shown progress in loan utilization across various sectors and sizes of enterprises, contributing to the growth and sustainability of SMEs.
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The 12thPEC Meeting SME Access to Finance Project December 12, 2019 Supported by 1
Outline Project Objective and Components Project Implementation and Progress of each components (As of November 30, 2019) The results achieved under the project (based on the Results Framework) to date The Proposed Work Plan Activities for 2020 2
Key Project Information Project Number P131201 September 15, 2014 Effectiveness Date August 14, 2014 US$10 million US$10 million Grant: US$ 7,624,071 Credit: US$9,083,799 June 30, 2020 IDA 54710 IDA H9580 Signing Date Credit Amount Grant Amount Disbursements Closing Date Credit Number Grant Number Committed: Cumulative to date: US$ 17,821,583 Total: 16,938,860 Line of Credit: US$ 13,600,000 Technical Assistance: US$ 3,338,860 (including first advance payment to ILO 231,550) 3
The Project Development Objective and Components The objective of the Project is to provide long-term funding sources for banks to provide long-term credit to SMEs. Components (Parts, as in FA) of the Project: Component 1: Line of Credit Facility Provision of a line of credit facility to PFIs for extending long-term local currency loans to SMEs for the implementation of investment Sub-projects. Component 2: 1. Provision of TA to DOSMEP and other relevant agencies to strengthen their capacity to formulate and implement strategies, policies, instruments and other activities related to the promotion of SMEs, and to implement, monitor and evaluate the Project. 2. Provision of TA to PFIs and other relevant financial institutions to improve their SME banking strategies, products and practices, including their compliance with environmental and social due diligence safeguard requirements. 3. Provision of TA to SMEs to build their capacity in business development and administration and financial management. 4
Component 1: Line of Credit Summary of Loan Utilization As of Nov 30, 2019 16 168 Contracts ( (1 161 MSMEs) ) By Sectors - - Trade 88 Contracts (52.4%) - - Services 56 Contracts (33.3%) - - Agriculture 5 Contracts (3%) - - Industry 14 Contracts (8.3%) - - Handicrafts 5 Contracts (3%) By Sizes - - Microenterprises 71 Contracts (42.3%) - - Small Enterprises 93 Contracts (55.4%) - - Medium Enterprises 4 Contracts (2.4%) 6
Component 1: Line of Credit Summary of Loan Utilization from Jan November 30, 2019 and in Sept 2016 November 30, 2019 Value in mil USD (Jan-Nov 30, 2019) WC IC Disbursed 0 0 0.19 0.07 1 1 0.39 1.2 1.58 2.27 Value in mil USD (Sept 2016 - Nov 2019) WC IC 2.00 2.00 2.12 2.06 2 2 0.41 1.2 6.53 7.26 # of Sub- Loans 58 52 32 26 168 % Fund allocated # of Sub Loans Disburs ed 100 100 94 96 98 PFIs Available Disbursed 4.00 4.18 3.76 1.54 13.48 SACOMBANK ST Bank LCNB LaoVietBank Total 4 4 4 0 0 5 10 24 39 0.00 0.00 0.24 0.06 0.30 0.27 0.85 1.52 2.64 1.6 13.6 The numbers of sub-loan categorized by sectors and types of loan borrowing as November 30, 2019 # of sector Service 20 10 12 14 56 # of Sub-Loans (SL) WC IC 31 29 13 7 80 PFIs women Total 58 52 32 26 168 Trade 34 35 10 9 88 Mfg 4 7 10 3 24 SACOMBANK ST Bank LCNB LaoVietBank Total 27 23 19 19 88 36 33 12 13 92 The STB, LCNB and LVB have fully utilized the funds by June 30, 2019. To date, Sacom Bank, ST Bank, Lao China Bank and LVB have disbursed almost 100%, 100%, 94% and 96% of the amount approved, respectively 6
Component 2: Technical Assistance to PFIs, Other commercial Banks & stakeholders through AFC Six different topics of trainings were provided for PFIs, other C-Banks during Aug Dec 2018 ( including fifteen banks have benefited from the program namely: SACOMBANK; STB; LCNB; LVB; BCEL; LDB; APB; ACLEDA Bank; BFL; JDB; Vietin Bank; Phongsavanh Bank; BIC Bank; Indochina Bank) and LBA and government staff (see more details in the annual report 2018) TA to PFIs: Under the first phase the training provided to PFIs is shown in the Table below: # Trainings 2 Trainings @ 3 days each Training Topics # 0f Participants 49 Target Group 4 PFIs 1 SME Market & borrower assessments, products & credit analysis 2 2 trainings @ 3 days each Concise version: SME Market & borrower assessments, products & credit analysis, credit risk management (of which one training conducted by LBA trainers) Credit risk management: how to reduce the risk of delinquency Portfolio management workshop 43 Non-PFIs 3 2 trainings @ 3 days each 43 4 PFIs 4 2 workshops @ 0.5 days each 4 workshops @ 0.5 days each 3 training sessions 16 2 PFIs 5 SME business opportunities for senior management 25 4 PFIs 6 ToT training for LBA trainers 2 LBA trainers Total Number of Participants 2 LBA Trainers 7 178
Component 2: ILO-Technical Assistance to SME (Cont.) The contract with the ILO for phase II of the Technical Assistance Provision to 200 registered SMEs was signed. ILO implementing the first phase of the TA to SMEs. The contract has been extended with additional financing to train more SMEs, which is on-going. There are 37 Trainings by 8 BDSs (EDC, MFL, LJI, MFA, SSC, TACDO, TOHLAO, YEAL) in 9 provinces (Attapeu, Champasack, Luangnamtha, Luangprabang, Oudomxay, Salavan, Vientiane Capital, Xiengkhouang, Savannakhet). Summary ILO Trainings to MSMEs by Business Status as of 30.11.2019 (exclude number of Unclear Business Size) Total MSMEs Total SMEs Business Status Micro Small Medium Registered 106 141 4 251 145 Unregistered 214 190 4 408 194 Total 320 331 8 659 339 There are 37 Trainings by 8 BDSs (EDC, MFL, LJI, MFA, SSC, TACDO, TOHLAO, YEAL) in 9 provinces (Attapeu, Champasack, Luangnamtha, Luangprabang, Oudomxay, Salavan, Vientiane Capital, Xiengkhouang, Savannakhet). PRC Meeting on 17 Nov, 2017 8
Component 2: ILO-Technical Assistance to SME (Cont.) Summary ILO Trainings to MSMEs by Location as of 30.11.2019 (Registered & Unregistered; exclude number of Unclear Business Size) Number of training Total MSMEs Total SMEs No. Province Micro Small Medium Vientiane Capital Champasack Xiengkhouang Luangprabang Oudomxay Attapue Luangnamtha Saravanh Savannakhet Total 1 22 175 204 5 384 209 2 3 4 5 6 7 8 9 3 4 2 2 1 1 1 1 25 49 18 24 4 7 8 10 27 28 15 15 15 16 4 7 2 0 0 0 0 0 0 1 54 77 33 39 19 23 12 18 29 28 15 15 15 16 4 8 37 320 331 8 659 339 9
Component 2: Technical Assistance to DOSMEP, MOIC and other key stakeholders 1. Some products/tools for MSME Development and under implementation: The contract between DOSMEP and AFC for phase II of the Technical Assistances (SME Banking Strategy) to 3 Commercial Banks (2 PFIs and 1 non-PFI) was signed; An Action Plan for the implementation of the SMEs Development Plan 2016 2020 was implemented and the draft of report has been shared with DOSMEP by the consultants; Monitoring and evaluation system and tools: M&E system and tools were developed based on lessons learned with the provision of TA by the ILO and AFC. In addition, the tracer study on the outcomes of the LOC component was prepared by the M&E Consultant. Workshops and training conducted by DOSMEP for PFIs, SMEs, MOIC-DOSMEP, MOIC, MOF and LNCCI : 1) Capacity building/training and workshops on E&S, SME Development Plan, Finance and Procurement and English skills were provided for over 1000 participants from Vientiane and the provinces. 2. 10
Component 2: Technical Assistance to DOSMEP, MOIC and other key stakeholders MOIC officers studied English Language at Vientiane College: 2019 (72 funds, 2 semesters) From September 1st, 2016 to August 30th, 2019 for 7 semesters, 254 funds for 95 Officers (50 female Officers). Number of semester range from 1 7 semesters meaning some officers for all 7 semesters, in average approximate of 3 semesters per 1 officer and 96% of officers passed the class. Summary of grading in 7 semesters: most of officers performed well in their studies as there are 155 times of B grade and 70 times of C grade out of 245 times. Level of highest English language are mostly in the Beginners (30 officers) and Elementary (43 officers) out of 95 Officers 11
The Results Achieved under the Project (based on the Results Framework) to date (1) VII-PRC Meeting on 27 Nov, 2019 12
The Results Achieved under the Project (based on the Results Framework) to date (2) Level of Indicator Target yellow = expected to be achieved until project end orange = indicator in danger not to be achieved grey = data-collection still to be done Indicator Name Baseline End Achieved (30/10/2019) green = achieved Remark/Status of Indicators 16 SMEs are currently rated B and might soon become NPLs Performance of SME loans (NPLs) (Percentage) 1: LOC 0 5 0 Number of SME Banking Strategies developed and adopted by PFIs (Number) AFC assignment not yet implemented 1: LOC 0 2 21 DOSMEP staff have received English language training (however some of these staff might have left DOSMEP by now) Out of current 34 DOSMEP staff 26 have provided information on training participation. 20 out of them have received trainings. Participation in further trainings will be summarized in the Impact Assessment Number of DOSMEP Staff receiving training (Number) 2: TA 0 30 Number of SMEs benefiting from Technical Assistance (Number) until Nov 2019, 659 MSMEs have participated in ILO trainings. (408 registered vs. 251 unregistered; 339 SMEs vs. 320 Microenterprises) ILO Trainings on FM, BP, ACC 2: TA 0 800 A cross-ministerial and outcome-oriented SME Development Action Plan (2021-2025) is developed (Text) 2: TA 0 1 Consultant has not (yet) provided a 2021-2025 action plan PRC Meeting on 17 Nov, 2017 13 13
The Proposed Work Plans main Activities for 2020 # Components Comments 1 Component 1: Line of Credit (Completed) 2 Component 2: Technical Assistance Technical Assistance to DOSMEP/NIU & Project Management: To carry out a study and develop a Policy Framework for startup ecosystem in Lao PDR. A consultant is in the process of being selected; The development and establishment of a SME Statistics System. A consultant will be selected shortly for this assignment. Select consultant 2.1 Select consultant 2.2 Technical Assistance to PFIs and potential Commercial Banks: (Second phase of TA for PFIs On-going Technical Assistance to SMEs: Scaling up the TA for MSMEs for second phase (six months extension) 2.3 on-going 3 Project Impact Assessment To be initiated 14
Thank you & Questions 15
