IFC, a member of the World Bank Group on May 19 granted a loan of $10 million to BFL Ltd to finance small and medium enterprises (SMEs) in Lao PDR. With this, the lender aims to double its SME loan portfolio to more than $100 million by 2020.
While SMEs employ up to 70 percent of the total labour force in Lao PDR, they contribute only around 16 percent of the country’s gross domestic product, much lower than their peers in other regional nations.
Lack of access to finance is a key obstacle to their business growth and contribution to the economy. Less than 20 percent of SMEs have access to long-term credit, which makes it difficult for them to grow and compete against other SMEs in Asia.
Drilling down further into the SME segment, there is significant capacity and opportunity for women entrepreneurs to develop more businesses in Laos if they can access bank financing. The majority of them tend to use savings or informal funding to fulfill their financing needs, and this hampers the growth potential of their businesses.
This loan will help BFL expand its outreach to SMEs, especially women-owned businesses, as it has been proactively enabling women entrepreneurs in Laos to access finance and providing tailored financial solutions as well as financial education and support.
There are significant opportunities for businesswomen in Lao PDR and we have seen many of them develop successful companies that have thrived in the growing Lao economy, said Bounmy Sengphachan, Deputy Managing Director of the BFL Commercial Division. We believe that there are many more women entrepreneurs in the country, who with the right financial support and advice can also develop successful businesses.
This is IFC’s second investment supporting the bank as a long-term partner. In 2015, IFC provided a risk guarantee facility for BFL’s portfolio of loans to women-owned SMEs in Lao PDR, enabling BFL and IFC to share the potential risks arising from the future portfolio of credit to women businesses.
IFC shares BFL’s strong vision and commitment to providing financing to small and medium enterprises, said Phongsavanh Phomkong, IFC Head of Lao PDR. Access to long-term funding will help SMEs expand business and improve competitiveness, contributing to job creation and poverty reduction in the country.
Source: Lao News Agency