Democratic Republic. Investing in rural people in the Lao People s. Rural poverty in the Lao People s Democratic Republic

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1 IFAD/G.M.B. Akash Investing in rural people in the Lao People s Democratic Republic Rural poverty in the Lao People s Democratic Republic The high growth rate achieved by the Lao People s Democratic Republic since the introduction of economic reforms in the mid- 1980s has resulted in a steady decline in poverty. The country has made impressive progress in economic growth, with the proportion of poor people falling from 39 per cent of the population in the mid- 1990s to 27.6 per cent in However, the country remains one of the poorest and least developed in South-East Asia. Although social indicators have also shown an improvement, they are still among the lowest in the region. Malnutrition is still very high: 44 per cent of children under 5 are chronically malnourished. The Lao People s Democratic Republic is also more rural in character than any other country in South-East Asia. About three quarters of the total population lives in rural areas and depends on agriculture and natural resources. Poverty is particularly concentrated in these areas. While agriculture is the mainstay of the economy, farming is largely practised at the subsistence level, and productive conditions for farmers are generally poor.

2 Poverty and extreme poverty are most common in mountainous regions, where the majority of the country s ethnic groups live. In upland areas, the poverty rate is as high as 43 per cent, compared with about 28 per cent in the lowlands. The poorest groups in the lowlands are those that have been resettled from mountain regions. In general, the most disadvantaged households are located in areas that are vulnerable to natural disasters; have no livestock; include a large number of dependants; and are headed by women. Women generally work longer hours than men, often taking on about 70 per cent of farming and household tasks, as well as caring for young children. They also receive less schooling. The literacy rate for women is 54 per cent, compared with 77 per cent for men. Ethnic women and girls, especially those in the highlands, are the most vulnerable members of rural communities. Women in ethnic groups comprise 70 per cent of the illiterate population and suffer further isolation given that few of them speak the national language. Poor rural people depend on agriculture for food and income, but agricultural conditions are often unfavourable and productivity is low. Farmers struggle to meet food requirements, especially when their households are large. Most use traditional farming methods. They lack knowledge of new technologies and skills to improve yields, have few inputs, and their landholdings tend to be too small for paddy cultivation or production of other crops. Declining soil fertility also affects productivity. Few farm households have access to irrigation. Livestock diseases spread unchecked, causing loss of animals. Because of declining yields of rice and other crops, in many parts of the country households are forced to use wild forest resources to provide food and generate cash. This unregulated exploitation of important natural resources causes serious environmental damage and ultimately exacerbates poverty. The Government s programme of opium eradication has been largely successful, but continued investment is required to support the development of sustainable alternatives to the cultivation of opium poppies as a cash crop. Poor, remote rural communities are also geographically and institutionally isolated. During the rainy seasons as many as half of all Lao villages become unreachable. Social isolation is a particular problem for upland ethnic peoples, who are marginalized in many ways because of their languages, customs and religious beliefs. In addition, rural communities have very limited access to government and financial services, roads, markets, basic education and health services. They are largely cut off from the benefits of a market-oriented economy, and their lack of education prevents them from gaining access to information that would help them improve their living standards and know their rights. Eradicating rural poverty in the Lao People s Democratic Republic The Lao People s Democratic Republic has formulated its development strategy for the period in the seventh National Socio-Economic Development Plan (NSEDP). Rural development remains central to the Government s development and poverty eradication efforts. The orientation of the country s new rural strategy, for the period through 2020, includes a strong focus on modernizing agricultural production and creating value-added food and agricultural products. The strategy aims to reduce rural poverty, maintain food security and apply science-based management to natural resources. Development of the agricultural and natural resources sector is aligned with the Millennium Development Goals (MDGs) and to support regional programmes, especially those of the Greater Mekong subregion and the Economic Community of the Association of Southeast Asian Nations. 2

3 IFAD/G.M.B. Akash IFAD s strategy in the Lao People s Democratic Republic IFAD began operations in the Lao People s Democratic Republic in Since then, it has provided a total of US$117.4 million in loans and grants for 13 programmes and projects. IFAD supports the Government of the Lao People s Democratic Republic in implementing the seventh NSEDP and the National Growth and Poverty Eradication Strategy, and achieving the MDGs. In accordance with the consensus that emerged from the in-country consultation process, IFAD s strategy is to ensure that poor rural people here have increased opportunities for sustainable food and nutrition security and livelihoods. Together with government agencies and development partners, IFAD has identified areas in which it has a comparative advantage and complements other donors activities. Specifically, the IFAD Country Strategic Opportunities Programme has three main objectives, focused on improving: Community-based access to and management of land and natural resources Access to advisory services and inputs for sustainable, adaptive and integrated farming systems Access to markets for selected products. Projects: 13 Total cost: US$294.8 million Approved IFAD financing: US$117.4 million Directly benefiting: 224,475 households The following cross-cutting issues are common to all three strategic objectives: Capacity-building of government, beneficiaries and service providers Engagement with ethnic groups Engagement with women as key partners in all production and marketing systems Strategic infrastructure related to farming systems (e.g. small-scale village irrigation) or markets (e.g. farm-to-market roads) Formation of farmer and producer common-interest groups Resilience to climate-related risks and enhanced capacity to adapt to climate change. 3

4 IFAD/G.M.B. Akash IFAD in Asia and the Pacific IFAD s investments in Asia and the Pacific comprise its largest regional portfolio. As of the end of 2013, it was providing more than US$1.765 billion in financing for 60 ongoing programmes and projects in 18 of the region s 30 countries. IFAD also provides regional and country-specific grants across the region. With cofinancing by development partners and funds from governments and other domestic sources, together these operations represent a total investment of more than US$3 billion. Ongoing initiatives supported by IFAD in the region focus on: Connecting rural producers to markets and creating jobs Invigorating and transforming rural communities Strengthening the capacities of women and young people Expanding the use of climate-smart technologies and sustainable resource management practices Partnering with the private sector to drive rural growth. More than half of resources allocated to grant-funded programmes in Asia and the Pacific support research on innovative technologies, while about a third support training and capacity-building in rural communities. Other grant-funded activities involve advocacy, policy dialogue and knowledge-sharing. 4

5 Ongoing operations Vientiane Sustainable Natural Resource Management and Productivity Enhancement Project Soum Son Seun Jai - Community-based Food Security and Economic Opportunities Programme Southern Laos Food and Nutrition Security and Market Linkages Programme Southern Laos Food and Nutrition Security and Market Linkages Programme This programme operates in five districts across three southern provinces: Phouvong and Xansay in Attapeu Province, Dakcheung in Xekong Province, and Ta Oy and Samuay in Salavan Province. These are among the poorest districts in the country. Rural people living in the districts face particular constraints resulting from their remote location and isolation, and the households of ethnic groups which make up a majority of the population are among the most food-insecure. Total cost: US$77.9 million Approved DSF grant: US$9.7 million Duration: Directly benefiting: 10,500 households Cofinancing: Asian Development Bank (US$60.6 million) The programme s goal is to contribute to reducing extreme poverty and hunger. Specifically, it focuses on: Food and nutrition security and pro-poor market access Rural financial inclusion Institutional support. The main target group for the programme comprises the populations of 175 villages that combine conditions of poverty with production and market potential. Women constitute a specific cohort within the main target group to ensure their equal or priority access to programme services and benefits. Soum Son Seun Jai Community-based Food Security and Economic Opportunities Programme This programme targets approximately 17,000 households in 225 villages where the incidence of poverty is greater than 30 per cent. It comprises nine districts in Sayabouli and Oudomxai provinces. The main target group consists of ethnically diverse poor rural households. The two primary subgroups are: Highly vulnerable, food-insecure households with limited capacity to enter the market Total cost: US$19.3 million Approved DSF grant: US$14 million Duration: Directly benefiting: 17,000 households Cofinancing: World Food Programme (US$3.7 million), German International Cooperation (US$0.4 million) Poor households that are moderately food-secure and have a greater potential to enter the market. 5

6 IFAD/G.M.B. Akash Both categories share a common livelihoods system based on farming rainfed crops, raising livestock, collecting forest products and wage labour. Young people are also part of the target group; they benefit from mentoring activities through linkages with agricultural universities and ethnic schools. The goal of the programme is to contribute to the reduction of extreme poverty and hunger in the two provinces. The development objective is to ensure sustainable food security and income generation for rural poor people in the target villages. The programme will develop new pilot approaches to creating integrated farming systems and links to markets. These two components are closely interconnected, since the target group lacks access to services promoting enhanced subsistence farming or marketing of cash crops, and is at a disadvantage when contracting with traders. In this context, an integrated and flexible approach is essential to addressing location-specific challenges among the rural poor. Capacity-building, knowledge management, community-based natural resource management, farmers organizations and gender mainstreaming are integral to the programme. Sustainable Natural Resource Management and Productivity Enhancement Project This project aims to achieve more efficient and sustainable management of natural resources and improve agricultural productivity in the southern part of the Lao People s Democratic Republic. Through an IFAD grant, the project supports the Government s efforts to maximize the productivity of existing arable land in an area that is limited by topography, undeveloped water resources and inadequate market access. Project activities are in line with the Government s overall objectives for productivity and commercialization of agriculture, as well as protection of natural resources. Total cost: US$36.8 million Approved DSF grant: US$15.0 million Duration: Directly benefiting: 11,250 households Cofinancing: Asian Development Bank (US$20.0 million) 6

7 Increasing agricultural productivity is crucial to maintaining the country s recently achieved self-sufficiency in rice. Pockets of food insecurity are still common, particularly where the road network is underdeveloped. One of the project s main target groups is poor farming households in lowland areas, which suffer from lack of market opportunities and limited marketing surpluses, as well as lack of secure land tenure. Another target group includes poor farmers in upland areas whose livelihoods are threatened by lack of secure land tenure and limited land for agriculture, inadequate awareness of their rights and low literacy levels, and poor access to markets. The project will encourage poor farmers to join farmers organizations and producers associations, making them more attractive partners for the private sector while also increasing their capacity to negotiate with potential investors. At the provincial and national levels, the project will build capacity in managing natural resource-based development and promoting agricultural productivity. A significant innovation is the devolvement of responsibility for natural resource management to the provincial and district levels, with policy guidance provided at the national level. Completed operations Rural Livelihoods Improvement Programme in Attapeu and Sayabouri Total cost: US$25.9 million Approved IFAD loan: US$17.3 million Approved IFAD grant: US$689,000 Duration: Directly benefiting: 26,200 households Cofinancing: German Development Service (US$0.3 million), German Agency for Technical Cooperation (US$1.7 million), World Food Programme (US$1.3 million) Northern Region Sustainable Livelihoods through Livestock Development Project Total cost: US$18.3 million Approved IFAD loan: US$3.0 million Duration: Directly benefiting: 17,000 households Cofinancing: Asian Development Bank (US$10.0 million), Swiss Agency for Development and Cooperation (US$3.5 million) Oudomxai Community Initiatives Support Project Total cost: US$21.1 million Approved IFAD loan: US$13.4 million Duration: Directly benefiting: 10,000 households Cofinancing: Government of Luxembourg (US$1.8 million), World Food Programme (US$1.8 million) Xieng Khouang Agricultural Development Project Phase II Total cost: US$9.6 million Approved IFAD loan: US$6.9 million Duration: Directly benefiting: 24,400 households Cofinancing: Government of Japan (US$0.5 million), United Nations International Drug Control Programme (US$0.9 million) Northern Sayabouri Rural Development Project Total cost: US$10.2 million Approved IFAD loan: US$7.3 million Duration: Directly benefiting: 10,000 households Cofinancing: United Nations Development Programme (US$1.5 million) Bokeo Food Security Project Total cost: US$15.3 million Approved IFAD loan: US$4.1 million Duration: Directly benefiting: 13,330 households Cofinancing: German Agency for Technical Cooperation (US$5.6 million), OPEC Fund for International Development (US$4.7 million) 7

8 Xieng Khouang Agricultural Development Project Total cost: US$10.0 million Approved IFAD loan: US$5.3 million Duration: Directly benefiting: 5,660 households Cofinancing: Government of Japan (US$0.0 million), United Nations International Drug Control Programme (US$2.6 million), United Nations Development Programme (US$0.5 million) Rural Credit Project Total cost: US$7.0 million Approved IFAD loan: US$4.4 million Duration: Directly benefiting: 21,500 households Cofinancing: United Nations Development Programme (US$0.9 million) Agricultural Production Project Total cost: US$24.8 million Approved IFAD loan: US$7.0 million Approved IFAD grant: US$390,000 Duration: Directly benefiting: 60,000 households Cofinancing: OPEC Fund for International Development (US$3.1 million), United Nations Development Programme (US$0.9 million), World Bank: International Development Association (US$6.2 million) Casier-Sud Pioneer Agricultural Project Total cost: US$15.9 million Approved IFAD loan: US$6.1 million Approved IFAD grant: US$310,000 Duration: Directly benefiting: 3,295 households Cofinancing: Asian Development Bank (US$7.0 million), United Nations Development Programme (US$0.9 million) Building a poverty-free world IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided over US$16 billion in grants and low-interest loans to projects that have reached more than 430 million people. IFAD is an international financial institution and a specialized United Nations agency based in Rome the UN s food and agriculture hub. Contact: Stefania Dina Country Programme Manager UN House Lane Xang Avenue P.O. box 345 Vientiane, Lao People s Democratic Republic Work: s.dina@ifad.org laos@ifad.org For further information on rural poverty in the Lao People s Democratic Republic, visit the Rural Poverty Portal: IFAD/G.M.B. Akash Contact: Stefania Dina Country Programme Manager UNDP, P.O. Box 345 Vientiane, Lao People s Democratic Republic Work: s.dina@ifad.org For further information on rural poverty in the Lao People s Democratic Republic, visit the Rural Poverty Portal: International Fund for Agricultural Development Via Paolo di Dono, Rome, Italy Tel: Fax: ifad@ifad.org ifad-un.blogspot.com instagram.com/ifadnews October 2014