Lao PDR - Small and Medium Enterprise Access to Finance Project

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The objective of the Small and Medium Enterprise Access to Finance Project for Lao People's Democratic Republic is to provide long-term funding sources for banks so they, in turn, can provide long-term credit to small and medium enterprises. This will be achieved by increasing the supply of long-term finance provided by commercial banks and by strengthening the capability of Department for Small and Medium Enterprise Promotion to formulate and implement public policies that promote access to finance for Small and Medium Enterprises (SMEs). This project comprises three components. The first component, A Line of Credit Facility, aims to alleviate the lack of long term sources of funding that prevents commercial banks from providing long term credit (more than 2 years) to SMEs. The second component, Risk Sharing Facility, will provide a partial credit guarantee to eligible private commercial banks that lend to SMEs. Lastly, the third component, Technical Assistance, will help strengthen the capacity of Department for Small and Medium Enterprise Promotion and other agencies in areas such as formulation and implementation of a SME development strategy, SMEs census, design of new SME lending and non-lending products, impact assessment, SME business advisory services, as well as project implementation and monitoring and evaluation, including outsourcing of procurement, financial management functions to the National Implementation Unit of the Ministry of Industry and Commerce.