VIENTIANE 2008:
Laos
The Village Bank System in Lao PDR
and the Importance of Networks
KHANthone phamuang
President, NALD/Homenet Laos
For Homenet Laos, solidarity economy focuses on empowerment of the whole community,
including providing economic opportunities for the poor, especially poor women and their families. It also involves: a) People working together towards these goals; b) Empowerment through economic activities for the family and community also helps bring women and other groups into leadership roles; and c) This is social as well as economic empowerment through people working together, especially when they cannot do it on their own.
Village banks are a good example of how this can be done. Through this system, people can help each other and learn together. Through this process, people also learn to organize their own economic activities, and work towards benefits for themselves, the community, and the environment. This can lead to cultural strengthening, and also strengthening the natural environment that people depend on for their livelihoods. And again, for women and others who have not been decision-makers, this is very important because they gain experience and skills in leadership roles. They can advocate for themselves and become leaders. This also makes the community empowered, and helps create better lives in all of the urban and rural communities involved with the village bank system.
Before the village banks started in Lao PDR, different types of group savings and credit programs were tried, but they faced many problems (high interest rates, repayment problems, people sold off their assets, etc.). This created a poor image about savings programs that made it difficult for the development of village banks. Then the village bank program through the Lao Women’s Union (LWU) project started in 1997-2000, but this was done at first in individual villages. After several workshops, it was decided to have a village bank system tied through networks.
The Lao Women’s Union project supported the village bank system – in part because household level savings involve women, and the village banks are women-based, with women as the majority of members. Now there are 3 different types of networks of village banks, each with its own strengths and weaknesses. Ideas have been brought in and expanded through the Lao Women’s Union, with inputs from the village bank systems in Thailand, Viet Nam, and the Philippines, and the history of cooperative and credit union movements throughout the world.
The village bank system allows people to work together and develop themselves and their communities. This results in a better environment, culture, and livelihoods in local villages and urban neighborhoods. It is much more than just a savings program; it supports the empowerment of women and poverty alleviation.
Village banks are managed by several elected committee members (mostly women) and village-level advisors (mostly men). The village level organizations make their own rules and regulations, under the general guidelines for the village banking system. Each village has one representative in the zone committee (zone level). General policy decisions are made at the top level (LWU and Lao government), but the members are the owners of the village banks and they decide on specific activities and make plans in a democratic way.
“Empowerment” comes from learning by doing and training through this process, and by gaining economic benefits as well as leadership skills. Women, for example, are becoming more visible decision-makers and are “moving up” in public positions due to this process.
The village banking structure is very popular because it is flexible and empowering. People in different villages (zones, districts, etc.) can exchange ideas, learn from each others’ experiences, and make decisions together. The many levels of the system (zones, districts, etc.) can help solve problems that arise in a way that individual village banks cannot if they were not in a system of networks. Networks can also grow and change as needed through a democratic process, under government policy. A majority of members on the village level, and committees from the different levels, must agree before changes are made.
The size and extensive but flexible structure of the system allows the village banks to have better management, take on more issues (environmental problems and others), have a stronger financial structure, offer more services, and produce more leaders. The system allows strong and sustainable village banks. The village bank network system can serve as a development network for the poor with the goal of poverty alleviation. The village bank system can help provide insurance, income generation activities, and other benefits – members can use these benefits depending on their specific needs.
For homebased workers, networks are important because they can grow and provide new services. For example, in the future, HomeNet Lao will help develop producer groups in villages and neighborhoods tied to the village bank networks.
In the future, this is how HomeNet Lao plans to tie with the village bank system: 1) HomeNet Lao will help develop a joint marketing system for the producer groups in the village bank network and other organizations; and 2) This will provide technical and design assistance, and will follow the model of initial payment and profit sharing for members whose products are in the joint marketing system. The women producers will be members of HomeNet Lao, and will be decision-makers within the HomeNet Lao network.
In addition, Homenet Lao will address other issues for homebased workers (tied to earlier Subregional Workshops): a) The creation of membership-based organizations as the main goal of HomeNet Lao, connected with the village bank system of the Lao Women’s Union; 2) Fair trade that benefits the poor will be explored as well by the HomeNet Lao network; 3) Social protection, a very important issue in Lao PDR, is being worked on through ongoing discussions with policy makers; 4) Key concerns include occupational safety and health and labor legislation, including a labor policy regarding homebased workers; 5) Gender and participatory governance are among the most important parts of the entire network system; 6) The environment, biodiversity, and pesticide reduction are a major focus of our work.
In conclusion, the village bank networks provide a strong and sustainable system that helps empower women and reduce poverty in Lao PDR. This is very important for homebased workers, and HomeNet Lao will continue to work closely with the village bank system in the future to expand opportunities for sustainable livelihoods for homebased workers.
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