Author: WEB.LITD

Minutes of Meeting (MoM) LAFF website management (10.10.2019)

Date/Location  
Participants:  
LAFF Management unit LAR Unit: Ms. Anoudthida Phanxaysack (Officer Credit Division of BOD)BOL IT Department: MR. Somboun (IT Officer of BOL)
AFC Timo Hogenhout (Team Leader)Soukphachan Vongsavanh (Head of Finance)
Lao IT Development Outhai Xayoudom (Co-Founder & CTO)Keomanophone Thammavong (COO)
Absent Keolabthavong Songsamayvong (Deputy Team Leader)
Attachments LAFF website management discussions
Discussed topics, feedback and actions agreed upon:
Topic 1: Whatsapp Group use for contact: AFC, LAFF management unit & Lao IT Dev agreed that we should have Whatsapp group which would be convenience way use for contact to each other and the group will be created by Lao IT Dev side. Topic 2: Provide Information for Lao IT Dev: Lao IT Dev want Information, photo that they will use in their website development process. AFC and LAFF management Unit will provide necessary information for Lao IT Dev which should approve by BOL side indeed.Lao IT Dev also need to know who will be the main coordinator for them, and LAFF management Unit said that would be Mr. Bounlam Sitaphone (Officer Credit Division of BOD). Topic 3: LAFF website development process: Lao IT Dev side will provide the timeline and share with AFC, LAFF management Unit on Monday 14th October 2019.Lao IT Dev will have an appointment with AFC and LAFF management Unit every 2 weeks for discussion about LAFF website.BOD allow IT department of BOL look after the website development process in the part of their technical.  

VIENTIANE (Vientiane Times/ANN) – The grant of 0.8 million euros was provided through Germany’s KfW Development Bank.

Germany has committed 0.8 million euros for the Lao Access to Finance Fund (LAFF) to strengthen capacity building and training of the Bank of the Lao PDR (BOL) and partner banks.

The grant in the amount of 0.8 million euros was provided through Germany’s KfW Development Bank.

The handover ceremony took place on Tuesday at the BOL in the presence of Director General of Banking Operation Department, BOL Ms Fongchinda Sengsourivong, KfW Country Director Lorenz Gessner and a representative of Ministry of Finance.

“The additional grant for the Lao Access to Finance Fund will further strengthen the banks’ capacity and quality participating in the fund which will have in turn positive effects on the overall services provided by the banks to the private sector in order to develop and expand,” Fongchinda said.

“The consulting services for delivering training and capacity building to the BOL and the partner banks are vital components for reaching the overall and specific objectives of the programme, which is the support of the commercial banking sector in Laos in providing sustainable and needs-based financial services for poor households and micro, small and medium enterprises (MSME) in rural areas,” cited KfW Country Director Lorenz Gessner.

According to KfW, the first bank participating in the LAFF is ACLEDA Bank Lao, which has successfully disbursed more than EUR 3 million over the last two years to MSME in Laos with an average loan size of 2,600 euros.

The programme objective is to facilitate the access of MSME to long-term finance in the domestic financial sector by offering eligible partner banks a target group oriented refinancing facility, which is aligned with the existing business environment of the local banking system.

The rationale of the focus on MSME is the expected above average impact on poverty alleviation through job creation and income generation.

KfW Development Bank is Germany’s leading development bank and an integral part of KfW. It carries out Germany’s Financial Cooperation with developing countries on behalf of the Federal Government.

It goals are to combat poverty, secure peace, protect the environment and the climate and make globalisation fair. KfW is a competent and strategic advisor on current development issues. 

ACLEDA Bank Lao Ltd. CEO and Managing Director Narin Phon (left) shakes hands with BOL Banking Operations Department Acting Director General Oth Phonhxiengdy after signing the agreement

1. Project

  • Bilateral German-Lao Development Cooperation.
  • Grant funding to the Lao PDR, Ministry of Finance.
  • Ministry of Finance channeled to Bank of Lao PDR to manage (BoL = Project Executive Agency).

2. Principal

  • Initial principal EUR 3.0 million.
  • Accrued interest EUR 1.0 million, on separate account.
  • Additional (2020) EUR 6.0 million.
  • Total (2020) EUR 10 million.

3. Interest income

  • Expected annual-interest income (2020): EUR 1.0 million.
  • BoL can propose usage for its own benefits (e.g. trainings, exposure trips).

4. Characteristics

  • Project-based: no legal personality, contracting in name BoL
  • Wholesale debt-finance facility in LAK: loans to banks and DTMFI (PFIs) in LAK
  • Market based:
  • interest rate charged to banks and DTMFIs is in line with comparable liability funding;
  • No interference in PFIs’ credit policies (e.g. selection of MSE-borrowers);
  • No interference if PFIs’ marketing strategies (e.g. type of sectors, locations, pricing of loans to MSEs)
  • Conditional:
  • Strategic interest in lending to MSEs, including informal enterprises;
  • Institutionalization of term lending (loans with duration of over 1 ½ year duration);
  • Outside urban areas of Vientiane Capital;
  • Minimum 30% for agricultural activities.

5. LAFF-Project Management

  • LAFF Steering Committee (LSC)

Mandate: Oversees and signs-off loans to PFIs, and annual workplan and budgets for LAFF’s Management. Requests and receives external-audit reports.

Composition: Deputy Governor (Chair), DG of BOD (Vice-Chair), DDG of BOD, DDG of BSD, DDG of FISD.

  • LAFF Management Unit (LMU)

Mandate: Management of operations, external and internal communication.

Director: Responsible for effective management in accordance to project’s principles. Reports to LSC. Manages relationship with BSD and FISD (see below).

Secretariat: Internal and external communication, the latter including the logistics of the Call for EoI process; preparation annual workplan and budget. Supports Director.

Loan Allocation Preparation subunit: Does financial analysis and due diligence of EoI-applicant banks and DTMFIs. In many ways the most important part of the overall governance and operational structure that requires high-levels of expertise. Prepares credit memorandum for LSC.

Loan Administration and Reporting subunit: Makes loan contract; issues notifications for installments of interest and principal; requests reports from PFIs; administers the LAFF portfolio and reports on it. Another main part of operations.

6. Involved External Stakeholders

  • BSD and FISD: do repayment-capacity assessment and due diligence screening for and on request of the Director of the LMU based on off-site reports and on-site inspections.
  • KfW: have to give no-objection to main LAFF-management decisions (e.g. LAFF-lending, annual workplan and budget).
  • External Consultant: to be hired by LMU to support LAFF-management processes, funded from LAFF-interest income
  • External Auditor: external audit and evaluation reports, to be instigated and received by LSC, funded from LAFF-interest income.
  • AFC: technical assistance provider.

7. Technical Assistance

  • LMU Director and LAP: financial analysis, due diligence process, Excel-based, with written explanation and in-person teaching.
  • BSD and FISD LAFF-Teams: repayment-capacity assessment and due diligence processes
  • LMU Director and LAR: Excel-based LAFF-loan portfolio administration and reporting; loan-contract screening, with written explanation and in-person teaching.
  • Operational Manual: Codification management and operational processes.