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Lao PDR: Poverty Reduction Fund Project

Improving quality of life through better access to basic infrastructure and services

Reducing Poverty in Rural Communities
Improving quality of life through better access to basic infrastructure and services


The Poverty Reduction Fund (PRF), established in 2003, is now the largest multi-sector community-driven development project in Lao PDR. The PRF has provided basic services to the poorest rural, remote communities in the country and built local capacity and institutions. Specifically, the fund has supported the increase in better access to roads, primary education, clean water and healthcare, which have all resulted in significant improvements in the quality of life for 650,000 beneficiaries, especially women and ethnic groups, in the most remote parts of the country. The PRF has also supported training for approximately 68,000 community members so that they could play a central role in project implementation. In addition, more than 310,000 local facilitators will be trained to support participatory decision-making. In a country where top-down planning is the norm, the project’s participatory and bottom-up approach is highly innovative.


Now a lower-middle income country, Lao PDR aspires to graduate from least developed country status by 2020 and join the ranks of middle-income countries. Lao PDR has achieved significant progress in poverty reduction over the past two decades. Despite this progress, the country remains one of the most impoverished countries in the region. The poorest districts are mostly isolated in rural areas. The mountainous topography and remoteness pose great challenges to poverty reduction. The core challenge for the PRF included accessing remote villages in a cost-effective manner to address the needs for basic infrastructure and services such as roads, schools, health dispensaries, and water supply systems. Other challenges included ensuring technical quality, improving operations and maintenance schemes and improving the skills of local PRF teams and village representatives. Many of the people in these remote areas are from small ethnic groups that do not speak the Lao language, which posed an additional challenge.


The PRF builds capacity among the rural poor, especially women and ethnic groups. Its approach aims to help the beneficiaries assess their own needs and provide support in the planning, managing, and implementation of their own public investments in a decentralized and transparent manner. In short, the project puts the community in the driver’s seat.

  • The priorities are demand-driven and based on requests from communities that include water supply, access to roads, education, health, irrigation and agriculture, income generation, and environmental activities. 91 percent of the project proposals came from women's priorities.
  • Project staff and village volunteers worked together with project design, preparation, implementation and monitoring of local projects selected by men and women of the community.
  • 75 percent of the funds were allocated to village field activities while 25 percent of the funds were used for operating costs.


From February 2003 to March 2011, the PRF completed 3,139 sub-projects providing support to approximately 650,000 beneficiaries (35.6 percent from small ethnic groups) from 2,185 communities in seven (of 17) provinces and 28 (of 144) districts, of which 19 are among the government’s 47 priority poverty districts.

  • 86 bridges have been constructed;
  • More than 668 villages have received access to clean water systems and 154 irrigation schemes have been developed;
  • 3,042 km of rural access roads have been upgraded;
  • 598 schools and 62 health clinics have been built in remote villages;
  • 681 community members participated in the decision-making process (33 percent women and 95 percent non Lao-Tai speakers);
  • 1,113 training programs were provided for approximately 68,000 community members at village clusters level;
  • 181 training programs were provided for over 310,000 provincial, district, and cluster village facilitators.


Before the bridge was built, it was so hard to get to our village, especially when it floods. If people got sick, they could not see a doctor. Children could not go to school. With the bridge we now can.

— Mr. Vanthong, village elder of the Houytoung Village, Sobbao District, Huaphan Province, Lao PDR

Bank Contribution

The total International Development Association (IDA) financing amounts to US$34.35 million, which includes initial IDA financing of US$19.34 million (2002-2008) and additional IDA financing of US$15 million (2008-2011).


Since 2008, the Swiss Agency for Development and Cooperation (SDC) has provided approximately US$7.3 million in support for the PRF. The overall financing envelope of US$41.6 million makes the PRF one of the largest multi-sector rural poverty reduction programs in the country. In addition, communities have contributed labor and local materials that would be equivalent to about US$6.5 million.

In 2010, the government drew upon the PRF platform to help with the rehabilitation of small-scale infrastructure damaged by Typhoon Ketsana. Financing for this work was provided through the Lao Upland Food Security Investment Project for US$14.97 million. The rehabilitation was financed by IDA, the European Commission, a grant of US$420,000 from the Global Facility for Disaster Reduction and Recovery, and supported by the Australian Agency for International Development. Since 2011, through a Japan Social Development Fund grant, the PRF is also piloting the provision of grants for improved livelihood and nutrition.

Toward the Future

In June 2011, the World Bank approved the Second Poverty Reduction Fund Project (PRF II) with a funding envelope of US$67 million, of which US$25 million is an IDA grant and the Government is committed to financing US$10 million. The project, which will be implemented over five years, will further improve access to and the use of basic infrastructure and services in 38 districts in 10 provinces. This represents a significant geographic expansion of the project and a 25 percent increase in the number of sub-districts covered. The PRF II continues to adopt a participatory approach, with a goal of 40 percent representation of women. The poorest in the villages should account for at least 60 percent of the participants in the planning process. The PRF II will continue to be one of the government’s main vehicles for rural service delivery through community-driven activities. The program aims to foster the adoption of a participatory planning, financing, and implementation model for local service delivery in rural parts of the country. The participatory approach aims to create local ownership of the development process as well as to ensure that investment activities are responsive to community needs.

For more information, please visit the Projects website.

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