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Lao PDR: Poverty Reduction Fund

Last Updated: August 2009
Lao PDR: Poverty Reduction Fund


Lao PDR is trying to graduate from least-developed country status and join the ranks of middle-income countries by 2020. But in a country that includes more than 47 different ethnic groups and in which 70 percent of people live on less than US$2 a day, particularly in remote rural areas, poverty alleviation programs need to put local people in the driver’s seat to make headway.


The Poverty Reduction Fund (PRF) empowers the poor, women and ethnic minorities in rural villages to assess their own needs and priorities, and builds capacity for them to plan, build and manage local infrastructure in a decentralized and transparent manner. Under this methodology,

- The priorities are demand-driven, based on community requests from a menu that includes investments in safe water supply, access roads, primary schools, health clinics, irrigation systems and village markets.

- Project staff and village volunteers work together in a participatory process to design, implement and monitor local projects selected by the men and women of the community.


Since 2003, poor communities in six provinces, 26 districts and nearly 2,000 villages have implemented over 2,400 local projects, with investments valued at more than US$24 million.

- More than 900 villages have access to clean water.

- More than 460 schools and 40 health clinics have been built in remote villages.

- More than 2,000 kilometers of rural access roads have been upgraded.

- More than 70 bridges have been built.

- More than 1,900 training sessions in infrastructure maintenance and usage and vocational skills were provided to participating villagers


IDA provided US$20million in funding for the first five years of project operations (2003–08), with additional financing of US $15 million approved for 2008–11.


The Swiss Agency for Development and Cooperation is providing an additional US$7 million to support Poverty Reduction Fund operations in 2008–11; and discussions are under way for US$2 million from the European Commission to increase food security and agricultural livelihoods in poor upland districts.

Next Steps

During its first phase of operations the fund faced the challenge of showing it could provide financing to remote areas and access remote villages cost-effectively, hone the skills of local project outreach teams and village representatives, and devise maintenance schemes to help communities keep their new assets in working order. Now the challenge is to institutionalize the participatory planning approach developed by the PRF by expanding it nationwide, and to ensure stronger involvement of local authorities rather than relying on implementation by a Project Management Unit.

Learn More

Lao PDR Poverty Reduction Fund (2002–08, with additional financing for 2008–11)
Project documents

For more information, please visit the Projects website.