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LESSONS:

Rural Finance Sector Development Program

sector: Finance | country: Lao, People’s Democratic Republic

1. To increase ownership and longterm commitment to goals, it is important that program support be embedded in a government strategy. Extensive preparation was made for the Rural Finance Sector Development Program in terms of market assessment and dialogue with government. The program was successful due to the close alignment of government and program objectives.

2. Considering the extensive nature of program preparation related to client demand, the monitoring and evaluation of the program should have included a periodic assessment of client satisfaction or interim impact of the program objectives on clients. The customer satisfaction survey conducted as part of the project completion report review indicated that clients have appreciated an improvement in access to finance and in services provided, but that there are some serious consumer protection issues that need to be addressed.

3. The reason why the program was not rated highly successful is because, despite the fact that the overall objectives were achieved (as defined in the design and monitoring framework), the linkage of the program to ultimately reducing poverty is weak. There was no substantial increase in access to formal financial services to rural, low-income clients.

4. If success is likely at the midpoint of a technical assistance (TA), planning for follow-on support should then be undertaken. The outcome of the program could have been stronger with follow-on TA, particularly in the case of the Catalyzing Microfinance for the Poor TA. Feedback from a range of microfinance providers and stakeholders confirmed the need for follow-on support.

5. Appropriate design of procurement proposal is important. The criteria for selection of an information and communications technology and management information system consulting firm was overly ambitious. Delays in implementation could have been avoided with more reasonable criteria.

6. Translating training into institutionalized practice. Despite intensive onsite technical assistance, the Agriculture Promotion Bank management placed inadequate focus on the development of its human resources and capacity building, which were needed to ensure long-term sustainability. A number of staff training programs designed by the consultants experienced delays. Implementation of recommended action steps (such as the monthly monitoring meetings suggested for the branches) were not given sufficient importance.

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