KPL
A major new partnership between Banque Franco-Lao Ltd. (BFL Bred Group) and International Finance Corporation (IFC) is set to strengthen financial support for small and medium-sized enterprises (SMEs) across the Lao PDR, opening new opportunities for businesses that are vital to the country’s economic future.
.jpeg)
Deputy Managing Director of BFL Bred Group, Nicolas Pluchart (L) shake hands with IFC Country Manager for Lao PDR, Vietnam, and Cambodia, Thomas Jacobs at the signing ceremony in Vientiane on July 17.
SMEs form the foundation of the Lao economy, making up 99 percent of all registered businesses and providing 94 percent of formal employment nationwide. Despite their importance, many entrepreneurs continue to face difficulties accessing formal financing, limiting their ability to expand operations, create jobs, and invest in innovation. Currently, only 27 percent of SMEs in Laos are able to obtain bank credit.
To help address this challenge, BFL and IFC have launched a new Risk Sharing Facility (RSF) aimed at increasing lending to SMEs while reducing financial risks for the banking sector. Under the agreement, both parties will contribute up to US$5 million each to support a US$10 million SME loan portfolio.
Deputy Managing Director of BFL Bred Group, Nicolas Pluchart.
The facility is expected to enable BFL to extend financing to promising businesses that may otherwise struggle to secure loans, particularly in a volatile economic environment. The initiative also seeks to encourage sustainable business growth and support wider economic resilience in Laos.
Deputy Managing Director of BFL Bred Group, Nicolas Pluchart, said expanding SME financing remains one of the bank’s key strategic priorities.
He noted that innovative financial tools such as the risk-sharing facility would strengthen the bank’s ability to safely provide capital to entrepreneurs who contribute significantly to economic activity, employment creation, and inclusive development across the country.
Mr. Thomas Jacobs, IFC Country Manager for Lao PDR, Vietnam, and Cambodia.
Beyond financial support, IFC will also provide technical assistance to help BFL strengthen its environmental and social risk management systems, while supporting the development of SME-focused banking services for new market segments.
Through the partnership, BFL plans to double its SME lending portfolio by 2028, helping businesses across multiple sectors expand and generate both direct and indirect employment opportunities.
IFC Country Manager for Lao PDR, Vietnam, and Cambodia, Thomas Jacobs, said the development of a resilient private sector requires stronger financial support systems for smaller businesses.
.jpeg)
He described the partnership as an example of how innovative de-risking mechanisms can empower underserved enterprises, strengthen market resilience, and promote sustainable employment growth throughout Laos.
The initiative is being implemented under IFC’s Small Loan Guarantee Program, supported by a pooled first-loss guarantee from the International Development Association Private Sector Window Blended Finance Facility. The structure is designed to encourage greater financing for SMEs in fragile and low-income markets.
The partnership highlights the shared commitment of BFL and IFC to supporting Lao businesses and advancing sustainable and inclusive economic growth in the Lao PDR.
