VIENTIANE, Lao People's Democratic Republic (ILO news) - Cash and bank payments have typically served as the main medium for social protection transfers in Lao People's Democratic Republic. This often leaves out the ‘unbanked’ population while carrying risks of delays and avoidable losses for the beneficiary. In an effort to improve financial inclusion among informal workers and in rural areas, and to make social transfers easier, more reliable and cheaper, the country is adopting innovative and efficient technologies such as digital payment apps.

As part of the UN Joint Programme “Leaving no one behind: Establishing the basis for social protection floors in Lao People's Democratic Republic”, a Lao-based fintech consultancy firm, LTS Ventures conducted a study of the fiduciary risks associated with last-mile payments and the value-for-money offered by different payment methods. The study analysed five existing or potential payment mechanisms: cash; village banks; public and commercial bank branches; digital wallets; and Distributed Ledger Technology or as it is commonly known, Blockchain.

Mr Phetsamone Soukthavyphone, Deputy Director of the Lao Social Security Organisation stated, “Modernisation has both pros and cons; while before it was difficult for the payer to carry a big bag of money, some beneficiaries now say that it is difficult for them to remember passwords, and they need to ask their children for assistance to use technology. We need to check the reality on the ground and then we can apply modern technologies where possible.”

“We have a payment map of Lao People's Democratic Republic. It shows, for each of the 150 districts, which payment mechanisms are available and which ones work best”, noted Loveleen De, Programme Manager, ILO. “There is no single solution, especially with all the geographical differences.”

The study shows the process of each payment mechanism, including the use of ‘middle-men’. This shows which payments can more easily be routed through the government transfer systems, therefore making such programmes on-budget and accountable.

The findings can be applied to social insurance payments to workers, social welfare payments to rural dwellers, as well as emergency cash transfers in disaster-affected areas. It helps to prepare the ground for assessing infrastructure requirements and taking national decisions on designing and implementing programmes, which can provide useful inputs to the work of government agencies, UN and development partners, as well as CSOs.

A decision-making tree, constructed within the assessment, can help facilitate decisions on the best payment mechanism(s) for a programme, depending on the size of the programme, internet connectivity and the availability of village banks.

The study received financial assistance from the Joint SDG Fund and the Government of Australia, through the UN Joint Programme “Leaving No One Behind: Establishing the basis for Social Protection Floors in Lao People's Democratic Republic”.

For further information please contact:

Ms Loveleen De
Programme Manager
Leaving No One Behind: Establishing the basis for Social Protection Floors in Lao People's Democratic Republic
Email: del@ilo.org