The World Bank’s Board of Executive Directors last week approved US$40 million in emergency finance support for small and medium-sized businesses in Laos to help them recover from the impacts of the COVID-19 pandemic, the bank said in a press release.
The funding will be channelled through the World Bank’s ‘Micro, Small, and Medium Enterprise Access to Finance Emergency Support and Recovery Project,’ which will work with the Ministry of Industry and Commerce and local financial institutions to provide credit to small businesses struggling to cope with the economic slowdown brought on by Covid-19.
Small companies will have the chance to secure working capital loans that can sustain their businesses during the pandemic and initial recovery period, or investment loans for new equipment or expansion of facilities.
Micro, Small, and Medium Enterprises (MSMEs) are the foundation of the Lao economy, accounting for 82 percent of total employment. Such companies have been significantly disrupted by the ongoing Covid-19 crisis, with many facing sharp reductions in demand and income, as well as interrupted supply chains. Tourism came to a near standstill in the second quarter of 2020, while a lockdown in April and May limited demand for various services and halted production at many firms. As a result, many firms expect to lay off a large percentage of their workforce while half of all businesses report that they will have to close permanently.