Performance of Savings Groups in Mountainous Laos under Shifting Cultivation Stabilization Policy (<Special Issue> Savings Groups in Laos from a Comparative Perspective)

Abstract

The shifting cultivation stabilization policy after the mid-1990s in northern Laos had a fundamental impact on rural lives, including an accelerated migration of non-Lao ethnic people. Based on household-level detailed data collected in 2010.11 from eight villages in Luang Prabang Province, we analyze first the differential impacts of such a policy on different types of villages in terms of location (access to urban centers), land endowments, ethnic composition, etc. Then we examine the role and limitations of village-level savings groups (SGs) introduced by an NGO (supported by the Lao Women's Union) from the middle of the first decade of the twenty-first century. It is found that most of the SGs faced difficulties in accumulating savings, which resulted in a shortage of funds that could be credited to needy members. Money borrowed from SGs is used mainly for medical treatment and consumption. It is suggested that income stabilization and diversification is one of the key factors that facilitate villagers' participation in SGs.