Creating an impact on economic status in Laos

Thongnami is a rural town located in the centre of Pakkading District (Bolikhamxay Province) along national road No. 13 south and roughly 200 Km from the capital of Vientiane. Its 3600 inhabitants live and work in and around the two villages of Thongnami Tai and Thongnami Neua.

In 2004 the people of Thongnami had a small but active daily market consisting of a few rows of sheds with grass and metal sheet roofs carried by wooden poles on earthen ground. Trade was limited to bananas, pineapples and seasonal Non Timber Forest Products but the market has since long been popular with travellers on their way to and from Vientiane because of the availability, quality and good price of bananas and pineapples.

The promotion of economic activity being a major component of Lao-Luxembourg Project LAO/011, the district authorities together with the project agreed to the construction of a proper market hall with adequate facilities and infrastructure. The ensuing construction resulted in the provision of a weatherproof infrastructure and a pleasant and practical environment for clients and traders. The hall was leased to a local private manager who invested his private capital to build further 28 shops and two restaurants around the hall to complete the market structure as designed. A recent evaluation by the project’s monitoring unit revealed the following: After 18 months of operation the market receives up to 125 traders per day and makes an estimated annual turnover of 600 000 USD. The project reckons the Internal Rate of Return should be approximately 16% over 10 years. Thongnami market now serves as an important outlet for a panoply of agricultural and non-food produce for the whole district.

Integrated Development

In addition to the construction of the market, Project LAO/011, in its integrated rural development approach, has implemented complimentary activities, which have directly contributed to the successful operation of the market:

The construction of a village access road (9 km) resulted in the opening up of a large area of agricultural land on both sides of the road. People immediately started clearing the land to produce cash crops like tobacco and maize. Also land clearing, levelling and certification provoked an immediate increase in agricultural production. Land use certificates gave the farmers security of ownership and therefore motivation to invest effort and money in the development of their land.

Agricultural extension resulted in increased supply of produce for the market and income for the farmers concerned. By introducing new agricultural practices like off-season vegetable growing (cucumber, green bean), the vegetable traders no longer depended on “imports” from other parts of the country or Thailand and could reap the premiums on off-season supply. The project also organized training courses for women on how to process unsold, excess agricultural produce like pineapple, banana, and bamboo shoots to increase their profits.

The establishment of Village Savings and Credit Schemes provided loans to farmers (50 –100 USD over six months) enabling them to invest money they would not get from banks or at restrictive rates from private moneylenders. Typically, investments go into such income generating activities as cash crops, rearing of small livestock (pigs, poultry, goats) and handicrafts.

Some project activities had an indirect impact on the development of the market such as the construction and renovation of several primary school buildings and a village meeting hall under the active participation of the villagers using the “training cum construction” method. A major indirect positive effect of these activities was the creation of employment with the local brick manufacturers, furniture shops, construction workers, restaurants and more demand at the market.
Thongnami underwent important developments that were not financed by the project such as its connection to the national electricity grid and the inclusion into the mobile phone network in 2005.

With the money that was generated by the investments of the project and other investors, many people started building permanent concrete homes, creating yet again more employment for construction workers and suppliers further enhancing the attractiveness of Thongnami and the economic status of its inhabitants.