On 17 June, Banque Franco-Lao Ltd. (BFL Bred Group) and the International Finance Corporation (IFC) signed a new financing agreement aimed at widening access to credit for small and medium-sized enterprises (SMEs) across Laos, targeting growth and job creation across the country.
The partnership establishes a Risk Sharing Facility (RSF) under which BFL and IFC will each contribute up to USD 5 million, creating a combined USD10 million SME loan portfolio.
The facility is designed to extend credit to businesses that typically struggle to access formal financing, while helping BFL manage lending risk in a challenging market environment.
SMEs form the core of the Lao economy, representing 99 percent of all registered businesses and accounting for 94 percent of formal employment. Yet access to bank credit remains limited, with only 27 percent of SMEs currently able to obtain financing, a gap the new facility directly targets.
Nicolas Pluchart, Deputy Managing Director of BFL Bred Group, said the facility would allow the bank to reach entrepreneurs who drive real economic activity.
“This risk-sharing facility strengthens our ability to safely extend capital to high-potential entrepreneurs who drive the real economy, create jobs, and support inclusive growth across Lao PDR,” he said.
Alongside the financial arrangement, IFC will provide technical assistance to strengthen BFL’s environmental and social risk management practices and support the bank in developing SME offerings for new market segments. Through the initiative, BFL has set a target to double its SME portfolio by 2028, with the expansion expected to generate both direct and indirect employment opportunities across the country.
Thomas Jacobs, IFC Country Manager for Vietnam, Cambodia and Laos, said the collaboration demonstrated how targeted de-risking tools can expand financing for underserved businesses.
“By combining our risk-sharing facility with targeted technical assistance, we are helping a leading local bank safely double its reach,” Jacobs said.
“Creative de-risking mechanisms can empower underserved smaller businesses, build market resilience, and generate sustainable employment.”
The transaction operates under IFC’s Small Loan Guarantee Program, backed by the International Development Association Private Sector Window Blended Finance Facility, a structure designed to scale up SME financing in fragile and low-income markets.
The IFC is the world’s largest development institution focused exclusively on the private sector in emerging markets, and a member of the World Bank Group operating in over 100 countries.
