Performance of Savings Groups in Mountainous Laos under Shifting Cultivation Stabilization Policy

Abstract

(ProQuest: ... denotes non-US-ASCII text omitted.)I IntroductionIn the late 1990s, village savings and credit groups (hereafter savings groups, or SGs) were introduced from Northeast Thailand to Laos by NGOs-Foundation for Integrated Agricultural and Environmental Management and Community Organizations Development Institute of Thailand-with the cooperation of the Lao Women's Union (LWU), first to villages in Vientiane Municipality and later to hinterland areas where the market economy was less developed (see Ohno and Fujita, special issue introduction paper). Raiffeisen's credit unions in Germany formed the original model for credit unions later developed in other areas, including other European nations, the United States, Japan, and also Northeast Thailand. When credit unions were introduced to these other areas, the economy-even in rural areas-was already commercialized and had a favorable infrastructure, which resulted in the successful growth of credit unions. In contrast, such conditions do not exist in Laos. The rural economy of Laos is still basically subsistenceoriented and largely isolated from urban centers due to poor infrastructure.Luang Prabang Province, which consists mostly of mountainous areas, is a typical case. Until recently, villagers there depended on cultivation under a village-level communal land management system, with staple food (rice) being produced for selfconsumption. Non-rice foods, such as various kinds of vegetables, were collected from the surrounding natural environment. Wild animals and fish were obtained through hunting and catching. Sales of livestock and non-timber products largely met the area's cash needs, and rural livelihoods remained basically in a state of self-sufficiency.1)However, in recent years the situation has gradually changed due to the growing population and increased cash needs among inhabitants, which have put pressure on natural resources. At the First National Forestry Conference, held in 1989, deforestation was officially identified as a major problem threatening the sustainability and stability of natural resource management in Laos (Khamphay and Phouthone 2009). Besides illegal logging, cultivation was identified as a major cause of deforestation. After the conference, a national program for shifting cultivation stabilization, land use planning and land was launched in 1990 and implemented on a trial basis in Luang Prabang and Sayabouly Provinces. Finally, the Seventh Party Congress in 1994 set a policy target to stabilize cultivation by 2005 with complete eradication by 2010, and donors and international organizations provided financial and technical support for implementing the policy in northern Laos (Takahashi and Liang 2010).2)The land use planning (LUP) program aimed at imposing restrictions on villagers' customary land use rights by introducing land use categories such as protection forest and conservation forest. Villagers were allowed to continue cultivation only in specific land categories. After a while, the land allocation (LA) program was introduced and three to five plots of land were equally allocated to every household. When villagers signed the Land Use Agreement,3) they were issued a Temporary Land Use Certificate (TLUC)4) for certifying ownership rights. They were prohibited from cultivating other lands. This implied de facto an introduction of a private landownership system in rural Laos. Villagers traditionally dependent on cultivation in communal land had to abandon it and start permanent upland cultivation. A policy of resettlement of highland people to lowland areas was also incorporated in this LUP/LA program.5)Under such a forced commercialization of livelihood in a short period of time, a critical question is: how did people adapt to the new policy and institutional environment in general, and how could they earn sufficient cash income to purchase rice and other necessities in particular, since it appears to have been difficult to produce enough rice only in the allocated upland fields? …