Village Development Funds in the GMS

In Guangxi, near the border with Viet Nam, a concrete slab was laid in a small village to give its children somewhere to play basketball. A long way to the east, a Dai ethnic man in southern Yunnan Province was able to buy 500 chickens to start a new livelihood. Down south to the Tenasserim Mountains in western Thailand, local people gathered on a royal holiday to plant trees to help restore a damaged forest. These are just a few examples of how people are using village development funds (VDFs)—revolving funds that provide low interest loans to local people in some of the poorest areas of the GMS—to improve livelihoods.

Since 2006, the CEP has set up VDFs in pilot villages in biodiversity conservation corridors to help the poorest households have access to cash in times of need, and to be able to seize livelihood opportunities when they arise. These isolated communities and their households have little or no access to formal lending: informal money lenders are an option, but the high interest rates that are charged often do more harm than good.


The CEP provided the seed capital to set up VDFs. Depending on the size of the village, fund amounts range from $5,000 to $30,000. Community members elect VDF committees who are then trained in basic financial management. The rules for lending are clarified and beneficiary households identified. In some countries, all the seed capital can be lent out, while in others it is capped, for example at 60% in Viet Nam. The amount each household can borrow, the repayment period, and the interest rate also varies between countries. Interest is usually 2%–3% a month. On occasion, the funds are used for community projects such as improving village roads, but far more common are loans to households for rice production, cash crops, and livestock.


VDFs are one of the most valued poverty reduction interventions in the CEP’s biodiversity corridors initiative. In Cambodia, the Lao PDR, and Viet Nam, more VDFs have been established since 2012 through the Biodiversity Conservation Corridors Project. Today, nearly 200 VDFs throughout the six GMS countries are helping prevent or reduce poverty for thousands of poor households living in the biodiversity corridors.

 “The money has really helped. I bought pigs with it and now farm them. Before I worked in construction, but this is much better.”
-- Villager in Genglao, Guangxi

Publish Date: 31st March 2018

See more content: GMS BCI

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