Fieldwork in Laos: Initial insights
This post was co-authored by Dr. Isaac Lyne, Dr. Salika Onsy, Dr. Daovy Kongmanila, Mr. Khamtou Kanyavong, Ms. Vilaythieng Sisouvong and Dr. Erin Taylor.
Between mid-October to mid-November, researchers based at the University of Western Sydney and the National University of Laos visited two peri-urban village communities in Vientiane, one lowland and the other upland, to begin collecting data and exploring questions regarding discernible impacts of digital financial services on smallholder farmers.
In Laos PDR, digitalised financial services have been a more recent occurrence than in many other low-income countries. Mobile money services were launched by telecommunications companies Unitel (U-money) and Lao Telecom (M-Money) in 2018 and 2021 respectively. Banque Pour Le Commerce Exterieur Lao Public (BCEL) has been a pioneer in banking apps for smartphones, launching BCEL One in 2014, which allowed customers to pay bills and transfer between accounts, and then One Pay cashless payments in 2017, which came with a wallet and QR Code that can also be used by those without a BCEL bank account. Other banks followed later. For example, among those more readily associated with services aimed at smallholder farmers, the Agricultural Promotion Bank launched the ‘APB Quick Mobile Banking’ app in 2021.
The fieldwork began with a week of piloting a semi-structured interview schedule by doing six interviews and a focus group discussion attended by all of the interviewees. The research team then convened at the National University of Laos to refine these instruments in light of the responses and our experiences with making the research manageable. After that, three weeks of research proceeded in the two village communities.
The lowland village community that we visited is in quite close proximity to a highway. A special economic zone located five kilometres away provides some employment for younger people in factories, but village life overwhelmingly revolves around agriculture. A recent irrigation project has enabled many households to cultivate an additional rice crop each May during the dry season. In this village we found resilient smallholder households that, despite sometimes having quite low cash incomes over the course of the year, more or less achieve food subsistence by growing their own rice and vegetables, raising ducks and chickens, and using a nearby river and community forest to access food (such as fish and mushrooms) to eat or as income streams.
In this community, we found people engaging with the BCEL One app to different degrees, and in different ways. One 31-year-old woman told us that her father (with whom she lives) has BCEL One on his phone, and his BCEL bank account is used to receive payment for his rice from traders when they do not have enough money in cash. By getting paid directly into his bank account, the family safely stores and saves money and avoids the temptation to spend cash. Meanwhile, the woman also uses her father’s BCEL One wallet for several purposes. She buys medicines for her children online and has them delivered to the house. She also pays the family’s electricity bill using his BCEL One app, but not the water bill, which she pays in cash at the Temple. When asked if she has considered paying the water bill through the app for convenience, she said she would rather pay cash because it gives her an opportunity to go to the temple to pray and meet her friends.
An entrepreneurial woman in her 40s with several small, but regular, income streams beside farming, and whose husband is in the police force, takes care of the rice farming for the family, including hiring a tractor from the farmers’ group she helps to coordinate. She likes to receive part of her payment from rice traders by bank transfer, keeping the money in her bank account to build up savings, but on the whole, she still prefers payment in cash to use as household money together with her other smaller revenues between the harvest seasons. She and several others in the community mentioned that they receive wedding invitations with a QR Code on them so that people who cannot attend can still contribute money by transfer.
Across this lowland village, the use of BCEL One is widespread, although perhaps not extensive. We spoke to four women who run small shops and accept payment via BCEL QR Code. However, they say that customers rarely use it; people may pay via QR code two or three times per week. As a result, one shopkeeper stopped displaying the QR code on her counter some time ago, although she still keeps it on her phone in case customers request it.
The tendency of households to access a mobile finance app, either directly or by means of workarounds, normally relies on someone in the family having a bank account, and this usually (although not always) happens because someone in the family has formal salaried employment. Indeed, some interviewees told us:
“Nobody in our family has a bank account because none of us work in a factory”. One woman, who is unbanked and whose children all rely on agriculture and informal work to make a living, deals entirely in cash and told us that the herd of cattle that her family have built up is their way of saving. She commented, “if we have an emergency, we can sell a cow”.
Some villagers receive remittance payments from children by using a BCEL Community Money Express (BCOME) agent that is located at a petrol garage three kilometres outside of the village. This agent operates using the full range of BCEL digital applications and provides one means by which those without an account can receive remittance payments and through which others with a BCEL account can access other basic banking services. BCOME is an initiative to extend community banking services by digital means. It was implemented in 2015 with the support of the United Nations Capital Development Fund through a programme called Making Access to Finance more Inclusive for Poor People.
The upland village community that we visited is populated by just over 400 families. It has benefitted from programs initiated by China Aid, including efforts to mobilise rice and cassava farmers groups, a weaving collective among women, and the construction of a modern health centre. The poverty headcount, according to the Village Chief, has fallen from nearly 160 families in 2006 to 22 families today.
Farmers have increasingly taken to cassava cultivation since a cassava export enterprise located itself in the village. However, while this is bringing farmers gross revenues of up to 40 million kip (or USD $2,000) per year at present, some of them are concerned about the long-term future of the market for this cash crop.
The village is located far from bank branches. Other villages in the district have been served by the APB with local branches, but this one has not. In this village, the BCEL One app has been a game changer. In one larger merchant store, the proprietor informed us that the QR code is scanned ten times on a normal day and that on Buddhist observance days (or Uposatha), which take place three or four times each month, when many young people come into the store to buy items for the temple, it might get scanned up to 100 times.
We found younger farmers using BCEL in savvy ways. A man aged 28, who studied agriculture at the National University of Laos before returning to the village, works with his brother-in-law to grow cassava. He also runs a profitable night-time restaurant and bar. He receives money for cassava using the BCEL account and says that perhaps 30% of his restaurant’s customers use his QR code. He was also previously a documented agricultural labourer in Thailand and opened a bank account there. Today, he uses it to provide a remittance service for other migrant labourers from his village who travel to Thailand. He charges 0.1% commission in Thai baht before transferring the money from the Thai account to his BCEL One account and giving the cash (held in the restaurant) to their families. By combining these income-earning activities he has continually earned and saved money, which he is now investing into the development of a rubber tree plantation together with his brother-in-law.
We also spoke with farmers who had used digital payment systems, but had returned to cash payments. For example, some women told us that they had tried using the APB QR code at a village store to make loan repayments, but had largely ceased to do so because of the fee charged by the shopkeeper. Instead, where possible, they would ask family members to make their repayments for them at APB branches in neighbouring villages.
Women generally had mixed views on the value of mobile apps such as BCEL One as a way to enhance their personal capacities and wellbeing with respect to family affairs. In a focus group discussion, after talking about financial provisions for business ideas, and differing ideas for their children’s futures, one woman told the group that she considered the per diems she gained from attending meetings to be “top secret money” that she would hide to use for her own purposes. When the group were asked if a mobile phone be a good way to store top-secret money, one woman said it would not because her children used her account. They would see that the money was there and tell her husband. Other women said that their husbands didn’t know how to use the app, so using a phone to store “top secret money” could be useful.
The use of digital finance apps is also not without problems or concerns. In the lowland village, one woman in her early thirties is mostly reliant on informal income sources, but has opened an account with BCEL and uses BCEL One to pay for bills and mobile airtime. Her son works informally, but sends his mother funds through his friend’s account. She complains that her phone is old and has a cracked screen, and that the facial recognition that BCEL ONE uses to sign in doesn’t work well on her phone. Across both villages there were also widely expressed concerns with mobile phone hacking.
Mobile money services have not made much headway in either of the villages we studied. Out of 39 interviews, only four people (one woman aged 31, and three men, two of whom are aged under 30) had tried to use the U-money service. Two of them stopped using U-Money because they couldn’t understand how to use it. The other two use it only to top up mobile airtime and data in order to get deals. One of these two also sends airtime top ups to friends when they are travelling to remote areas where they might not be able to buy phone top up vouchers.
In summary, no one used U-Money to receive remittance payments, and very few of those we spoke to had even heard of the U-money service at all. Only two people (uncoincidentally, those who do use U-Money) had heard of Lao Telecom’s M-Money service. U-Money is claimed to have half a million subscribers in Laos, but as a means of money transfer, perhaps it does not make sense to villagers when the BCEL One wallet for instance can also do this, and so much more. Perhaps we may find later, in future fieldwork, that these mobile money services are used more widely in remote areas where banking services are not readily available, and in cases where NGOs have enrolled people in cash transfer programs that use mobile money.
This was just the first of three rounds of qualitative fieldwork that we will undertake in Laos and Cambodia. The project will also be doing a household survey in Cambodia in 2024, and economic experiments in Laos in 2025. We will continue to blog about our findings as we go along. If you would like more information about the project, please don’t hesitate to contact us.
