This report reviews Community DrivenDevelopment (CDD) projects in Lao People's DemocraticRepublic (PDR) to determine their effectiveness inchanneling resources to communities for poverty reduction.The study examines three CDD projects in depth: the PovertyReduction Fund, the Village Investment for the Poor (bothsupported by the World Bank), and the Government-financedVillage Development Fund. Through close analysis of theseprojects and cursory analysis of other CDD projects, thereport concludes that overall, the CDD approach in Lao PDRimproves the well-being of communities in a cost-effectivemanner. The study, however, identifies three challenges thatremain for CDD projects to be wholly successful. The firstchallenge is a call for harmonization of CDD mechanismswithin the country. CDD approaches are not currentlycoordinated geographically, technically, or financially.This leaves communities who need help without resources, anexcess of skills in some areas and a dearth of skills inothers, and funding allocated towards operations, whichcould be redirected to communities. The report recommendscoordinating and consolidating CDD approaches. The secondchallenge is the achievement of inclusive participation.While empowerment has proven to improve the well-being ofcommunities, not all local officials recognize the benefitsof a participatory approach. The report recommends operatingin districts on a long-term basis to develop sustainedempowerment and extensive training to local officials andcommunities on participatory approaches. The final challengefor CDD projects is the funding of livelihood activities,which is necessary for sustained poverty reduction. Evidencehas demonstrated that CDD backing of livelihood activitiesthrough loans, however, is unsuccessful. The reportrecommends administering grants for livelihood activitiesand ensuring technical support along with a participatory approach.
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