Village Development FundGuideline

ຂແນະ

ນຳ ວ

າດວຍ

ການ

ຄມຄອ

ງບລຫ

ານ ກ

ອງທ

ນພດທ

ະນາບ

ານ

ສະ

ບບປບ

ປງ ກ

ນຍາ 2

019

Village Development Fund Guideline

Revised September 2019

September 2019Revised Version

Village Development Fund

Ministry of Agriculture and ForestryDepartment of Forestry

Biodiversity Conservation Corridors Project

Guideline

September 2019Revised Version


ADB Grant#0242-Lao - (SF), and #0488-Lao - (SCF)

Biosiversity Conservation Corridors Project

Address: Department of Forestry, Thatdam Rd. Chanthaboury Dist. Vientiane Capital, Lao PDR.Phone: +856 21 253 320, +856 21 254 815

Email: [email protected]: www.gmsbcclaos.org, Facebook: facebook.com/BCCLAOS/

Contents

Foreword List of Abbreviations

1. Introduction

2. VDF concept and purpose2.1 What is the purpose of the VDF? 2.2 What is the purpose of VDF guideline? 2.3 Who will use this guideline?

3. Conditions for village to receive funds 4. VDF Establishment and Management 4.1 VDF establishment 4.2 VDF management organizations - Structure 4.3 VDF management organizations - Roles and Responsibilities

5. VDF principles 5.1 Fund sources 5.2 Beneficiaries5.3 Loan for eligible and ineligible activities 5.4 Scope and modality 5.5 Interest rate 5.6 Repayment 5.7 Loan accessibility conditions 5.8 Criteria for screening project proposals 5.9 Project proposal approval 5.10 Benefitsharing

6. VDFfinancialmanagement6.1 Deposit and withdrawal 6.2 Disbursement 6.3 Financial reporting

7. VDF audits 8. VDF implementation References

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Annexes

0.1 Approval Letter for VDF Establishment

0.2 Assigned Letter for VDFMB

1.1 Grant Agreement for Village Development Fund 1.2 VDF Loan Application 1.3 Loan Contract Agreement1.4 Cash Receipt Proof

1.5a Withdrawal Application (Used by VDFMB)

1.5b Withdrawal Application (Used BCC Project/LWU)

1.6 Rapid Participatory Assessment Table2.1 VDF Bank Book Record 2.2 Daily/Monthly VDF Receipt and Payment Book

2.3 VDF Loan and Interest Monitoring Book 3.1 VDF Monthly Bank Report 3.2 VDF Monthly Receipt and Payment Report 3.3 VDF Loan and Monthly Report 3.4 VDF Financial Summary Report

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Foreward

The Guideline on Village Development Fund (VDF) is prepared by National Proj-ect Management Office (NPMO), Provincial Project Management Office (PPMO), District Project Implementation Unit (DPIU), Lao Women Union (LWU) at provin-cial and district levels and Social Specialist under Department of Forest Resource Management (DFRM) and Ministry of Agriculture and Forestry (MAF) in Septem-ber, 2013; and it has been revised in March 2016.This guideline is compiled to guide for facilitators who are involved in the development and support of VDF establishment and operations under supported by GMS-BCC project.

Abbreviations

ADB Asian Development BankBCC Biodiversity Conservation CorridorsDAFO District Agriculture and Forestry OfficeDFO District Finance OfficeDOF Department of ForestryDICP Department of Investment and Cooperation PlanDICPO District Investment and Cooperation Plan OfficeDLFNCO District Lao Front for National Construction OfficeDLWUO District Lao Women Union OfficeDPIU District Project Implementation UnitDPRFO District Poverty Reduction Fund OfficeDPSC District Project Steering CommitteeDRDO District Rural Development Office DTTs District Technical TeamsLAK Lao Kip/Lao CurrencyLao PDR Lao People’s Democratic RepublicMAF Ministry of Agriculture and ForestryNPMO National Project Management OfficePAFO Provincial Agriculture and Forestry OfficePFD Provincial Finance DepartmentPITs Project Implementation TeamsPPIU Provincial Project Implementation UnitPPMO Provincial Project Management OfficePPRFO Provincial Poverty Reduction Fund OfficePPSC Provincial Project Steering CommitteeVDF Village Development FundVDFIC Village Development Fund Inspection CommitteeVDFMB Village Development Fund Management BoardVMC Village Management Committee VO Village Organization

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1Village Development Fund Guideline


1. Introduction

TheBiodiversityConservationCorridors(BCC)ProjectisfinancedunderagrantfromtheAsianDevelopmentBank(ADB),andbeingimplementedinfivedistrictsinChampasak,SekongandAttapeu provinces in southern Lao PDR. The project period is for eight years from April 11, 20111 to September 30, 2019. The project aim is to achieve climate resilient sustainable forest ecosystemsbenefitinglocallivelihoodsinthebiodiversitycorridors.

The project has four outputs: (i) strengthening of institutions and communities for biodiversity corridor management; (ii) restoration, protection and sustainable management of biodiversity corridors; (iii) livelihood improvement and small-scale infrastructure support in villages; and (iv) project management and support services provided.

2. VDF concept and purpose2.1 What is the purpose of the VDF?

TheVillageDevelopmentFund (VDF) is adecentralizedfinancial instrument and seed funddirectly provided to the target villages under the BBC project. It is operated and managed by the villagers by an elected Village Development Fund Management Board (VDFMB). The VDF functions in accordancewithguidelines issuedby theProvincialProjectManagementOffic-es (PPMO) in the three provinces (Champasak, Sekong and Attapeu). Before the end of the BCC project period, the monitoring responsibility of VDF will be transferred to the Lao Women Union (LWU) at district level for future management support.

The aim of the VDF is to support the government’s planning guidelines for socio-economic developmentbysupportingtheneedforafinancialresourcedirectlyabletobenefitthetargetvillages in the corridor areas. Individuals, households and user groups are able to access and utilize funds for livelihood improvement and poverty alleviation via a micro-credit mechanism. Funds can be borrowed for activities of their choice with repayments returned to the VDF with interest,inordertogenerateasustainablerevolvingfinancialinstrument.

2.2 What is the purpose of VDF guideline?

The VDF guideline is written for facilitators as a simple guide on the technical aspects of the VDF and to assist with preparing, implementing and administering the funds. It also outlines the rights, obligations and duties of the VDFMB, the relevant agencies and organizations involved in the process of VDF establishment and operation.

2 Village Development Fund Guideline


2.3 Who will use this guideline?

This guideline will be used by everybody concerned with the implementation of BCC proj-ect,particularly, thePPMO, theBCCPDistrictCoordinationOffice(DCO)andresponsiblefacilitators who are involved in the development and support of the VDF establishment and operation. These are:

(1) VDFConsultantandBCCprojectstaff;

(2) BCC project management;

(3) TechnicalstafffromvariousprovincialanddistrictsectionssuchasLaoFrontforNational Construction (LFNC), Lao Women Union (LWU), District Agriculture andForestryOffice(DAFO)andothers;

(4) VDF Management Board.

3. Conditions for village to receive fundsThePPMOwillapproveandtransferthefundtotheVDFaccountafterthevillagehasfulfilledcompletely the following conditions:

(1) Completed establishment of the VDFMB and the Village Development Fund In-spection Committee (VDFIC);

(2) Completed basic training in accounting/book keeping skills by the VDFMB;

(3) Completed opening the VDF savings account in Lao currency (LAK). The bank account must be named “Village Development Fund of XX Village” (not individ-ual/personal name) and requires three signatures of VDFMB members (i.e. Chief or deputy, accountant and treasurer);

(4) Completed submitting the application form with proposed list of project activities and ideas;

(5) Completed signing the VDF grant agreement with the BCC project.

4. VDF Establishment and Management4.1 VDF establishment

The establishment of VDF involves undertaking the following steps:(1) Conducting a village consultation meeting ensuring that all villagers and relevant

organizations have been informed and invited to participate in the meeting;

(2) Informing meeting participants of the objectives of the village consultations and then introducing the concept of VDF, its purpose and its principles;

(3) Making a decision with villagers on what they decide to do i.e. “Yes” or “No”

9 If the response is “No” then the VDF will be not established in that village 9 If the response is “Yes” then the following tasks have to be carried out;

(4) Explain the role and function of the VDF management board and inspectors;



(5) IdentifyqualifiedandinterestedcandidatestobeVDFMBmembers.Candidatesnominated should meet the following criteria/conditions:

9 To be trusty person; 9 To be active person; 9 To be competent person; 9 To have healthy and good manner; and others; 9 To avoid relatives, cousins or either husband or wife of the same family; 9 Age between 18-60.

(6) Hold an election in accordance with a democratic process with those who receive thehighestvoteswinningtheseatontheboard.Thevotingcanbedoneindifferentways:

9 The villagers can write the names of the persons who they think appropriate as the committee members on a piece of paper and submit that paper to the election committee. Those papers will be the basis for counting; or

9 They can use rocks or pieces of wood to represent counts for each volunteer. In this case, the volunteers or candidates have to stand in a line then the villagers will put the rock or the wood in front of the candidate they prefer (suitable for the illiterate community); or

9 Another technique as appropriate.

(7) After voting, the elected committee has to count the vote and report the results to the villagers at that meeting. The result of village consultation meeting is to prepare a written paper submission for approval / approved by the head of village;

(8) Each village must submit a letter to the district requiring requesting an approval letter to establish the VDF and VDFMB (Annex 0.1: Approval letter for VDF estab-lishment, and Annex 0.2: Assigned letter for VDFMB);

(9) Each village must sign agreement with BCC project. (Annex 1.1 Grant Agreement on VDF);

(10) TostatetheofficialVDFestablishmenttothevillagers.



4.2 VDF management organizations - Structure

Central

Province

District

Village

Provincial Project Steering Committee

PAFO

District Project Steering Committee

DAFO

Village Development Fund Management Board (VDFMB)

- VDF chief - Deputy head of VDF - Treasurer cum Secretary - Accountant - Technical worker

MAF - DOF NPMO- BCC Project

PPMO – Provincial Project Implementa-tion Teams

(PAFO, LWU, LFNC, PFD, DICP, PPRF)

DistrictProjectCoordinationOffice/Dis-trict Technical Teams

(DAFO, DLWUO, DLFNCO, DFO, DRDO, DICPO, DPRFO and Village

Cluster)

Village Development Fund Inspection Committee (VDFIC)

- Head: Village chief/deputy - Deputy: Village LFNC - Member: Village LWU - Member: Village Soldier - Member: Village Security/Police

Village Organization (VO)/Village Management Committees

Village Development Fund (VDF)

Villagers Villagers Villagers Villagers



4.3 VDF management organizations - Roles and Responsibilities

VDF management organizations

Roles and Responsibilities

NPMO: National Project ManagementOffice

- Prepare the VDF guideline and approve it for implementation - Give the overall guidance on VDF implementation; - ProvidetheVDFtrainingforconcernedtechnical/fieldstaffat

provincial and district levels; - Monitor, inspect and evaluate the VDF operation as appropriate.

PPMO - PITs: Provincial Project ManagementOffice–Project Implementation Teams

- Assign the VDF implementation team at provincial level and in-form PIT about of its tasks, responsibilities, management and fol-low up for VDF;

- To be in charge of VDF establishment; - Approve and transfer the fund to VDF village account after the vil-

lagehasfulfilledallconditionsasindicatedinpoint3ofthisguide-line;

- Supervise and guide on technical, establishing and operating the VDF;

- Provide the training in related topics for VDFMB, for instant ac-counting/bookkeepingskills,proposedactivityscreening,benefitsharing and etc.

- Monitor andevaluateVDFoperation effectiveness aswell as re-view VDFMB as appropriate;

- Conduct the internal audit on periodical or annual basis.

DPIU - DTTs: District Project Imple-mentation Unit- District Technical Teams

- Assigned and formed the VDF monitoring team at district level in-cluding its tasks, responsibilities, management and follow up VDF

- Participate the VDF establishment, monitoring and evaluation of VDF operation;

- Provide the technical consultancy to VDFMB during the imple-mentation;

- Support the technical terms to VDF activities as requested by VD-FBM;

- Followupandmonitoractivitiesimplementedatfield.

VO - VMC: Village Organization- Village Management Committee

- To be the VDF owner; - Establish the VDFMB and VDFIC; open VDF bank account for

operating the VDF; - Make the VDF grant agreement with BCC project [annex1.1: VDF

Grant Agreement];



- Check the loan distribution progress, monitor and evaluate the VDF operation of VDFMB;

- Suggest and solve any problems of VDF during its implementa-tion as requested by VDFMB.

VDFIC: Village Development Fund Inspection Com-mittee

VDFICwillconsistoffivemembers,thosewhoareprincipallyresponsible leaders in village organizations, such as the village chief; FLNC; LWU; Youth and etc. VDFIC will have general re-sponsibilities to:

- Regularly monitor and inspect the operation of VDFMB and the use of VDF;

- Evaluate the progress of activities supported by VDF fund; - Provide advice, improve and solve problems related with the use

of VDF; - Report the inspection results to concerned organizations.

VDFMB: Village Development Fund Management Board

VDFMBwillconsistofamaximumoffivemembers,ofwhichtwomembersmustbefemale.VDFMBwillholdofficeforthreeyears, but will require annual review of performance and en-dorsement by village organization. However, a member can be replaced by a new selected person if it is necessary, but the vil-lage has to inform the LWU. VDFMB will have the general re-sponsibilities as follows, to:

- Be village representative for operating and managing the VDF; - Strictly follow up the VDF grant agreement and VDF principles

as given in the VDF guideline; - Consider project proposals and give loan approval for villagers/

borrowers [annex1.2: Loan Application Form]; - Regularly follow up, monitor the progress of VDF activities as

wellasfinancialoneandreporttoBCCprojectandLWU; - Yearlymakethebenefitsharingforconcernedbodiesaccordingto

VDFprinciple(Netprofitsfrominterestearningbasis); - KeepallVDFdocumentsincludingfinancialrecords; - Organize VDF periodical and annual meetings (participated by

stakeholders such as VDFMB, VDFIC, village organization and villagers as appropriate) and make reports and submit to BCC project and LWU.

Positions Roles and Duties of VDFMB

VDF chief - Responsible for advising and supervising loan distribution/ preparing loan contract agreement [annex1.3: Loan Contract Agreement];collectingdebtsandinterestfromborrower;benefitsharing and reporting;



- Makingfinaldecisions regardingallVDFproject activitiesat thevillage level;

- Signingallpaymentapprovalsandreportssenttotheprojectofficeand LWU;

- Coordinating and attending all meetings with the BCC project and LWU.

Deputy - SpecificcallyresponsiblefordisseminationcampaignonVDFandits principles to the villagers and all the administrative issues;

- Advising and supervising on loan distribution; monitoring; collect-ingdebtsandinterestfromborrower;benefitsharingandreporting;

- Acting on behalf of the VDF chief to sign all payment approvals and reportssenttotheprojectofficeandLWU;

- Coordinating and attending all meetings with BCC project and LWU.

Treasurer cum Secretary - Keeping the cash of VDF; - Making a loan contract agreement with borrowers according to VD-

FMB’s approval and keeping all documents related with receipts and spending or other related documents [annex1.3];

- Paying the loans to borrowers [annex1.4: Cash Receipt Proof] and collecting the debts and interest from borrowers in accordance with the loan contract agreement; [annex2.3: Loan/Debt and Interest Monitoring Book];

- Assisting the accountant in withdrawing money and making depos-its in the VDF account [annex1.5a: Withdrawal Application];

- Reporting to the VDF management organizations, villagers and oth-er people concerned about cash situation [annex3.2: Receipt and Payment Report];

- CoordinatingandattendingallmeetingsthatrelatetofinancewithBCC project and LWU.

Accountant - Keeping all VDF accounting and bookkeeping or related documents and maintains a list of borrowers and its activities [annex2.1: VDF Bank Book];

- Keeping records of daily receipts and spending [annex2.2: Receipt and Payment Monitoring Book/Credit-Debit Book];

- Issuing/writing all payment orders and receipts related to the VDF [annex1.4];

- Recording withdrawing and depositing money in the VDF account [annex1.5a];



- Collecting the repayments from borrowers [annex2.3]; - Preparingfinancialmonthly,quarterly,semiandannualfinalre-

ports for submission to the VDFMB [annex3.1: Bank Account Re-port]; [annex3.3: Loan and Interest Report]; [annex 3.4: Financial Summary Report];

- CoordinatingandattendingallfinancerelatedmeetingswithBCCproject and LWU .

Technical worker - Following up activities of villagers, responding to their problems, coordinatingwithDistricttechnicalstaffforresolvingproblems.

- Assisting Deputy of VDF Chief for studying project proposals.

5. VDF principles5.1 Fund sources

The main source of the VDF fund is from the BCCP seed fund ($5,000) but it is also allowed to receive funds from the following sources:

9 ADB and other international development agencies/such as payments for carbon credit;

9 Government projects and programs; 9 Provincial and district funds; 9 Non-governmental organizations; 9 Group savings from within the village; 9 Village revenue; 9 Service contract payments (from private and public sector); 9 Donations (unconditional); 9 Ecotourism activity, and 9 Others

5.2 Beneficiaries

TheVDF“beneficiaries”includeeverypersonwithinthevillage,whetherasindividuals,ashouseholds, group of households / user groups and associations, and all of which are consid-ered to be equal, regardless of gender, wealth, poverty, ethnicity, hierarchical and / or social status.



5.3 Loan for eligible and ineligible activities

The VDF loan is to be used to fund short term activitieswhichprovidedirectbenefittolocallivelihoods through income enhancement.

The VDF loan is not to be used to fund long term activities, harmful activities with nega-tive impacts to the natural resources, forest and wildlife and other activities as detailed below:

“Funded” for activities “No funded” for activities1. Off-farmbusiness

opportunities (small trade)

2. Annual crops, cash crops, vegetable gar-dens

3. Animal rising: Pig, goat,poultry,fish

4. Handicrafts and weaving

1. Any personal loan to an individual family, except medical emergency;

2. Small scale infrastructure: E.g. water supply, toilet, roads, buildings, temple, village of-fice, paddy field extension, bridge, irrigation, fishpond, ex-panded settlement, rice bank, etc.

3. Expenditure for social activities: E.g. festival ceremonies, paid for wedding party, teachers/government staff salaries, village meeting, racing boat, gam-bling, etc.

4. Unacceptable activities to ethnic groups;5. Purchase of logging equipment/chain saws, vehicles/ motor-

bike, hand-tractor, and wildlife trading ;6. Insecticides, herbicides, pesticides and other dangerous

chemicals;7. Long terms agricultural activities:

E.g. Buffalo and cattle raising, fruit trees, coffee, rubber tree, teak, etc.

8. Other activities not mentioned above which have negative impact to natural resources.

5.4 Scope and modality

The main purpose of VDF is to build it to be accruing interest in a sustainable way. There-fore,tofacilitateitsoperationtomaximizeproductivity,theVDFloanmodalityisclassifiedinto three types as follows:

No. Types of Loan Modality Maximum Loan (LAK)

1. Business/Trading Group 10,000,000

2. Agriculture/Handicraft Group 10,000,000

3. Medical emergency Individual 1,000,000



5.5 Interest rate

Any loan from the VDF incurs interest which is added to the VDF initial seed capital account andfromwhichVDFbenefitsharingtakesplace.Theinterestfortheloansisasfollows:

No. Types of Loan Interest rate/month Maximum period (month)1. Business/Trading 2 % 6

2. Agriculture/Handicraft 1 % 12

3. Medical emergency 0.5 % 3

5.6 Repayment

VDF repayment will be carried out based on each loan contract agreement. There are several options for repayments as follows:

No. Types of repayment Interest calculated1. Pay all interest on the day of uplifting

the loan from the sum received, leaving only the balance loan amount to back at the end of the loan period

Fixed interest on the initial loan amount.

2. Pay monthly interest, with the full loan disbursed to be pack back at the end of the loan period.


3. Pay the interest and loan at the end of the loan period


4. Pay monthly interest and proportion of loan

Loan amount averaged (monthly) over the loan contract period, and the interest calcu-latedfixedontheinitialloanamount.

5. Pay monthly interest and proportion of loan

Loan amount averaged (monthly) over the loan contract period, and the interest calculated on the balance loan amount at that date.

5.7 Loan accessibility conditions

TheVDFisavailableforbeneficiariestoborrowforactivitieswithinthreecategories(typesofloan) as indicated in point 5.4 above. Loans are only able to be borrowed for group activities, and not for use within a revolving fund or individual family/personal use, except in a medical emergency.Forbeneficiariestobeeligibleforreceivingaloan,theymustmeetthefollowingconditions:

(1) Must be a member of the village (the list and family book/census);



(2) Must not already owe money to the VDF. Before approval, any outstanding loan of the borrower must have been repaid including principal and interest;

(3) Musthaveformedagroupwithmaximumoffivemembers(listofallmembers),except for the third type of loan, which can be for an individual;

(4) Purposed project must to be one of the three types of loan and match the activities that can be funded by the VDF as indicated in point 5.3 above;

(5) Must complete and submit the loan application form to VDFMB in accordance with the format to be provided by VDF;

(6) Must complete a Loan Contract Agreement with VDFMB, and

(7) Must have a group repayment guarantee covering all members in the group (for ex-ample, if one member out of group cannot repay, then the rest of members have an obligation to pay back he/she share to the VDF).

5.8 Criteria for screening project proposals

VDFMBmust strictly screen theprojectproposalsbefore issuing loans tobeneficiaries.Thefollowing criteria have to apply:

9 Submitted proposal must be on the standard VDF form; 9 Theprojectobjectivesmustcomplywiththethreetypesofloanwithjustification(povertyreduction,conservation,orcapacitybuildingbeingspecified);

9 All proposed activities must be consistent with: (1) feasibility of loan amount proposed to borrow for activity, (2) feasibility of technical inputs for activity e.g. skillsandlabors,(3)feasibilityofeconomicreturne.g.marketingandfinancialpotential, (4) feasibility of social return, (5) feasibility of environmental return.

AllrequirementsabovemustbecertifiedbyBCCProjectstafforLWU);[annex1.6:RapidPar-ticipatory Assessment];

5.9 Project proposal approval

The approval process for each project proposal involves: 9 Individuals, households, household groups, and village communities submit

project proposals to the VDF management committee in accordance with the three types of loan as mentioned in point 5.4 above;

9 The VDF management committee reviews the application by applying criteria set down in point 5.8 and approves the projects in meetings (at least twice a year) with participation of BCC project coordinators and LWU;

9 LoancontractagreementsaresignedbetweenbeneficiariesandVDFMB.



5.10 Benefitsharing

ThebenefitsharingoftheVDF’sgrossprofitswhichisderivedfromtheloaninterestwillbesharedbetweenthestakeholdersinvolved.Thebenefitsharingwillbeorganizedannually,asfollows:

No. Stakeholders concerned Percent of profits

Remark/purposes

1. VDF 40% This amount will be added (accumulated) to the VDF initial seed capital

2. LWU 10% All members of VDF monitoring groups in LWU at district level will receive the same averagedbenefit

3. VDFMB 20% All members will receive the same averaged benefit

4. VDFIC 10% All members will receive the same averaged benefit

5. VDF Operation Cost 10% To support VDF stationery, VDF technical meetings, VDFMB’s traveling costs to with-draw and deposit money from/into VDF account

6. Village Development Treasury

5% This will be managed by the village man-agement committee based village need and its appropriateness

7. Social Welfare Cost 5% This will be managed by VDFMB. Its main purpose is to assist/support for the poor, women and ethnic minorities in the village, (eg for birth, illness and death)

6. VDFfinancialmanagement6.1 Deposit and withdrawal

Deposits can be made into the VDF account by authorized representatives of VDFMB, while, the withdrawal must be by signed letter by two out of three people in VDFMB (i.e.. the chair-person or deputy chairperson and accountant), along with a withdrawal endorsement letter or note signed by BCC project coordinators or LWU [annex1.5b: Withdrawal Application for BCC project/LWU]. Account information of savings deposits and withdrawals will be main-tained by the VDF accountant/bookkeeper and easily accessible at any given time.



6.2 Disbursement

Disbursement of the loan is made after the VDFMB has approved the proposal and the loan contract agreement is made between the borrower and VDFMB as indicated in this guideline [annex1.2].

6.3 Financial reporting

The bookkeeper and the deputy chairperson of the VDFMB are responsible for preparing andsummarizingthefinancialreportsforthewholevillageandconcernedrepresentativesonmonthly, quarterly, semi-annual and annual basis giving the performance of the VDF and proj-ects undertaken. The accounts books will be maintained by the VDF bookkeeper and consol-idated annualfinancial and technical reportswill be submittedby theVDFMB to theBCCprojectcoordinatorsandLWU.Thefinancialreportsshouldbeincluded:

1. Bank account report statement [annex 3.1]

2. Receipt and Payment Report [annex 3.2]

3. Loan and Interest Report [annex 3.3]

4. Financial Summary Report [annex 3.4]

7. VDF audits

Audits of the VDF will be carried out by external auditors contracted by the PPMO/LWU. Au-dit reports will be submitted to MAF-DOF, NPMO, LWU, and the ADB. Random inspections ofaccountscanalsobecarriedoutonbehalfofthePPMO/LWUbyfinancialspecialists.

8. VDF implementation

Theguidelinesonvillagedevelopmentfundhaverevisedandfinalizedonthebasisofguide-lines issued and agreed by DOF, PPMO and LWU. During implementation of VDF if problems or disputes occur, a peaceful consultation will be conducted in order to preserve and develop a good atmosphere for the achievement of the village development and poverty reduction.

9. The guidelines will be agreed (as a replacement of the one dated November 2013) and signed by following representative. Vientiane, Date: ............................

Department of Forestry



Reference:

1. SUFORD Project. Handbook on Village Development Fund for $8,0002. SUFORD Project. Guideline for Delivery Grant for $4,0003. BCI Project (2007). Guideline on Village Development Fund4. ADB (June, 2009). Guideline on Community Livelihood Fund in Cambodia5. Vietnam (August, 2008). Guideline on Organization and Management for TaBhing Com mune Development Fund6. Bank of Lao PDR(2008). Regulation for Saving and Credit Unions http://www.bol.gov.la7. EBIT Company. Microcredit [email protected]. IUCN (July 8, 2008). Village Development Fund report

Annexes



16

Annex0.1: Approval letter for VDF Establishment

Lao People’s Democratic Republic Peace Independence Democracy Unity Prosperity

Province:………………………. District:………………………… Ban…………………………….. No.________/Village

Approval Letter for VDF Establishment

ATTN : District governor of …………………………………………………

Subject : Asking for approval of VDF establishment

- Referring to strategy and policy of Lao government to improve livelihood and socio-economic development plan.

- Referring to the national poverty reduction plan and extend to implementation in action at the village level

- Referring to ……………….……..village voting, which is officially agreed by a village

meeting on date ………………….…..

A head of village …………..…….. requesting to the district governor of ……………...

to approve the village development fund establishment of …………………. ….village.

The village meeting with included the mass organization and villagers agreed on date

…………………………

Therefore, Hope you will consider as suitable reasons.

Truly sincerely,

At……………………Village, date…………………

Village Chief



17

Annex0.2: Assigned letter for VDFMB


Province:……………………….

District:………………………… No.___________/District Governor

Assigned Letter for VDFMB Ban………………………….

- According to the approval letter for VDF establishment of district governor

No………………….. date ……….…….……

- According to village voting for VDFMB members on date …………….……………….

District governor of ……… ……………………District, Agree to assign

Section 1: VDFMB member list

(1) Mr……………………………………………...... Head

(2) Mr……………………………………………….. Deputy

(3) Mr……………………………………………….. Secretary and cash treasure

(4) Mr……………………………………………….. Accountant

(5) Mr……………………………………………….. Technical

Section 2: VDFIC member list

(1) Mr………………………………………………… Head

(2) Mr………………………………………………… Deputy

(3) Mr…………………………………………………. Member

(4) Mr…………………………………………………..Member

(5) Mr………………………………………………… Member

Section 3: This document is valid from the date of signature until any change from the next

village VDF meeting

District Governor of……………………..



18

Annex1.1: VDF Grant Agreement


Province:………………………. District:………………………… Ban…………………………….. No.________/Village

Grant Agreement on Village Development Fund

between

The Biodiversity Conservation Corridors Project of ………………………province herein referred as “Party A”.

and

Village Organization of …………………..village, ………………………….……..district, ………………………. province herein referred as “Party B”.

Both parties agree to the terms of this grant agreement as follows

Section1: ‘’Party A’’ agrees to make available fund to “Party B” from Provincial Project Management Office (PPMO) on terms and conditions set forth in this Grant Agreement an amount of Five Thousand Dollars ($5,000).

Section2: ‘’Party A’’ shall provide the technical terms for the grant operation and management to “Party B” through capacity building activities as well as monitoring and conducting the internal audit on the grant operation. Also to pause providing supporting to other previous activities if “Party B” is not follow by VDF guideline.

Section3: “Party B” shall establishment of Village Development Fund (VDF), open VDF bank account as well as operate and manage the grant via micro-credit mechanism by elect Village Development Fund Management Board (VDFMB) on the basis of guidelines issued by PPMO and VDF guideline as well as follow by ‘’Party A’’’s advice.

Section4: The Recipient shall produce the financial reports and submit it to BBC project/PPMO

Section5: This grant agreement is valid from date of signature

DoNREO Village Chief of ………… District Coordinator

Certified by PFRMS Provincial Coordinator



19

Annex1.2: Loan Application Form


Province:………………………. District:………………………… VDF of Ban……………………. No.___________/VDF

VDF Loan Application

ATTN : The chief of Village Development Fund Management Board

I am................... Age...........years old, on behalf of group has objectives to borrow the VDF

loan in order to carry out ................................................................activity with total loan

request............................LAK (written in words:…………............………………………..),

Loan duration...............months, started from date....................... to..........................

The objectives of expenditure estimation for activity

1…………………………………………………. Amount ……………………………LAK 2…………………………………………………..Amount ……………………………LAK 3………………………………………………… Amount ……………………………LAK The lists of members: 1…………………………………………………. 2………………………………………… 3…………………………………………………. 4………………………………………… 5…………………………………………………. 6…………………………………………

Therefore, I informed about it to you for the duly consideration

At...........................Village, Date.............................

Certified by village chief Signature of borrower 1………………………………. 2………………………………. 3………………………………. 4………………………………. 5……………………………….

VDF Chief



20

Annex1.3: Loan Contract Agreement


Province:………………………. District:………………………… VDF of Ban……………………. No:__________/VDF

Loan Contract Agreement between

Village Development Fund herein referred as “Lender”.

and

Villagers/beneficiaries herein referred as “Borrower”.

Both parties agree to the terms of this grant agreement as follows

Section1: Lender agreed to approve a loan to Borrower in contract No……………...………., by referring to its VDF loan application No……………., dated…..………….…….... Total amount of loan (Written in Numbers) :..………………...……...………LAK Total amount of loan (written in words) :..………………………...…….……. The loan interest rate per month is :……………………………………..% The loan period is : ………………………………months

Stated from date.….….. to date..….…

The purpose of this loan will be used for :….………………….…...……………

.............................................................

Section2: Borrower agreed to pay back the loan and interest to Lender as selected [X] option

below:

[ ] Paid off interests on the day of receiving loan, while the loan have to disburse back at the end period of time (fixed interest charge)

[ ] Paid monthly interest, while the loan have to disburse back at the end period of time (fixed interest charge)

[ ] Paid the interest and loan at the end period of time (fixed interest charge) [ ] Paid monthly interest and loan (Loan divided in an average by the loan contract

period, and the interest will be calculated in fixed with the initial loan) [ ] Paid monthly interest and loan (Loan divided in an average by the loan contract

period, and the interest will be calculated by the rest of capital)



21

Annex1.3: Loan Contract Agreement

Section3: Lists of beneficiaries or Borrowers

No. Name and surname (Husband

& Wife)

Loan Amount (LAK)

The loan interest rate per month

Loan period

(Month)

SUM (LAK)

% LAK 0 1 2 3 4 5 6=(2)+(4x5)

01

02

03

04

05

Section4: Borrower has the list of members that indicated in section3 above to be guarantee for this loan contract agreement and all members have the obligation together to pay back the loan with interest for one member in group in case he/she is unable to fulfil a contact obligation

Section5: Under this loan contract agreement both parties agreed to apply the penalty measure in case a borrower is unable to fulfill a contact obligation

- Group leader and VDFMB will be respond for recording and penitential

discussion/peaceful consultation for instant, to extend the contract for one month with no any interest charged for extend contract period, if it cannot be addressed then all group members have to payback a capital and interest within 15 days.

Section6: This grant agreement is valid from date of signature

At . . . . . . …………..village, Date………. . . . Certified by village chief Borrowers’ member (Name and Signature) 1 ………………............................................

2 ................................................................

3 ................................................................

4 ………………………………………………

5 .……………………………………………

VDF chief VDF cash treasure



22

Annex1.4: Cash Receipt Proof


Province:………………………. District:………………………… VDF of Ban……………………. No._________/VDF

Cash Receipt Proof

- Referring to the loan contract agreement No: ……………….., dated:………….………

Village Development Fund Management Board has received /paid cash amount………….

…………………………..Kip (written in words:……………………………………..….....)

to/from borrower/productive group/Mr./Ms…………………………...……………………

Therefore, made this cash receipt proof to be evidence

At:……………..Village, Dated:…………..

VDF Cash treasurer VDF Accountant Signature of Borrowers

Signature of VDF Chief



23

Annex1.5a: Withdrawal Application



Withdrawal Application (Used by VDFMB)

ATTN: Project Steering Committee/LWU at……………………level Subject: Requesting for a permission to withdraw the Village Development Fund of

…………………………………….Village

- Referring to the villagers’ request and VDF’s agreement meeting on date……………...

Village Development Fund Management Board has agreed to withdraw money from the

VDF bank account with total amount is ………………………….………………….....LAK

(written in words …………………………………………..……………………………….).

The purpose is to lend the loan to individuals, households and user groups within the

village to borrow for their project of choice.

Therefore, we informed about it to you for the duly consideration

At..............................village, Date…....…................

Certified by VDFMB chief

Attach: Loan Application Form of each borrower



24

Annex1.5b: Withdrawal Application


Province:………………………. District:………………………… BCC project No.______/BCC project

Withdrawal Application (Used by BCC project/LWU)

ATTN: Director of ..............................................................Bank Subject: Requesting for a permission to withdraw the Village Development Fund of

…………………………Village

- Referring to the request sheet of VDFMB of……………village No..............................,

Dated.................................................

BCC project of …………………province has agreed to give permission for VDFMB of

…………………village withdraw money from its VDF bank account with total amount is

………………….....LAK (written in words:………………………………………………..)

for the purpose of…………………………………………………………………………….

Therefore, BCC project/PPMO informed about it to you for the duly facilitation

At..............................., Date……...…................

Certified by District Project coordinator Certified by LWU



25

Ann

ex1.

6: R

apid

Par

ticip

ator

y A

sses

smen

t

Rap

id P

artic

ipat

ory

Ass

essm

ent T

able

-Be

fore

rele

ase

a lo

an, V

DFM

B w

ill u

se th

e fo

llow

ing

tabl

e fo

rm to

sele

ct/s

cree

n an

d as

sess

men

t the

requ

est a

ctiv

ity o

r pro

ject

pr

opos

al fo

r rec

eivi

ng a

VD

F lo

an)

-Sc

ore

1-10

(wor

st-b

est):

If to

tal a

vera

ge sc

ore

is e

qual

or m

ore

than

5, t

han

appr

oved

. If b

elow

5 m

eans

not

app

rove

d (C

alcu

latio

n av

erag

e sc

ore

:(1)+

(2)+

(3)+

(4)+

(5)/5

No

Nam

e of

bor

row

ers

Am

ount

to b

orro

w

(kip

)

Feas

ibili

ty o

f loa

n am

ount

pro

pose

d to

bor

row

(1

)

Feas

ibili

ty o

f Te

chni

cal i

nput

s (s

kills

, lab

or...

) fo

r thi

s act

ivity

(2

)

Feas

ibili

ty o

f Ec

onom

ic R

etur

n (3

)

Feas

ibili

ty o

f So

cial

Ret

urn

(4)

Feas

ibili

ty o

f En

viro

nmen

tal

Ret

urn

(5)

TOTA

L (s

core

) Sc

ore

Ave

rage

A

ppro

ved

(yes

/no)

01

Exam

ple:

Mr.A

3,

000,

000

4 5

7 9

6 31

/5

6 ye

s 02

Ex

ampl

e: M

r.B

4,00

0,00

0 6

4 4

2 4

20/5

4

no

Cer

tifie

d by

BC

C p

roje

ct/L

WU

D

ate

App

rove

d by

VD

FMB

D

ate



26

Annex2.1: VDF Bank Book



VDF Bank Book Record

No. Date Description Credit (Kip)

Debit (Kip)

Balance (Kip)

01

02

03

04

05

06

07

08

09

Total

Document attached there is bank account report or copying for the bank deposit book of village.



27

Ann

ex2.

2: V

DF

Rec

eipt

and

Pay

men

t Mon

itorin

g Bo

ok

Lao

Peop

le’s

Dem

ocra

tic R

epub

lic

Peac

e In

depe

nden

ce D

emoc

racy

Uni

ty P

rosp

erity

Prov

ince

:……

……

……

……

….

Dis

trict

:……

……

……

……

……

V

DF

of B

an…

……

……

……

….

No:

____

____

_/V

DF

Dai

ly/M

onth

ly V

DF

Rec

eipt

and

Pay

men

t Boo

k

No.

D

ate

Reg

iste

r N

o.

Des

crip

tion

Rec

eipt

(K

ip)

Paym

ent

(Kip

) B

alan

ce

(Kip

) Si

gnat

ure

of

acco

unta

nt

01

02

03

04

05

06

T

otal

Atta

ched

: Rec

eipt

cas

h pr

oof



28

Ann

ex2.

3: V

DF

Loan

and

Inte

rest

Mon

itorin

g Bo

ok

Lao

Peop

le’s

Dem

ocra

tic R

epub

lic

Peac

e In

depe

nden

ce D

emoc

racy

Uni

ty P

rosp

erity

Prov

ince

:……

……

……

……

….

Dis

trict

:……

……

……

……

……

V

DF

of B

an…

……

……

……

….

No:

____

____

__/V

DF

VD

F L

oan

and

Inte

rest

Mon

itori

ng B

ook

No .

Nam

e an

d Su

rnam

e C

ontra

ct

No.

A

ppro

ved

date

Con

tract

Ex

pire

d da

te

Act

iviti

es

Loan

am

ount

(L

AK

)

Loan

pe

riod

(Mon

th)

Loan

inte

rest

ra

te /

mon

th

Am

ount

of r

epay

men

t / m

onth

Out

stan

ding

lo

an a

nd

inte

rest

(L

AK

) Si

gnat

ure

of

acco

unta

nt

Perc

ent

(%)

Am

ount

(L

AK

) C

apita

l In

tere

st

Paid

da

te

Cap

ital

Inte

rest

01

02

03

04

05



29

Annex3.1: VDF Bank Account Report



VDF Monthly Bank Report …….

Date Description Credit (Kip)

Debit (Kip)

Balance (Kip)

Previous balance:………… =

Total

- Balance carried forward in month………………………………………..LAK - Total deposit in month……………………………………………………LAK - Total withdrawal in month………………………………………………..LAK - Balance brought forward for next month ………………………………..LAK

Attached: bank account report or copying for the bank deposit book of village.

At………………Village, Dated:……………

VDF Chief VDF Treasurer VDF Accountant



30



VDF Monthly Receipt and Payment Report………… Date Register

No. Description Receipt (Kip)

Payment (Kip)

Balance (Kip)

Previous balance:……. =

Total

- Balance carried forward in month………………………………………..LAK - Total Receipt in month……………………………………………………LAK - Total Payment in month…………………………………………………..LAK - Balance brought forward for next month ………………………………..LAK

Attached: The cash receipt proof

At………………Village, Dated:……………


3.2: VDF Receipt and Payment Report



31

Ann

ex3.

3: V

DF

Loan

and

Inte

rest

Rep

ort

Lao

Peop

le’s

Dem

ocra

tic R

epub

lic

Peac

e In

depe

nden

ce D

emoc

racy

Uni

ty P

rosp

erity

Prov

ince

:……

……

……

……

….

Dis

trict

:……

……

……

……

……

V

DF

of B

an…

……

……

……

….

N

o:__

____

____

/VD

F

VD

F L

oan

and

Inte

rest

Mon

thly

Rep

ort

No.

D

ate

Con

tract

N

o.

Act

iviti

es

Loan

(LA

K)

Rep

aym

ent (

LAK

) D

ue (L

AK

) C

apita

l In

tere

st

Tota

l C

apita

l In

tere

st

Tota

l C

apita

l In

tere

st

Tota

l

To

tal

VD

F C

hief

V

DF

Tre

asur

er

V

DF

Acc

ount

ant



32



VDF Financial Summary Report for ……….Month No. Description Amount (LAK)

I Total Income (1.1+1.2+1.3+1.4+1.5) =

1.1 Grant income from BCC project

1.2 Interest income on loan

1.3 Interest Income from Deposits with a bank

1.4 Capital/loan

1.5 Others

II Total expenditure (2.1+2.2+2.3+2.4+2.5+2.6) =

2.1 Activity………….(amount of contract……..)



2.4 VDF operation cost

2.5 VDF benefit sharing to related parts

2.6 Others

III Account Balance =

3.1 Cash balance

3.2 Bank account balance

IV Balance =

4.1 Cash balance

4.2 Bank account balance

Remark: (I+III)=(II+IV)

At ……………Village, Date………………


Annex 3.4: VDF Financial Summary Report

Documents

Village Development FundGuideline