The objectives of the present study were, using Lao PDR as a case country, (1) to analyse the livelihood assets and activities of selected households with the emphasis on a comparison between poor and non-poor households and between those which had and had not received a micro credit; (2) to assess whether the well-being of the villages and households had improved as a consequence of the application and implementation of village development funds, that is, micro credits, and which were the factors affecting poverty; and (3) to evaluate the opinions of provincial level forestry and district leaders and other leaders on village development funds in contributing to well-being in Laos. The theories of sustainable livelihoods and entrepreneurship were used in analysing the impact of micro credits on the welfare of villagers and their livelihood assets. A basic assumption was also that access to various levels of assets and the combinations of assets both have an influence on people’s choice of livelihood strategies.

Village and household survey data were used. These data were collected in the field in the form of interviews with closed questions. Village heads were interviewed, as well as the heads and the members of the selected households. In total, 76 villages were studied and 1,518 households were interviewed. The village development financing system was assessed through provincial and district level semi-structured interviews, by focusing in particular on the adequacy and appropriateness of the development financing guidance, tools and training.

A quantitative analysis suggested that the effects of the SUFORD project and micro credits in the form of village development funds were small or non-existent. However, the quantitative analysis could define the specific factors related to poverty as follows: ethnic origin; glutinous rice production during the wet season; the farm area; the goods and chattel situation and the house type compared to the situation three years earlier; and the off-farm income of the household.

In contrast to the quantitative analysis, the major result of a qualitative analysis was that the SUFORD project had improved the welfare situation of the households and villages. The positive results of the qualitative analysis may be explained by the fact that the SUFORD project was perhaps regarded by the rural communities as much more powerful than it really was.