Established in 1993 as the Association of Cambodian Local Economic Development Agencies, ACLEDA began as a nonprofit, nongovernmental organization funded by international development organizations. With support from the International Finance Corporation (IFC)World Bank’s private investment armand from the United Nations Development Program (UNDP), today it has evolved into a regulated for-profit institution with $22 million in assets that is Cambodia’s leading provider of microcredit, holding more than half the national market. Its 45 branches have lent $15.5 million to nearly 60,000 emerging entrepreneurs—80 percent of them women, and most living in Cambodia’s poverty-stricken countryside. Average loan size is $273, with a nonperforming rate of only 4.8 percent that compares favorably to many larger commercial banks in Cambodia.

ACLEDA’s decision to transform itself into a commercial bank was the direct result of its success. Its first five years, in which ACLEDA rapidly expanded to cover 13 of Cambodia’s 21 provinces, showed that loans could be provided to the country’s small business owners and farmers at a profit. General Manager In Channy and his colleagues realized that if ACLEDA could wean itself from dependence on donors and operate as an independent commercial entity, that would not only ensure its long-term sustainability but also increase growth potential by diversifying funding sources to include equity injections, commercial interbank loans, and public deposits.

IFC’s Mekong Project Development Facility and the UNDP provided financial and technical support for the transformation. The technical assistance enabled ACLEDA to bring its policies and practices in line with international accounting standards and its internal structure in line with international commercial banking standards, making it attractive to new investors. IFC has since joined KfW of Germany and FMO and Triodos Bank of the Netherlands in buying a 49 percent stake in the new bank. These new capital resources are allowing ACLEDA Bank to scale up its microcredit operations by more than 40 percent over the next two years.

ACLEDA Bank will also offer savings and fixed deposit-taking, business services long needed but out of reach for Cambodia’s rural small-scale entrepreneurs. Other services will include cash management, wire transfers, and—down the road—specially designed insurance products, said ACLEDA’s vice-chairman, John Brinsden. A former senior executive at Standard Chartered, he was sent to the bank with financial support from IFC’s Japanese trust fund.