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 | IFC News » ACLEDA Bank: An IFC Client Leading on Sustainability ACLEDA Bank: An IFC Client Leading on Sustainability |
 As a refugee in Thailand some years ago, In Channy dreamed of improving the lives of the poorest people. He began to realize this dream in 1993 after returning to his native Cambodia, by starting the Association of Cambodian Local Economic Development Agencies (ACLEDA), a nongovernmental organization to provide loans and credits to the very poor. With help from IFC, ACLEDA has evolved into a commercial bank, while retaining its focus on reducing poverty.
In the beginning, ACLEDA’s credit officers would walk to villages in search of clients. They used megaphones to announce their presence and the services offered. During one visit, a credit officer approached a woman living in a lean-to and selling snacks near a pagoda. Recognizing the woman's potential as an entrepreneur, ACLEDA loaned her $10 to start a microenterprise selling grilled bananas and cakes. The woman repaid the first loan in three months, after which she borrowed $15. Six loans later, she built herself a sturdy house, gave up the snack business, and undertook a more lucrative enterprise: selling sand and gravel from a nearby river.
 Mr. Channy and his colleagues built ACLEDA one client at a time. By 1998, when they were serving about 55,000 small borrowers, ACLEDA received its first support from IFC, in the form of technical assistance through its Mekong Private Sector Development Facility. ACLEDA was by then the largest microfinance institution in Cambodia, serving small businesses across the country.
Considering ACLEDA's success and the vital role microfinance institutions can play in bringing financial services to rural areas, the National Bank of Cambodia soon licensed ACLEDA as a “specialized bank.” IFC acquired an equity stake in the company through investments in 2000 and 2003, mobilized other investments, and provided financing to expand the bank's lending to microenterprises. Following a stellar performance, ACLEDA was relicensed in 2003 as a commercial bank.
Functioning as a commercial bank has allowed ACLEDA to launch several new products and services targeted to consumer and retail customers. These include direct payroll deposit for factories and businesses serving lower-income clients; savings accounts for ordinary people in urban and rural areas; money transfers that help families assist one another across provinces and regions; and online financial services. The bulk of the bank’s loans go to entrepreneurs selling basic commodities such as rice, fish, produce, and artisanal goods. ACLEDA is thus achieving its business goals, while retaining a commitment to sustainable development.
 ACLEDA’s management nurtures a corporate culture based on honesty, integrity, transparency, accountability, and managerial responsibility. It is one of the largest recruiters of university graduates in Cambodia. Market research demonstrates that customers choose ACLEDA because of its range of products, good service, a convenient network of branches, and good returns, as well as confidence in its management and good governance practices.
This year IFC recognized ACLEDA’s achievements with its Client Leadership Award. In presenting the award Assaad Jabre, IFC's Acting Executive Vice President, said, "The winner of the IFC Client Leadership Award should be a company that sets the standard for leadership in corporate governance, community involvement, environmental and social sustainability, and commercial success. ACLEDA has truly earned this award."
In receiving the award, Mr. Channy thanked the IFC for its contribution to the bank's success and shared a few of its many success stories from working with entrepreneurs.
Today ACLEDA's loan portfolio exceeds $80 million, compared to just $10 million in 1998. ACLEDA is now 51 percent owned by Cambodia interests, including its staff, with the remaining 49 percent taken up in equal parts by IFC, DEG (a part of Germany’s KfW), FMO, and Stichting Triodos Doen together with Triodos Custody B.V. as custodian of Triodos Fair Share Fund (The Netherlands). |
ACLEDA’s Partnership with IFC |
| 1998 | With assistance from IFC’s Mekong Private Sector Development Facility, UNDP, and USAID, ACLEDA embarks on a program to transform itself from a nonprofit organization to a commercial bank. |
| 2000 | IFC makes an equity investment of $490,000 for a 12.25 percent shareholding. The investment is instrumental in mobilizing equity from FMO, DEG, and Triodos Bank. It also makes possible a specialized microfinance bank license for ACLEDA. |
| 2003 | IFC leads shareholders in executing a capital increase, allowing ACLEDA to graduate to a full-service commercial bank. |
| 2004 | IFC extends a $6 million credit line to support ACLEDA’s expansion program across Cambodia for working capital loans to microenterprises. The funding also helps the bank roll out pilot programs for fixed asset financing, such as equipment loans for small businesses and housing improvement loans. |
| 2005 | ACLEDA receives IFC’s Client Leadership Award. |
IFC is a leader in commercial microfinance. As of June 30, 2005, IFC had invested $323 million in 69 microfinance projects in 43 countries. It helps build strong commercial microfinance institutions through investments, partnerships, and targeted technical assistance. The goal is to bring microfinance into the mainstream of the banking industry to help reduce poverty and improve people’s lives.
FOR FURTHER INFORMATION:
contact:
Rita Jupe
(202) 458-8967
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