94901 IFC SOLUTIONS Microfinance Stories of Impact This series provides examples of our impact, expertise and lessons learned working with clients and partners. Expanding Access to Microfinance in Cambodia through a Strategic Partnership On the brink of the new millennium, Cambodia was a RESULTS & IMPACT post-conflict country with a struggling economy and limited financial infrastructure. The opportunities for  IFC has invested over $123 million in formal employment were limited, and many people – ACLEDA and its subsidiaries since 2000. especially women - turned to self-employment through starting small businesses.  ACLEDA is currently the largest commercial bank and microfinance The country needed broader access to finance, as provider in Cambodia with a portfolio well as strong financial institutions that would make of $1.39 billion. loans available to low-income people and micro entrepreneurs.  ACLEDA reaches nearly 400,000 microfinance clients in Cambodia, Lao PDR, and Myanmar. IFC has worked with ACLEDA, a local financial institution, for over 15 years. Through investment  ACLEDA operates 238 branches in and advisory support, IFC helped ACLEDA grow into Cambodia the largest commercial bank and microcredit provider in Cambodia, and expand its operations into  ACLEDA is the only bank with Myanmar and Lao PDR. nationwide coverage.  ACLEDA has set the standards in “IFC has supported our continued efforts to offer financing to small Cambodia and in the broader region for corporate governance, and medium enterprises that are the backbone of the Cambodian environmental and social practices, economy. Long-term partnership with IFC also enhanced our ability to and risk management. mobilize additional funding from private investors.” — In Channy, CEO of ACLEDA Bank Plc IFC Global Microfinance program is implemented in partnership with Belgium, Japan, and the Netherlands IFC SOLUTIONS MICROFINANCE The Opportunity Our Approach On the brink of the new millennium, Cambodia was a post- In 2000 IFC became a founding shareholder of ACLEDA Bank conflict country with a struggling economy and limited with an equity investment of $490,000. Over the years IFC has financial infrastructure. According to the Asian Development invested over $123 million in the bank and its subsidiaries Bank, in the early 2000s less than 10 percent of Cambodian through senior debt, rights issues, trade finance, and small enterprises had access to credit. Those affected the most subordinated debt. by the lack financing were micro-entrepreneurs outside of These investments were complemented with a range of advisory Phnom Penh and other big cities. initiatives. Along with partner international organizations, IFC In Cambodia the opportunities for formal employment are helped ACLEDA transform from an NGO to a commercial bank scarce and many people turn to self-employment through and establish a solid foundation for future growth. At the time of creating small businesses. Many of these self-employed ACLEDA’s transformation, IFC and partners had: entrepreneurs are women, who make a living with scarf  Helped upgrade the bank’s organizational structure and weaving, noodle making, hairdressing, tailoring, and silk accounting practices in line with the international standards; weaving. Informal credit could not provide adequate working  Delegated an IFC representative to sit on ACLEDA’s Board capital for these small businesses, and the lack of financing of Directors; often prevented them from growing and becoming sustainable.  Provided legal and operational support at all stages of In short, 15 years ago the demand for financial services across ACLEDA’s application for banking license; the country was high and growing, and the market needed  Trained ACLEDA management and staff, organized a study strong financial institutions to pioneer inclusive financial tour to Bolivia’s Banco Sol; models.  Incorporate consistent environmental and social and risk- IFC saw the opportunity to contribute to strengthening management standards into the bank’s operations. Cambodian microfinance market when it began cooperation More recently, IFC worked with ACLEDA to: with ACLEDA, a local microfinance provider. From the onset,  Strengthen responsible lending across ACLEDA’s IFC and ACLEDA established a strategic partnership which operations in Cambodia and Myanmar through Responsible helped the bank become the largest commercial bank in the Finance diagnostics, training, and action plan; country and an important regional player.  Enhance ACLEDA’s risk management and portfolio monitoring practices. IFC sees ACLEDA as a strategic partner in the region. In the last few years, IFC assisted the bank in its expansion to Lao PDR and Myanmar, where ACLEDA set up a greenfield microfinance institution to provide financing for the low-income population. In Myanmar, IFC is supporting ACLEDA through its Performance Based Grants Initiative (PBGI). Today, ACLEDA is the largest commercial bank and microfinance provider in Cambodia, reaching over 350,000 clients through a network of 238 branches across the country. ACLEDA operates a portfolio of $1.39 billion – one of the largest in the region. The bank’s growing subsidiaries in Myanmar and Lao PDR have disbursed over 20,000 loans worth Local entrepreneur at her market stall (Photos: The World Bank) $91 million. More importantly, ACLEDA’s success has had a positive effect on the entire Cambodian financial sector, making it more attractive for the international investors. ACLEDA set the market standards in corporate governance, environmental and social practices, and risk management in Cambodia and in the broader region. IFC, a member of the World Bank Group, is the largest global development institution focused exclusively on the private sector in developing countries. REGION: EAST ASIA & THE PACIFIC | COUNTRY: CAMBODIA | STRATEGIC PRIORITY: ACCESS TO FINANCE | THEME: FRAGILE & POST CONFLICT COUNTRIES CONTACT Hanh Nam Nguyen | Hong Kong NNam@ifc.org | +852 2509 8100 ifc.org/gfm March 2014