ACLEDA Bank, Cambodia's 11-year-old poor peoples' bank, is celebrating another milestone:
a $6 million credit line from one of its shareholders, the International Finance
Corporation, private sector arm of the World Bank Group.
ACLEDA (in which IFC holds a 12.5 percent share through two equity capital investments
totalling $1.6 million) is Cambodia's only fully-licensed bank specializing in loans
to the poor. ACLEDA grants loans as low as $30, has more than 111 branches spread
over 21 provinces, employs 1,791 staff, and serves 105,000 low-income borrowers (nearly
70 percent of them women) who by the end of April had loans outstanding of $47 million.
The default rate on these loans was only 1.2 percent last year, and is running at
a similar rate this year.
General manager In Channy says that after gaining its commercial licence, ACLEDA's
credit rating qualified it to borrow from international sources. The new loan was
required to respond to a high demand for credit from entrepreneurs of micro-to-medium-sized
businesses and he expected an additional 3,000 enterprises would be funded.
"It provides a stimulus to social development and is a powerful weapon in the
fight against poverty," he said.
The customers encompass roadside fruit and vegetable vendors, people with market
stalls, small garment factories, general manufacturers, furniture makers, rice millers,
importers and exporters. This can be for stock, equipment or working capital. The
three biggest borrowers currently have credit of $200,000.
"Some of our small customers have never been able to borrow money before, because
the private money-lenders won't take a chance on them," Channy said. "They
are only interested in secured loans and ability to repay quickly. They generally
lend for 10 days only, at an interest charge of 10-to-20 percent. So you have people
in the market who borrow 100,000 riel for bulk stock and it's costing them 10,000
riel per day.
"At ACLEDA we are interested in helping people to succeed, with the bank as
a supportive partner. We find out what they want to achieve through an interview.
Our monthly interest charge for micro-enterprise credit is 3-to-4 percent, for small
businesses 2 percent and for medium-sized businesses 1.2 percent."
IFC's East Asia and Pacific director Javed Hamid, at a function to sign the loan
documents, described ACLEDA as being "like a star student. It began like many
other donor-funded micro-enterprise support institutions and has risen to the top
of the class. ACLEDA has achieved many great things, largely due to its own enterprising
spirit and ability to make the most of this country's fragile, but promising private
"The many loans to individuals are businesses selling basic commodities like
rice and fish, wholesaling fruit, making and selling crafts. There are literally
thousands of stories ACLEDA Bank can tell about lifting people out of poverty by
financing these businesses."