From NGO/ Project to Microfinance Institution the Experience of ACLEDA Bank, Cambodia

Publication Date: 2002
Published by: APRACA (Asia-Pacific Rural and Agricultural Credit Association)
Document Type: Paper (Microsoft Word)

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Has transformation from a NGO to a bank helped ACLEDA perform better?

The author traces the origin of ACLEDA which started in January 1993 as a NGO for small microfinance development and credit. In the year 2000 it transformed from an NGO to a bank. The main factors which prompted this decision are:

• The program was financially sustainable.
• Operations were present in 14 out of the 21 Cambodian provinces.
• The capital base was ready to qualify for a banking licence from the National Bank of Cambodia.

• It enabled compliance with the regulation that stated that any institution with credit or savings operation must have a specialised banking license.
• It helped raise equity and provided access to commercial funds.
• It helped the institution enhance its range of financial services.
• It facilitated the organization to expand member savings, loans and standardised procedures.

• Developing strategies for enhancing outreach,
• Focussing on attaining management and operational efficiency,
• Concentrating on developing wide range of financial products,
• Developing good management systems.

• The legal complexities involved in the transformation should not be underestimated.
• Transformation is a time consumeing process.
• It is hard to change a NGO's organizational culture to that of a bank.
• Political risks threaten future survival and growth.