Case study - Acleda

Case Study

Financial Institutions
Economic growth through SME finance in Cambodia

Economic growth

In the past 10 years the economy of Cambodia grew with an average of 7% per year. As one of the poorest countries in Asia this growth and continued stability allowed entrepreneurship to blossom, although it happened mainly in the bigger cities. Through further integration within the Asian Economic Community ( and the world economy Cambodia expects its economic growth to continue for the years to come. To support this growth and divide it in a good manner the further development of fi nancial services essential, especially
in rural areas.

Access to financial services

ACLEDA Bank was established in 1993 by the International Labor Organization (ILO) to provide financial services to improve the SME sector, in cities and nationwide areas. The bank license, obtained in 2003, helped the bank with the roll-out of a branch network to all  provinces of Cambodia. ACLEDA is now market leader in financial services for SMEs. With more than 250 branches, another 3,300 ATMs and transaction points spread across the country ACLEDA expanded access to financial services to rural areas. Services are also offered via mobile phones and internet. Especially for small entrepreneurs and farmers in the countryside access to financial services means they can invest in machines, stock or expand their trade relations. Like the company in the Kampong Thom Province (header photo) which produces and sells household items, it was able to buy and create stock through the working capital fi nanced by ACLEDA. Now the entrepreneur can sell ten pots and pans per day produce instead of four preordered and he is looking to hire extra staff.

The FMO loan

For more than 15 years, ACLEDA has been a valued client of FMO. FMO has supported the development of ACLEDA through share capital, loans and technical support and training. This has played an important role in the growth and professionalization of the bank.
In 2015, FMO syndicated a loan of USD 102 million arranged for ACLEDA. For ACLEDA, but even also for larger financial institutions in these countries, it remains diffi cult to get the necessary growth capital. As syndicate leader, FMO took the lead with a USD 18 million participation in the loan. In addition, names seven other investors participated in this five-year transaction. With the USD 102 million loan ACLEDA is able to provide more than 40,000 companies with new long-term financing mainly in rural areas. Because of this loan there is improved access to fi nancial opportunities, even in the least accessible parts of Cambodia.

The development of SMEs

Economic growth has been accompanied by growth of small and medium-sized enterprises (SMEs); in the last 10 years there have been 500,000 new SMEs officially registered in Cambodia. Estimations that there are at least the same number of unregistered SMEs. The registration of companies means that they are then able to apply for business loans, but it also means that they have to start paying taxes and adhere to local laws and regulations. The latter is important when it comes to environmental and social aspects. Obtaining a business credit is essential for growing a company and in many emerging markets a major barrier to further the development of the SME sector. A growing company means new jobs and with that often improving the living conditions of the new employees.