ACLEDA Bank, with a past as an NGO, has high ambitions and recognises the importance of strengthening its commitment to environmental and social issues.

Cambodia’s recent history bears the scars of the Khmer Rouge’s rule, 1974–79. Under that brutal regime, government institutions and private property were abolished, money was banned and educated people were persecuted and systematically executed. The country was predominantly agricultural, but it is now estimated that there are a million small and medium-sized enterprises (SMEs), generating almost 75 percent of employment opportunities.

From NGO to the country's largest bank

ACLEDA was originally founded in January 1993 as an NGO with a remit to offer financing to microenterprises and small enterprises. After seven successful years, ACLEDA was converted into a private company, and was granted a bank licence in 2003.

It is now the largest employer in the banking sector, and has a strong social commitment. ACLEDA is SMART certified, which means that it has systems which benefit customers, but which are also capable of dealing with the most crucial risks in the sector. This involves, for example, responsible and transparent pricing, the prevention of over-indebtedness and treating customers with respect.

Dr So Phonnary began working as a Small Enterprise Promotion Officer in 1993. Today, she is Executive Vice President & Group Chief Operations Officer.

“ACLEDA aims to be a role model in the banking sector,” says Dr Phonnary. “That’s why we see minimising environmental and social risks as an essential part of our mission. We are not blind to challenges, but we encourage and train our Credit Officers to maintain continuous dialogue with our clients on social and environmental risks.”

Short-term environmental and social risks have a negative impact on operations in the long-term

There are five full-time employees working at ACLEDA’s Credit Division for Environmental and Social Issues (E&S). They play a crucial role in the evaluation of E&S issues in the loan application process.

One of the challenges facing the bank is to explain to borrowers the importance of running their operations in a sustainable way, to show how they will be impacted in a negative way in the long run if they do not take account of E&S issues.

Swedfund sees an opportunity to make a difference here. One of our requirements is that the bank has an environmental and social management system for handling environmental social risks and impacts in its lending.

Continuing improvement of the banking sector is a precondition for the country's continuing economic development

For the country’s banks, access to long-term capital is crucial. At present, this corresponds to just two percent of assets. DFIs such as Swedfund is a vital partner, as we can offer credit with a long duration. Our capital makes it possible for the bank to offer loans to more small and medium-sized enterprises, which in turn generates increased income, increased employment and the expansion of domestic production.

Investment in fintech solutions and internet banking 

In Cambodia, it is estimated that only ten percent of the population has access to financial services within the formal system. ACLEDA began early to develop products and services aimed at micro, small and medium-sized enterprises, and, at present, the bulk of lending goes to these.

“In April 2016, we launched ACLEDA ToanChet, an app for mobile banking and digital payments. As of end December 2017, we already had more than 258,000 accounts connected to the system, of which more than 5,000 are stores connected to ACLEDA Toanchet. We are also preparing to launch a small loan app. This is a highly significant development in our endeavour to be an active participant in the transition to a cashless society,” says Dr Phonnary.

The DFI's capital does the most good in difficult environments 

Since the 1990s, Cambodia has been one of the world’s fastest-growing economies. The economy will grow by around 7% 2017 and 2018, according to projections from IMF. The projection is also based on Cambodia macroeconomic stability and the economic growth as well as the increasing in government's revenue from tax collection and structural reforms.

Despite this progress, the country is facing challenges such as a fragile economy, limitations in infrastructure, weak institutions and substantial income disparities. There are also signs that the country is becoming more closed, that organisations championing civil society and human rights are being forced to leave the country and that sections of the free media have been closed down.

In this reality, capital from DFIs becomes even more important. Our ability to reduce risks is vital for mobilising private capital, and the private sector is crucial for progress. A DFI’s ability to fund sustainable investment generates a more secure return for companies and employees and also for society in general.


▼ ACLEDA, Association Cambodia Local Economic Development Agency, was established in 1993 by the ILO and UNDP as an NGO and microfinance institution, with a remit to offer financing to microbusinesses and small companies. The project proved to be successful and financially viable. The organisation was converted into a private company in 2000. In connection with the privatisation, IFC, DEG and FMO, among others, became shareholders.
▼ Shortly afterwards, ACLEDA began the process of converting to a commercial licenced bank, and a bank licence was granted in 2003.
▼ Today, the bank is the largest in the country, with a market share of around 20 percent, 260 local branches throughout the country and over 12,500 employees, of whom around 40 percent are women. Over half of the bank’s borrowers are women.
▼ Swedfund invested in ACLEDA Bank in 2015 through a loan of USD 5 million.


▼ From 1974–1979, the Khmer Rouge ruled Cambodia. Their politics where extreme, and included abolishing the country’s institutions in favour of an authoritarian state.
▼ A quarter of the population are estimated to have died through mass executions, famine and disease. Cambodia was invaded and occupied by Vietnam in 1979, and this was followed by 12 years of armed conflict.
▼ Vietnam occupied Cambodia for ten years from 1979. When the occupation ceased, UNTAC began to lay the groundwork for an open, democratic and liberal economic policy.
▼ Cambodia’s first democratic election was held in 1993, and the country is now formally a democracy.
▼ GDP has doubled, and life expectancy has risen from 61 to 71 years.
▼ Cambodia is in column 1 on the DAC list

SDGs in focus through our work:

▼ SDG 5 Achieving gender equality and empowering all women and girls.
▼ SDG 8 Promote inclusive and sustainable economic growth, and full and productive employment with decent work for all.
▼ SDG 12 Encourage sustainable consumption and production patterns.
▼ SDG 17 Enhance the means of implementation and revitalise the global partnership for sustainable development.

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