Capacity Leads, Capital Follows: Donors and Investors Match Instruments to ACLEDA 's Stage of Development

This paper is a case study of the ACLEDA, which has migrated from a sponsored and limited life project in post-conflict Cambodia to the largest retail bank network in the country.

The case study highlights:

• The role played by multiple donors in supporting the organization through its various stages of transformation;
• The life cycle stages of the organization from the time it was an NGO.

The paper divides the various stages of donor associations with ACLEDA into three distinct phases:

The first phase:

• The association with ILO (International Labour Organization) & UNDP (United Nations Development Programme) in the years 1992 to 1994;
• The beneficial role of ILO and UNDP played by having a long term interest in the incubation of a local organization instead of short-term quick impact project;
• The benefit to ACLEDA from the technical expertise of the two donors.

The second phase:

• The role of Sida (Swedish International Development Cooperation Agency), KfW (KfW Entwicklungsbank) and USAID from the year 1995 to 1997, by providing risk capital through various instruments during the growth phase when ACLEDA was operating as a microfinance organization;

The third phase: The transformation of ACLEDA into a specialized bank and eventually into a commercial bank made possible through a consortium of four investors:

• FMO (The Netherlands Development Finance Company);
• DEG (Deutsche Investitions- und Entwicklungsgesellschaft GmbH);
• IFC (International Finance Corporation);
• Triodos-Doen.

The paper concludes with a brief discussion on the importance of having committed manpower and a strong management to create an institution that can successfully attract risk and commercial capital.