Cambodian Microfinance: A Case of Successful Commercialization?

This article examines the debate about mission drift associated with the commercialization of microfinance through the case of ACLEDA Bank (ACLEDA) of Cambodia. Stakeholders have debated whether the commercial approach to microfinance causes erosion of social missions ever since the trend to transform microfinance NGOs into regulated financial institutions gained momentum in the 1990s. The microfinance industry in Cambodia has made great strides in recent years. ACLEDA is widely regarded as one of the most successful cases of microfinance NGO's transformation to a commercial bank in Asia. The article examines ACLEDA's claim that it is serving the entrepreneurial poor after its transformation. On the basis of field data, the article concludes that:

• ACLEDA remains committed to serving poor customers after its transformation;
• ACLEDA misrepresents the economically active poor as microentrepreneurs in its official discourse;
• Credit officers have used their discretion in the field to prevent large scale mission drift.

The paper concludes that ACLEDA does not necessarily serve poor people with entrepreneurial ideas as much as those whose household members have regular, stable income sources.