From the Chief Executive Officer

Despite the clouds gathering over the global economy, FMO had an overall positive 2011. Our portfolio size and development impact improved further and we enhanced efforts to stimulate knowledge exchange and innovation, even though our profit was not as high as last years' results.

Our approach - working at the frontiers of development finance, investing capital in projects and places where others cannot or will not venture - paid off again in 2011. FMO's relevance was reaffirmed as many western commercial banks hit by the eurozone crisis reduced their lending in emerging markets.

The economic crisis in the developed world is having far-reaching consequences, accelerating fundamental changes that are already underway. Three profound and interconnected global trends are becoming increasingly evident for FMO.

Profound global shifts

The first trend is the shift of economic activity and political power from the West to the East and South. This is changing the pattern of capital flows in the medium term, with more commercial capital flowing to emerging markets, but also flowing from countries such as China and India to Europe. This is creating a multi-polar world, which fosters equality instead of dominance between countries.

The second trend is a shift in the pattern of poverty. Twenty years ago, more than 90% of the world's poor lived in low-income countries. That has fallen below an estimated 30% as the countries inhabited by the poor have grown richer. The basis of development cooperation is moving towards equality, with the focus on developed and developing countries doing sound business together and growth in private sector is now more important than official development aid.

The third trend is the continuing mismanagement of global public goods, such as carbon emissions, water, forestry and fisheries. With forecasted growth rates, and given the growing middle class in emerging markets, we will need 2.3 planets in 2050 to sustain our lifestyles. We cannot solve the problem by reducing (economic) growth, because developing countries need economic growth to reduce poverty. Instead, we need drastic changes in the way we all produce and consume.

I believe this third trend to be the most important in the long term. And for FMO, it means that our activities should contribute to the goal of nine billion people to live well within the means of our planet by 2050 - assuring them of sufficient food, clean water, sanitation, shelter, mobility, education and health.

Such factors explain our decision to add Agribusiness, food & water as an FMO focus sector in 2011. The growth in the world population, and the increasing middle-class population in developing countries, means a relentless rise in food demand. The agriculture industry is a major emitter of carbon dioxide and uses 75% of the world's ever-scarcer water supply, though the increased productivity provides jobs for many people in developing countries.

Sustainability is a must

Companies increasingly grasp the importance of sustainability. Crisis or no crisis, they see more and more the vital need to take their social and environmental responsibility, if they are to retain their markets over the long term. FMO's role is to invest in entrepreneurs who have a positive impact on economic growth and reducing poverty, and who manage their impact on the environment, and people responsibly.

Creating a sustainable planet demands true innovation and a partnership approach, a dialogue.

To remain a front runner in development finance, FMO must acquire, build and better share knowledge - both inside our bank and with external partners. We need to remain innovative, both devising new initiatives and introducing innovations from one market into another. By using our knowledge and innovation to help achieve successful projects in frontier markets, FMO can also mobilize financing from others - one of our key strategic aims.

As our 2011 achievements show, we are well positioned as we prepare to embark on a journey to ensure nine billion people can live well within the means of our planet. I would like to thank all FMO's employees for their achievements during 2011. Working in partnership with all our stakeholders, I am confident that together we will be able to grow our impact again in 2012.

Nanno Kleiterp
Chief Executive Officer