Group performance

Development impact

FMO calculates the ex ante economic development impact of its investments using the Economic Development Impact Score (EDIS). With this tool, we assess the potential contribution that the activities we finance make to the local economy. (For more on EDIS calculation, see www.fmo.nl/edis).

  • FMO uses a second indicator to manage our development impact. The Development Impact Indicator (DII) provides insight into the relationship between development impact and the volume of new investment. We calculate the DII by multiplying the EDIS score by the amount of new investments in millions of dollars, and dividing this figure by 100. DII was 687 in 2010, up from 590 in 2009. A higher DII means our development impact affected more or bigger projects and ultimately a greater number of people.
  • In 2010, the average EDIS of our portfolio increased to 67 from 65 in 2009, well above our target of 64 set for 2012. This significant strengthening of our economic development impact in the last two years shows our Moving Frontiers strategy is paying off.
  • In addition to EDIS and DII, FMO's evaluation specialists in 2010 developed a set of quantitative indicators to provide more detail on our economic development impact. Gaining more insight into the impact of our investments helps us optimize our portfolio's impact. Ex post evaluations show that no less than 74% of the evaluated projects made strong contributions to development. Business success is the most important driver for development impact. For more information, read the development impact evaluation results.

Quantitative indicators:

Post-investment, monitoring of clients' achievement of the stated potential development impact becomes pre-eminent. For this purpose, FMO developed and started collecting industry-specific (quantitative) indicators for its whole portfolio. For example, if we finance a textile company, the construction of a new power plant, or a bank, we want to know the number of jobs created, the number of households that gain access to electricity or the loans extended to Micro, Small and Medium-sized Enterprises (MSMEs), respectively. This information illustrates the development reach of projects that FMO invests in. Given that FMO is often a minority investor, the results of these quantitative indicators cannot be attributed exclusively to FMO.

After certain exclusions, results of the reach figures are based on almost 80% of clients in the 2010 portfolio. Important exclusions include: 100% provisioned clients; terminated facilities; and certain cases where we invest at holding company and subsidiary level, collecting the data at one of the levels to avoid double counting.

Portfolio-wide overall development reach by FMO's clients 1)

Investments' Performance indicators

Portfolio 2010

Employment provided (x1,000) 2)

1,200

Microfinance loans 3)

 
> Amount (€xmln)

11,499
> Number (x1,000)

9,500

SME loans 3)

 
> Amount (€xmln)

26,535
> Number (x1,000)

700

Customers reached with services 4)

 
> Number of electricity connections (x1,000)

4,500

Payments to governments 5)

 
> Contribution to government revenues (€xmln)

1,100

 

  1. Portfolio development reach figures cover approximately 80% of the total portfolio for 2010 for all indicators. Missing data are not extrapolated. Data is inputted into the scorecard from: clients' credit reviews, excel templates, and in some cases, directly from clients or annual reports. Employement, number of microfinance and SME loans, customer reached with services and payments to governance are presented in round figures.
  2. Employment: Estimated 1.2 million people were employed by FMO investment clients reporting data in 2010. Calculation method: This is the number of employees currently working for the banks, investees and companies where FMO is investing in (note: for infrastructure projects, indirect employment is taken into account). These figures are based on clients' most recently reported figures.
  3. Microfinance loans are outstanding loans between €0 and €10,000; SME loans are outstanding loans between €10,001 and €1 million.
  4. Number of electricity connections: FMO helps to increase access to energy by financing energy projects. In 2010, FMO's investment clients provided for estimated 4.5 million electricity connections (number of customers served). Calculation method: This figure is automatically calculated from our scorecard: Client's installed generation capacity in MW/Total installed capacity in the country MW * number of electricity connections in the country. This calculation gives an approximation of how much electricity connections the project that FMO financed contributes to the host countries' number of electricity connections. The number of electricity connections in the country is obtained from different sources such as host countries' distribution company, project's consultants, market studies, World Bank publications and country energy strategy papers and in few cases estimates.
  5. Payments to government: In 2010, €1,069 million was contributed by FMO's investment clients (that reported data) to government revenues in the form of taxes and other payments to the government. Current contributions to governments mainly through taxes paid. And where applicable, other payments to the government including; royalties, import/export tariffs, excluding subsidies received.