Letter from the Management Board
We look back on 2018 as a pivotal year for the development finance industry in general and FMO in particular. Various countries significantly upped their funding for development finance, sparking more opportunities for the private sector in our markets. At the same time, development finance institutions took on a more prominent role, making some bold decisions.
Last year brought more consensus that climate change and inequality are among the world’s most pressing challenges. We are harmonizing our procedures around impact reporting, and global institutions such as the G20, World Bank, and IFC have put impact reporting on their agenda. Also, globally, we see growing interest in Africa; its different African regions and countries are rightfully seen as opportunities for the private sector.
This renewed vigour was also noticeable in the Netherlands. In 2018, the Minister for Foreign Trade and Development Cooperation launched a policy that calls on the private sector to play a more prominent and innovative role in achieving the Sustainable Development Goals. FMO is asked to participate in a Dutch state-owned company that will help the Dutch private sector to invest outside the Netherlands. This company, which we are building together with the Dutch Enterprise Agency (RVO) and other relevant players, will provide Dutch corporates with a knowledgeable and clear point of entrance to successfully do business in countries that are sometimes considered to be some of the most challenging environments in the world.
In addition, our mandate for the Dutch state’s Infrastructure Development Fund and Access to Energy Fund was extended for a decade until 2028 and both funds will grow substantially.
Another of last year’s highlights was FMO Investment Management’s first close of the NN-FMO Emerging Markets Loans Fund. Its largest fund to date ($250 million) enables European institutional investors to co-invest alongside FMO. We are also proud that the European Commission awarded us the management of the NASIRA risk-sharing facility, which will allow us to finance underserved entrepreneurs in the European neighbourhood and Sub-Saharan Africa. We also signed an agreement with the United Nation’s Green Climate Fund (GCF), which will enable us to provide blended finance solutions to accelerate climate mitigation and adaptation projects. And we developed a pioneering vision and underlying accounting methodology for limiting global warming to only 1.5°C, which we presented at the COP24 meeting in Poland.
Our first and foremost priority is to achieve higher impact on Decent Work and Economic Growth (SDG 8), Reduced Inequalities (SDG 10) and Climate Action (SDG 13). Our two other strategic pillars are to deepen relationships with all our stakeholders and to increase our productivity.
Looking back on 2018, the Management Board is pleased with our overall results across all three goals. In terms of impact we performed above target on our green and inequality investments and were on target for our overall volume. This is mainly due to a solid performance in our three core markets, which are Agribusiness, Food & Water, Energy and Financial Institutions, while the private equity portfolio contributed less to the results than expected. Also we mobilized less capital then we had hoped for.
We organised the fifth edition of our Future of Finance conference and the second edition of Making Solar Bankable. Both events offer a platform for our clients, partners and investors to build international networks and share experiences and perspectives on relevant themes for their sector. And Queen Máxima of the Netherlands, who is the UN Secretary-General's Special Advocate for Inclusive Finance for Development, was keynote speaker at Power of Partnerships. This event brought together female entrepreneurs from emerging markets, financial institutions and women business networks to see how finance can contribute towards gender equality. Furthermore, FMO scored an 8.5 in our client satisfaction survey, in which our clients complimented us on our professionalism, competence and reliability.
In terms of the third strategic goal, which is to increase productivity, in 2018 we worked to make our own house future proof. We began optimising and digitising our core processes, working on better impact reporting, our management information systems as well as business process optimisation. FMO’s effectiveness and efficiency, however, are not yet where we want them to be, and this continues to have our full attention, which will require additional investments in the coming years. We also embarked on a journey to redefine FMO’s values and corresponding behaviours. All of our staff were involved in a process that yielded four values that underpin our culture: making the difference, diversity, quality and integrity. These four values and their accompanying twelve behaviours will be guiding us in our process to further improve FMO itself and in our role as a platform organisation.
The Management Board itself experienced a dynamic 2018. Peter joined FMO in July and the three of us quickly found a new rhythm and pace. Working together we realised that FMO had a lot of untapped potential for having more impact and we determined ways to realise that. Not just by further improving the efficiency and the effectiveness of our organisation, for example through digitalisation and by innovating with partners, but also by building on our leadership in the industry. Together with the European DFIs we are well positioned to increase understanding of the European way of thinking around development by the other bilateral and multilateral development institutions.
The new year holds an ambitious agenda for FMO. We will strengthen relations with NGOs, governments and institutional investors, and find more mobilizing partners. We also want to build on the appetite to invest in emerging countries we have witnessed. Therefore, we have budgeted approximately €3 billion of sustainable investments in emerging economies, and encourage Dutch businesses to make investments that contribute towards the SDGs. Finally, we will work with our partners to achieve better aligned impact measurement and strengthen our own internal ability to be effective and efficient.
Inequality and climate change are monumental challenges and the work that needs to be done in the emerging economies is extensive. But we also feel excitement and optimism. Because the entrepreneurs we partner with are creative; because the countries we operate in are resilient; and because new technologies are enabling new solutions. We sincerely believe that the world will come together to solve these challenges because doing nothing is not an option.
We would like to thank all our stakeholders for their continuous support in the last year, including our clients and investors, the Dutch Ministries of Finance and of Foreign Trade and Development Cooperation, the NGOs that help us to improve and, most of all, our colleagues for giving their best every day.
Fatoumata Bouaré, Chief Risk & Finance Officer
Linda Broekhuizen, Chief Investment Officer
Peter van Mierlo, Chief Executive Officer