Higher impact portfolio

Our economic outlook for 2019 is positive overall with economic growth in developing countries and emerging markets expected to be 4-5%[1] on average. The global risk sentiment has slightly deteriorated mainly driven by the escalating trade tensions between the United States and China. Furthermore, a potential ‘no-deal’ withdrawal of the United Kingdom from the European Union (Brexit) and a greater than envisaged slowdown in China can further worsen the outlook.

Looking at FMO’s key countries, India’s economy is set to improve benefiting from lower oil prices and a slower than anticipated pace of monetary tightening. These same lower oil prices will have a negative effect on Nigeria, although the overall prospect for Sub-Sahara Africa is positive compared to 2018. In Turkey the contraction of the economy is projected to be deeper than anticipated following policy tightening and adjustment to more restrictive external financing conditions. We will closely monitor these developments. The wide diversity of our portfolio will remain an important risk mitigant.

We are positive that in this environment we will be able to attract sufficient funding and aim to invest a total of €2.9 billion. Some 32% of new commitments for FMO's own book and government funds will be invested in green transactions and another 27% in investments that contribute to reducing inequalities. We also expect to accelerate our growth in the European Neighbourhood, Africa and Asia. Finally, we will continue our efforts to develop together with several other parties an Africa strategy for the Dutch private sector.

To ensure our investments generate the impact we aspire to, we will continue to encourage our clients to increase their ESG performance. For 2019 we aim to manage 90% of the high-risk items fully compliant with our standards or under active management on a pathway to compliance for clients contracted in 2017 and 2018 where FMO was in the lead.

During 2019 we will work on several new products and segments to build a higher impact portfolio. Through our involvement with NASIRA we will support women and refugees and through our Private Equity Department-led venture capital programme we will support innovation in FMO’s focus markets. In addition, we will build new catalysing vehicles to increase the impact of FMO’s own investments.