The 2020 financial statements of Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V. (hereafter referred to as ‘FMO’ or ‘the company’) were prepared by the members of the Management Board and signed by all members of the Management Board and the Supervisory Board on March 19, 2021 and will be submitted for adoption in the General Meeting of Shareholders on April 22, 2021.
FMO was incorporated in 1970 as a public limited company with 51% of shares held by the Dutch Government and 49% held by commercial banks, state unions and other members of the private sector. The company is located at Anna van Saksenlaan 71, The Hague, The Netherlands and is registered under ID 27078545 in the Chamber of Commerce. FMO finances activities in developing countries to stimulate private sector development. In addition, FMO provides services in relation to government funds and programs.
Financing and investing activities
FMO is the Dutch entrepreneurial development bank. We support sustainable private sector growth in developing and emerging markets by investing in ambitious entrepreneurs. We specialize in sectors where our contribution can have the highest long-term impact: financial institutions, energy and agribusiness
FMO’s main activity consists of providing loans, guarantees and equity capital to the private sector in developing countries. Furthermore FMO offers institutional investors access to its expertise in responsible emerging markets investing through its subsidiary FMO Investment Management B.V.
A minor part of the investment financing is guaranteed by the Dutch government under the Faciliteit Opkomende Markten (FOM), in which FMO itself participates as a 5% to 20% risk partner. Any losses to be claimed under the guarantee are reported under ‘Other receivables’.
We arrange syndicated loans to mobilize funds, by bringing together investors – commercial banks and other development finance institutions (DFIs) - with FMO for structuring these transactions. This enables us to provide our clients with increased access to finance and more diversified lending, while giving our financial partners efficient opportunities to enter new markets.
FMO also stimulates Dutch investments in emerging markets. Apart from focusing on Dutch SME companies investing abroad, FMO supports mid-sized corporates, seeking trade finance or engaging in consortia finance for development of large infrastructure projects in our markets.
Commercial fund management
FMO's subsidiary, FMO Investment Management B.V. (FMO IM), works with third party investment funds, which participate in FMO’s transactions in emerging and developing markets. Through these funds FMO IM offers investors access to our expertise in responsible emerging market investing.
Services in relation to government and public funding
Apart from financing activities from its own resources, FMO provides loans, guarantees and equity capital from government funding, within the conditions and objectives stipulated in the agreements. The funding consist of subsidies provided under the General Administrative Law Act regarding MASSIF, Access to Energy Fund (AEF), Building Prospects, Capacity Development Program (CD), Partnership Development Fund (PDF), Development Accelerator (DA), Fund Emerging Markets for Developing Countries (also called FOM-OS) and Dutch Fund for Climate and Development (DFCD)
FMO incurs a risk in MASSIF as it has an equity share of 2.16% (2019: 2.17%). With respect to the remaining interest in MASSIF, and the full risk in the other government funds, FMO has a contractual right and obligation to settle the results arising from the funds’ activities with the Dutch Government. The economic risks related to these funds are predominantly taken by the Dutch Government, and FMO has limited power over policy issues regarding these funds. FMO receives a remuneration fees for managing these funds. Therefore, with the exception of FMO’s equity share in MASSIF, the funds’ assets, results and liabilities are not included in the annual accounts. The segment information paragraph provides more detail on the loans and equity investments managed for the risk of the Dutch Government.
The European Development Financial Institutions (EDFI) Management Company (of which FMO is one of the shareholders together with the other EDFIs) was established in Brussels to manage European Commission (EC) funding for the Electri-FI global facility. In 2018, the Agri-FI investment facility as well as the Electri-FI Country Windows investment facility have been added. FMO, as accredited entity for the EC, acts as delegatee (contractee) for the EC and has sub-delegated all operational activities related to Electri-FI/Agri-FI and Electri-FI Country Windows to the EDFIMC.
FMO has received funds from the EU, USAID and the Dutch Government with the purpose to invest directly in Climate Investor One, a facility raised by FMO and managed by Climate Fund Managers (CFM). Climate Investor One (CIO) is a blended finance, capital-recycling facility mandated with delivering renewable energy infrastructure projects in emerging markets through its contribution to each phase of a projects lifecycle. Climate Investor One will create sustainable positive impact on the environment and communities of developing countries.
In December 2018, the EC approved up to €75 million in guarantees and signed the contract for risk sharing facility NASIRA. The facility uses guarantees to allow banks to on-lend to underserved entrepreneurs within the European neighborhood and Sub-Saharan Africa. It targets portfolios consisting of loans of young, female and migrant entrepreneurs including refugees, returnees and internally displaced people. The goal of these guarantees is to allow local banks to provide loans to groups they perceive as too risky. Risk sharing reduces the perceived and real risks of lending to vulnerable and underserved parts of the population and enables financing for people who want to grow their business. Following the COVID - 19 outbreak, the EC together with FMO scaled up the NASIRA financial guarantee to support small COVID-19 affected entrepreneurs in Africa and EU Neighborhood. The measures are a joint response and include a top-up of €25 million from the European Fund for Sustainable Development and an expansion in scope to support COVID-19 affected entrepreneurs.
In November 2019, FMO and the European Commission (EC) signed the guarantee agreement for the FMO Ventures Program. The EC has provided €40 million in guarantees to FMO’s innovative early-stage investment program. FMO Ventures Program will contribute to FMO’s ambition to further strengthen the focus on early-stage investments that deploy an innovative, technology-enabled business model. Such start-ups, often led by young entrepreneurs, have high developmental impact in our markets. The program will aim to invest a total of €200 million in both fund and direct investments in Africa, the European Neighborhood and Asia (excluding China). The direct investments will focus on start and scale-ups in AgriTech, Energy Access, and FinTech. Next to equity investments, the Program will also have a dedicated technical assistance program, for which the EC is providing €6.5 million, that will seek to support investees of FMO Ventures Program and will promote the development of local Venture Capital ecosystems in emerging markets in general.