Letter of the Management Board

In July 2020, we celebrated FMO’s 50th birthday. Hundreds of colleagues joined the online celebration in which we commemorated half a century of empowering entrepreneurs to build a better world. It was a heartwarming and joyful moment, in the midst of a painful pandemic and in a year that proved to be extraordinarily challenging for everyone.

Loss of lives, loved ones and livelihoods marked people globally. All countries and businesses were affected in one way or another. FMO was impacted as well. Our main priorities became the wellbeing of our colleagues and the wellbeing of our customers and investees, doing our utmost to ensure they could weather the storm and support their local communities. FMO staff showed tremendous flexibility and resilience, quickly adapting to the changing environment, while maintaining our mission as their priority.

Support to COVID-19-affected businesses

Our additionality to the market and risk appetite as a development bank became even more important, also because of significant capital outflows of emerging markets. We provided payment holidays or emergency funding to some customers and worked with financial institutions to enhance their support to micro, small and medium-sized enterprises. And, perhaps most important of all, we continued regular financing in our focus sectors - Agribusiness, Food and Water, Financial Institutions and Energy - to create jobs, reduce inequality and take climate action. It was also good to see that our capacity development program, through consultants and webinars, helped customers find their way in crisis management and remote working.

In March, at the start of the first lockdown, we prepared for a worst-case scenario. During the year, however, we were pleased to cautiously conclude that our customers were more resilient than we initially thought. Still, reflecting on the uncertainty that current times have brought, the value of our Private Equity portfolio decreased. Consequently, we ended the year with a negative result of €205 million for the year 2020. Our first loss since 1991 is largely driven by a decrease of the fair value of FMO’s private equity portfolio; this is seen across sectors and geographies, and the result of a global decline in emerging market equity valuations due to the COVID–19 pandemic. Furthermore, these assets are exposed to changes in currency rates as a large part of FMO's private equity portfolio is denominated in US dollars.

Despite these negative factors, our net interest income grew due to lower interest rates during 2020, resulting in lower interest expenses.

Although we are reporting a net loss in 2020, FMO’s capital ratio remains well above the combined ratio of the SREP minimum requirement, set by the Dutch Central Bank. FMO continues to receive an AAA rating with a stable outlook from both Fitch and Standard & Poor's. Our diversification strategy, with exposures diversified across sectors and countries, has again proven effective during the pandemic as some economies and sectors have been affected less than others.


Does that mean 2020 is without highlights? On the contrary. We have a lot to be proud of. A few of the highlights are mentioned here:  

  • Our first renewable energy investment in Djibouti for the construction and operation of a 60MW windfarm, helping Djibouti meet energy demands and transition towards 100% renewable energy by 2030.

  • The launch of FMO’s Ventures program to support pioneering technology-enabled business models. These innovative players are crucial to accelerate progress towards the SDGs. With 10 investments in 2020 FMO is now one of the most active Venture Capital investors in Africa.

  • The extension of the NASIRA risk sharing program to support COVID-19-affected entrepreneurs in Africa and the European Neighborhood together with the European Commission. The first guarantee with EU support was signed with SASFIN in South Africa.

  • An additional €40 million was granted to the Access to Energy Fund by the Dutch Ministry of Foreign Affairs. This will enable us to invest in more high-risk, high-impact renewable energy transactions.

  • FMO played an important role in the development of the green bond market in the Caucasus by acting as anchor investor in the first green bonds issued in Armenia and in Georgia for respectively Ameria Bank and Georgian Global Utilities.  

  • Throughout the year we intensified our collaboration with other development finance institutions (DFIs), in particular the European DFIs (EDFI), to support our joint customers throughout the pandemic and economic crisis.

  • Through our NL Business activities, we co-funded four tech-enabled COVID-19 initiatives for the African health sector.

  • We worked closely with the Dutch government on the establishment of Invest International, with Joost Oorthuizen appointed as prospective CEO and Ineke Bussemaker as prospective Chair of the Supervisory Board.

  • Our draft position statement on phasing out fossil fuels from direct investments was published for consultation. Feedback was generally positive and provides confidence that we are moving in the right direction. We are currently processing this feedback.

  • We issued a seven-year, €500 million sustainability bond.

  • Harmonization of impact measurement:

    • The Partnership for Carbon Accounting Financials (PCAF) launched the first global standard for measuring and reporting financed emissions.

    • FMO has reported on jobs supported and financed absolute GHG emissions using the Joint Impact Model for the first time. Other impact investors are adopting the model as well.

    • EDFIs announced joint ambitions for climate action.

Internal tensions

As mentioned, our anniversary year was a challenging one. FMO operates in a rapidly changing environment, which became even more challenging because of the COVID-19 pandemic. Increasing expectations from society and our stakeholders require continuous improvement of FMO’s way of working and its operational processes.

The Management Board defined a strategic agenda to address the challenges posed, which could count on broad support within the organization. It also focused on culture, diversity, feedback, accountability, and compliance. Unfortunately the implementation of the strategic agenda caused increasing tensions. 

In June, Peter van Mierlo decided to step down as CEO of FMO. The Executive Committee was subsequently dissolved in August and in October, Linda Broekhuizen was appointed as interim CEO and Huib-Jan de Ruijter as interim CIO, while the search for a new CEO commenced.

The tensions in the organization impacted FMO as an institution as well as our staff; in a dialogue process that took place over the summer within the organization, the topics of collaboration and behavior were discussed extensively. Amidst the lockdown and measures that were in place, we needed to find a way to share divergent perspectives, emotions, and experiences through screens, while the situation really called for in-person conversations. While we continued to build on the strategic agenda, it became clear that we needed to change how we interact with one another, starting with leadership. A number of initiatives were started or developed further. For example, the Management Board, together with the broader leadership team, implemented a more open and inclusive way of working. We stepped up in embedding dialogue sessions – open to everybody in the organization – as a regular engagement moment, in combination with dialogue sessions with specific teams in the organization. We upgraded our Grievance and Complaint-mechanisms, updated our Speak Up policy, intensified our engagement with the Works Council and clarified the role of our Confidentiality Counsellors. Moreover, we decided to further intensify the focus on workplace behavior, unconscious bias, diversity and inclusion, and feedback through launching a program called Culture Conversations. These topics were included in the strategic agenda mentioned, and consistent with feedback given, they required significantly more attention in the near-term.

Reshaping our Financial Economic Crime program

The financial industry is facing increasing regulatory requirements and supervisory scrutiny. In 2020, we therefore accelerated the pace of aligning our investments and customer files with the obligations arising from the anti-Money Laundering and Anti-Terrorist Financing Act (in Dutch: Wwft) and the Know Your Customer (KYC) regulation. We see this as an area where the risk of non-compliance with Wwft and the Sanctions Law is present, therefore a Financial Economic Crime (FEC) Enhancement program was set up to demonstrate full compliance by the end of 2021. We take our role as gatekeeper to the financial system very seriously, as progress towards our focus SDGs can be severely hampered by financial economic crime. As was said recently by the co-chair of the UN Panel on International Financial Accountability, Transparency and Integrity: ‘A corrupt and failing financial system robs the poor and deprives the whole world of the resources needed to eradicate poverty, recover from COVID and tackle the climate crisis.’ With significant effort from FMO staff across the entire organization, we will ensure FEC is more firmly embedded in our processes.

Together, we are stronger

Our motto for FMO’s anniversary celebration was The Challenge of the Decade, the Achievement of the Century. The challenge has only become bigger in the last year. The pandemic has caused rising inequality within and amongst countries. And although greenhouse gas emissions fell, fulfilling the promise of the Paris Agreement on climate change still requires strong efforts from people, industries and governments.

Cooperating with other development banks and partners has become key. Together, we are stronger. Joining forces creates efficiency and strengthens our ability to address the immediate COVID-19 recovery and long-term challenges like climate change. Equally significant are commercial partners who see the need and the gains of investing in sustainable development in emerging markets. Partners that are willing to build on our 50-year track record and experience, help us accelerate promising projects, grow green and inclusive businesses and replicate best practices.


Internally, 2021 is a year for stabilization, which will set us up even better for accelerating our efforts towards realizing the SDGs. We will continue to support our customers to weather these uncertain economic times, together with our partners. We look forward to welcoming a new CEO within a few months and are well on our way to anchoring our FEC approach throughout FMO. Hopefully, towards the summer, we will be able to see each other again in our refurbished offices.

We are very grateful for the trust we received from our stakeholders, customers and investees. And, above all, we would like to give a special, heartfelt thanks to the FMO staff, who kept being formidable, even under very difficult circumstances.