Lessons learned through evaluation

FMO undertakes evaluations to assess the impact of its investments and to learn from that experience. Evaluations help us be more effective in achieving our mission and develop a continuous learning culture. FMO carries out sector and SDG focused evaluations for investments made from FMO’s balance sheet, commissions external studies for investments financed through the Dutch government funds we manage on its behalf, and coordinates external evaluations commissioned by the Ministry of Foreign Affairs. 

In 2020, we completed an evaluation of investments made in the Financial Institutions (FI) sector. The evaluation found that, in the last 5 years, FMO has accelerated the impact it creates together with its customers. In particular, more micro, small and medium enterprises (MSMEs) have been reached (SDG 8: Decent Work and Economic Growth), a greater share of FIs in LDCs were supported and banking products for women increased significantly (SDG 10: Reducing Inequalities). Going forward, more could be done to increase FMO’s non-financial additionality by improving the FI impact management framework around SDG 8 and deploying innovative products, which are currently being developed in the sector. 

Learnings from past evaluations led to a strategic study with LadyAgri that was completed in 2020. In 2019, the Evidence Mapping Report identified that FMO should apply a gender lens to investments made through Building Prospects that has gender as a key strategic focus. In addition, the review of the progress made by our Agribusiness, Food and Water (AFW) department towards implementing the recommendations of the 2018 sector evaluation, showed that significant progress was made on eight out of nine action items. The only lagging item was for AFW to increase gender inclusion. To follow up on these findings, we worked with LadyAgri, which developed a Gender tool for investments in agri corporates, to identify the role of women along the value chain and opportunities to improve gender equality. The tool consists of a set of questions that investment teams can use during due diligence to score the company on gender aspects along dimensions such as leadership, employees and value chain. In 2020, FMO tested the tool on several investments financed by Building Prospects and is now adapting it to our own investment process. For example, by making Capacity Development opportunities more visible for agri corporates and identifying investments eligible for the 2X Challenge (refer to the ‘Performance on our strategy’ chapter).

For more information on these and other evaluations, please refer to our website.

FMO’s additionality

According to the 2020 Customer Satisfaction Survey, customers choose FMO as an investor because of the long-term relationship with FMO (79% of customers), the longer tenors offered by FMO (47% of customers) and the positive signal an FMO investment has on attracting funds from other investors in the future (42% of customers). This reflects the areas in which FMO is additional[1], confirmed also by FMO’s external evaluations including a gender finance study and the KivuWatt evaluation.

The gender finance study, commissioned externally by FMO, looked at three loans provided to customers in Lebanon, South Africa and Armenia and proved how important FMO’s loan tenors are for these customers. It showed that by offering better financing terms, FMO promotes financial inclusion among women in these countries. For one of the customers, the evaluation concluded that flexibility and the willingness to provide financial backing during the COVID-19 pandemic were key to the relationship with FMO, and a sign of additionality. For another customer, it showed the significance FMO’s investment has had in developing the Bank’s products towards women-owned or -led businesses.

FMO also completed an evaluation on KivuWatt, a methane gas extraction and production facility in Rwanda funded by Building Prospects and Access to Energy Fund. As the only major facility that has entered the grid since 2016, KivuWatt has delivered multiple benefits to the national energy sector, households, health care centers, businesses, and local communities. In addition, it has resulted in a reduction in greenhouse gas emissions. The associated risk of the project and the lack of available finance in the local market, underline FMO’s additionality. FMO offered financing terms both in amount and tenor that were not available in the market, and mobilized additional funds from BIO, the African Development Bank and Emerging Africa Infrastructure Fund which had no prior exposure in Rwanda. FMO’s unsecured loan of US$31 million was instrumental in mobilizing the consortium’s debt of US$91 million.

  • 1 For a current definition of additionality, refer to the chapter ‘Our value creation model’.