Report of the Supervisory Board
Letter from the Supervisory Board
The year 2024 has been a strong year for FMO; building on our foundations and positioning the organization for future success. The geopolitical landscape's challenges, such as the ongoing war in Ukraine and the Middle East and a surge in protectionist policies across various nations, make this a complex period for global markets. Additionally, wavering green ambitions within the financial sector and among governments have put critical climate action at risk, potentially making it more difficult to secure co-investors for future impactful investments in emerging markets. Despite these headwinds, FMO has navigated these complexities with resilience, maintaining stability while adapting to evolving circumstances.
Impact and profit
The Supervisory Board is proud of the impact numbers FMO achieved in 2024. The investments with a Reduced Inequalities Label have far outpaced those of last year. While the energy sector faced challenges due to limited new project developments, Green-labelled investments also saw substantial growth.
FMO’s profit for 2024 (€297 million) is notably higher than last year (€65 million) due to the release of several loan provisions and the appreciation of currencies (mainly the USD against the Euro). At €15.5 billion the total committed portfolio grew significantly in 2024, driven also by the appreciation of the US Dollar against the Euro and an increase in mobilized investments, indicating FMO’s strong partnerships and mobilization power.
As the Supervisory Board, we keep a keen eye on the trend in FMO’s regular income relative to its organizational expenditure. In 2024, these were well-balanced; however, the anticipated rise in operating expenses, driven largely by increased staff costs, highlights the need to remain cost-conscious, grow our portfolio and maintain a strong focus on improving efficiency in the years ahead. To underpin these ambitions FMO has a culture program and leadership impact program in place, focused on improving collaboration, effectiveness and efficiency throughout the organization.
Market creation
This year, FMO continued to advance its ambitious 2030 Strategy, with – amongst others – an emphasis on market creation. The Supervisory Board is particularly excited about the long-term potential of this initiative to unlock new opportunities – locally and paving the way for Dutch Businesses - and create bankable projects, especially in least developed countries (LDCs). While building the required skill sets and pipelines demands time and effort, the progress achieved thus far is promising, with the EU’s €25 million fund for investments in Young Businesses in Africa as important additional funding. Viable investment opportunities in LDCs have proven to be scarce and achieving FMO’s 2030 strategic goals in this area will require targeted interventions, included in the Market Creation program. Working together with local stakeholders and other DFIs will be crucial.
Private Equity
Private Equity continues to be a challenging part of our business, with returns lagging behind and exits proving difficult. Still, equity investments remain a crucial impact instrument; as often, without equity investors, there are no debt investors. Effective deployment is key to our success, ensuring our investments complement our overall ecosystem.
Values and behaviors
Employee satisfaction has improved compared to four years ago. The focus on values and behaviors continues to be an important theme for the Management Board. Embedding values such as accountability and clear communication within our organizational culture will significantly benefit FMO. This cultural shift is challenging but essential for aligning our strategy and working more efficiently. Streamlining ICT systems and investment processes will further support these efforts, creating a more cohesive and effective organization.
CSRD
On the compliance and KYC side, the dedicated teams have successfully addressed backlogs. Maintaining high standards and momentum in this area remains crucial. Being in the first group of institutions required to adopt the new Corporate Sustainability Reporting Directive (CSRD) approach to sustainability disclosure, radically changed how we present our sustainability performance in this annual report. These standards require significant effort from the organization and are not always designed to fit FMO’s business model.
A new chair
In 2024, Eme Essien Lore was appointed as a new member of the Supervisory Board, joining both the Audit & Risk Committee and the Impact Committee. This year, FMO will bid farewell to Dirk Jan van den Berg, the current Chair of the Supervisory Board, as he concludes his second and final term. The search for a new Chair is already underway.
Reflecting on his tenure, Dirk Jan van den Berg said: "It has been an honor to serve on FMO’s Supervisory Board over the past eight and a half years, witnessing the organization’s steadfast commitment to creating sustainable impact in some of the world’s most challenging markets. As my second and final term comes to an end, I take pride in the progress we have achieved together. We navigated the challenges of the COVID-19 pandemic, addressed organizational complexities, onboarded a new CEO, expanded the Management Board, and steered the organization through significant growth. I am confident that FMO’s dedicated leadership and talented team will continue to drive meaningful change and achieve the ambitious goals set for the future.”
Outlook
The Supervisory Board has started its search for a new Chief Finance & Operations Officer, as Fatoumata Bouaré will continue her career at the European Bank for Reconstruction and Development (EBRD). Fatou leaves FMO in a strong financial position, having ensured stability across our financial, operational, and risk frameworks during significant growth. Additionally, she took essential steps to future-proof FMO’s systems and processes. The Supervisory Board thanks her for being a pivotal and steadfast member of FMO’s management board for many years.
As we move into 2025, FMO’s priorities will be continuing to execute its strategy. The Supervisory Board recognizes the need to balance ambition with pragmatism, increasing efficiency to reach the 2030 goals.
We extend our heartfelt gratitude to FMO’s employees for their hard work and dedication throughout 2024.