Letter from the MB of the Fund Manager
Dear reader,
In 2022, the global economy faced an intensification of upheaval. The Ukraine war – first and foremost a humanitarian disaster – led to political and economic crises across the region and beyond. Inequality rose, the climate crisis continued to unfold, and a global recession began to loom, pushing an increasing number of vulnerable people into food insecurity, reduced energy access and poverty. The crises also lead to a heightened stress on global trade systems, in particular in the Energy- and (agricultural) Commodities markets.
The poorest economies, where poverty reduction had already slowed down significantly, face continued challenges, confronting the resilience of society. Development finance institutions such as FMO will need to intensify their operations in the coming years to encourage the flow of private finance to meet sustainable investment needs in these societies.
In close consultation with our stakeholders, we updated our strategy towards 2030. In our ‘Pioneer-Develop-Scale’ strategy the role of our public funds and facilities is pivotal. These help us explore higher risk opportunities and markets to make them ready for additional private investments.
Our long-standing track record in managing public funds to catalyze private finance, has contributed to a significant expansion of our responsibilities. Over the past few years, FMO set up facilities and investment programs with the European Commission and the Green Climate fund. In 2021, the UK government also decided to entrust FMO with the management of the UK's Mobilising Finance for Forests programme.
In 2022, the Land Use Facility has been able to provide Miro Forestry Developments with a USD 3 million facility, on top of the existing facility of USD 5 million. Miro Forestry is a triple bottom line plantation forestry business with operations in Ghana and Sierra Leone. The company’s mission is to develop and operate globally high-end and cost competitive commercial forestry whilst providing environmental, social, and economic benefit to local communities. The aim of the top-up is to source new recruits from Field Ready’s vetted pool, specifically for the 40 new positions on the industrial site with a gender profile of 50% women, as well as to develop a mentoring program targeted towards female employees.
The Land Use Facility has continued in 2022 on its advanced pipeline of investments in agriculture, forestry, and ecological protection. Four projects reached the Clearance in Principle stage. These involve two innovative green financing loans to strengthen climate adaptation in Nepal, one Brazil nut project in Bolivia and Peru, and a biowaste and sustainable industries project in Pakistan. Also, the preliminary approval of a €151.8mln guarantee from the EFSD+ to attract additional capital to the DFCD’s Water and Land Use Facility has been a milestone. This guarantee will ensure the DFCD has additional capital available to finance the advanced investment stage projects, as well as new projects originated by SNV and WWF.
In 2023, the developing countries will continue to see hardship and challenges. To support them, courage and ambition are imperative in the deployment of FMOs public funds and facilities, especially against the background of the ongoing climate crisis. We will continue to generate investments that create equal opportunities and equitable access to finance, that protect the value of ecosystems and forests, that provide access to renewable energy and that help build up fair value chains in agriculture.
The Hague, 26 April 2023
On behalf of the Management Board
Fatoumata Bouaré, Chief Finance & Operations Officer
Franca Vossen, Chief Risk Officer
Huib-Jan de Ruijter, Co-Chief Investment Officer
Michael Jongeneel, Chief Executive Officer
Peter Maila, Co-Chief Investment Officer