Introduction

DFCD Aya is a program designed to enhance the Dutch Fund for Climate and Development (DFCD) by leveraging a top-up structure. This initiative is supported by the European Commission (EC) through the European Fund for Sustainable Development Plus (EFSD+), which provides a guarantee of up to €105 million to FMO. This guarantee enables a €240 million loan from FMO to DFCD’s Land Use Facility.

2024 has been a transformative year for the Dutch Fund for Climate and Development (DFCD), marked by significant milestones and notable achievements. As we reflect on the progress made, it is evident that our commitment to sustainable development and innovation has driven us forward despite the challenges we faced.

This financial report relates to the EU guarantee towards DCFD Aya. For more information on DFCD in total, please refer to the DFCD Annual Report 2024.

Highlights of 2024

One of the most significant highlights of the year to FMO was the signing of the guarantee contract under the EFSD+ program of the European Commission. This landmark agreement has not only strengthened our financial stability but also reinforced our dedication to supporting sustainable projects. The guarantee contract provides a robust framework that ensures the continuity and expansion of our initiatives, enabling FMO to continue making investments to make a more profound impact on communities and the environment.

In addition to the guarantee contract, DFCD Aya has successfully supported several new projects aimed at sustainable agriculture, forestry and land use.

In 2024, DFCD Aya made investments in Dvara KGFS, Camimex, and Helios CLEAR, each contributing to sustainable development and aligning with the European Commission's Global Gateway priorities. Dvara KGFS, a non-bank financial institution in India, received a $12 million funding package from FMO to support its capital planning and growth ambitions. This investment focuses on enhancing financial inclusion by providing credit and financial services to underserved microentrepreneurs in rural areas, thereby promoting economic resilience and reducing inequalities. This aligns with the Global Gateway's priority of fostering inclusive economic growth and improving financial access.

Camimex, a leading shrimp processor in Vietnam, was supported with a  $15 million investment. This funding aims to scale up sustainable shrimp farming practices, integrating mangrove conservation with aquaculture. By enhancing biodiversity and promoting sustainable agriculture, this investment supports the Global Gateway's goals of environmental sustainability and climate resilience. The project also contributes to the local economy by improving the livelihoods of smallholder farmers.

Helios CLEAR Fund, a Pan-African private equity fund, received a  $10 million investment from DFCD Aya. The fund targets climate mitigation and adaptation projects across Africa, focusing on green energy solutions, climate-smart agribusiness, and resource efficiency. This investment is in line with the Global Gateway's emphasis on climate and energy, aiming to secure a low-carbon growth trajectory for Africa and enhance resilience to climate change.

These investments by FMO, using DFCD Aya, not only advance the Global Gateway's priorities of sustainable development, climate action, and economic inclusion but also demonstrate a commitment to high environmental and social standards, fostering long-term benefits for local communities and ecosystems.

Challenges

While 2024 has been a year of achievements, it has also brought its share of challenges, difficulties and the remedial measures taken. 

Difficulties

  • Ongoing discussions with the European Commission (EC) on specific reporting requirements: The continuous dialogue with the EC to clarify and finalize the specifics of reporting has posed challenges in maintaining a streamlined reporting process. 

  • Finding a ‘modus operandi’ with the EU delegations: Establishing an effective and efficient working relationship with the EU delegations has been a complex task, requiring significant coordination and alignment. 

  • Acceptance by clients retrospectively included under DFCD Aya (as agreed in the guarantee agreement) of horizontal provisions and OLAF requirements: Ensuring that warehoused clients fully accept and comply with the horizontal provisions and OLAF (European Anti-Fraud Office) requirements has been a notable challenge. 

  • The Technical Assistance Facility has not been signed yet: The TA Facility agreement remains unsigned, causing delays in the provision of necessary support and resources. 

Remedial measures taken

  • Fast track-record: We have established a fast track-record with underlying transactions and reporting requirements to expedite the reporting process and meet EC expectations. 

  • Cooperation status updates and regional business trips: Formats for cooperation status updates with EU delegations have been developed. Additionally, regional business trips have been organized to introduce EU delegations to DFCD consortium partners, WWF and SNV, fostering better collaboration and understanding. 

  • Dedicated taskforce: A dedicated taskforce has been established to update legal documents in accordance with horizontal provisions and OLAF requirements, ensuring compliance and acceptance by warehoused clients. 

  • Arrangements for TA Facility signing: Necessary arrangements have been made to facilitate the smooth signing of the TA Facility agreement in the first half of 2025, addressing the delays and ensuring timely support. 

In conclusion, 2024 has been a year of growth and learning for DFCD Aya. As we move forward, we remain committed to overcoming challenges and leveraging our successes to drive sustainable development. We are confident that the foundations laid this year will pave the way for even greater achievements in the future.