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.
Through the consortium approach, DFCD serves as a leading example for institutional partnerships by connecting long-standing project development expertise of its consortium partners. This allows projects to graduate from ideas to full implementation. An example project is the KASCOL project. This project, originated by WWF, is focused on the sugar cane sector in and around the Kafue, Zambia. KASCOL wishes to convert 300 ha of sugarcane fields under flood to drip irrigation to improve water application rates and hence productivity. In 2022, KASCOL has graduated from WWF to FMO, and will follow its graduation path even further in the future.
In 2022, DFCD has, through its proven consortium of 4 parties, continued connecting project development expertise on water & sanitation, land use in agriculture, forestry, and ecological protection areas to the financial firepower of DFIs and other investors. The total number of active projects thereby increased to more than 50. With EFSD+, as part of EU’s investment framework, the EC has decided to give preliminary approval to provide DFCD’s Water and Land Use Facility with a guarantee of €151.8mln to further develop climate (adaptation) projects and support vulnerable landscapes, an important milestone for the DFCD.
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