Letter from the MB of the Fund Manager
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.
With AEF, in 2022, FMO provided a development contribution to the Essor mini-grid project in the Democratic Republic of the Congo (DRC), which aims to improve access to electricity in isolated cities by means of hybrid solar mini-grids implemented under long-term concessional structures. The development contribution finances part of the external development costs including technical and feasibility studies.
In 2022 AEF made a considerable loss, due to a combination of impairments on loans and negative valuations on some of the equity investments – partly a direct result of the war in Ukraine. However, AEF also viewed some successes, with -for example- the transition of Anergi Turkana (wind energy, Kenya) from AEF to FMO’s own balance sheet and a new investment in the clean cooking sector.
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