Letter from the MB of the Fund Manager

Stepping up

At the heart of FMO's strategy lies the commitment to enable entrepreneurs to increase inclusive and sustainable prosperity. Looking back at 2024, we must acknowledge several concerning trends: rising geopolitical turmoil and weakening institutional foundations threaten global stability and solidarity, disproportionately affecting the most vulnerable people. Additionally, we are witnessing the public withdrawal of several major financial players from their climate and environmental, social and governance (ESG) commitments. In this context, FMO calls on the financial sector to remain resolute in advancing sustainable investment strategies. Financial institutions play a pivotal role in driving local economic growth, reducing inequality, and driving meaningful climate action. Investing in access to (green) energy, food and finance creates long-term value, something FMO has demonstrated consistently over 50 years of impactful and profitable investments.

Amidst these challenges, FMO recognizes the urgent need to step up even more. However, meaningful change cannot be achieved alone, strong partnerships are essential. By working together, we can drive sustainable investments, create economic opportunities in our markets, support Dutch businesses, and build a more resilient, inclusive future.

The strengths of partnerships

By providing crucial financial support and mobilizing additional funding for underserved regions, FMO has continued to make a tangible impact in 2024. The strength of our partnerships - evident in the success of initiatives such as the SDG Loan Fund and European Commission guarantees - enable us to expand programs like NASIRA and the FMO Ventures Program. These programs contribute to local livelihood options for the one billion young people who will try to enter the job market over the next decade - a majority living in emerging markets. We are also grateful for the increased funding and support for the Dutch Fund for Climate and Development (DFCD Aya) from the Dutch government and the European Commission, and for Mobilising Finance for Forests (MFF) from both the Dutch and UK governments.

MASSIF in 2024 devoted significant attention to being able to continue to support its clients, end beneficiaries, and micro, small and medium-sized enterprises in the future and to play its part in FMO’s Strategy 2030. For example, by advancing innovative transactions, continuing to invest in fragile countries as well as ‘Green label’ transactions which is also in line with the ‘best effort’ ambition that was communicated to the Ministry of Foreign Affairs in 2023. Highlights include the Local Currency Bond for Société Générale Madagascar, the Green Label Equity investment in Ecofy in India, the first NASIRA guarantee in Ethiopia and the new commitment to the FMO Ventures 2.0 program.

Market creation

To help close the financing gap for achieving the SDGs, and while recognizing the limited business opportunities available to us and other impact investors, we have further expanded our market creation efforts in 2024 to develop bankable business opportunities and foster ecosystems that drive sustainable local economic growth. These efforts also strengthen our contributions to the Global Gateway goals and support Dutch trade opportunities. Also here, partnerships remain central to our endeavors, with initiatives such as Aria, Impact Invest Nepal, CASA Plus, and the EU’s €25 million fund for investments in Young Businesses in Africa all playing pivotal roles.

Looking ahead

In a volatile global landscape, FMO faces three key long-term challenges: a scarcity of investment-ready companies, limited availability of concessional funding, and increasing regulatory requirements. We remain committed to our 2030 ambitions and will increase our efforts to stay on track.

We will in particular focus on RI-labeled investments, especially in LDCs and on Green investments. Crucial next steps include the Market Creation initiative, onboarding of new EFSD+ programs and our increased cooperation with the Dutch and UK governments. As we reflect on the past year and prepare for the challenges ahead, we recognize that our achievements would not have been possible without our partners, and we extend our heartfelt gratitude to them for their trust and collaboration over the past year. We remain dedicated to deliver on the impact and trust that our partners place on us. At FMO, we believe that doing makes the difference, and that amidst the global turmoil, stepping up is a must.

The Hague, 25 April 2024

On behalf of the Management Board

Franca Vossen, Chief Risk Officer
Huib-Jan de Ruijter, Co-Chief Investment Officer
Michael Jongeneel, Chief Executive Officer
Peter Maila, Co-Chief Investment Officer