Skip to content


Contact us

Memorandum for 2017 on the steering of Finnfund activities by the Ministry for Foreign Affairs


The Ministry for Foreign Affairs, the main shareholder, steers Finnfund’s operations by means of an annual memorandum. This document defines Finnfund’s specific function in promoting development and sets objectives for its development policy operations, operational development and financial profitability.


Its basis is the Government Report on Development Policy, completed in February 2016. This set four conditions for Finnfund operations. Finnfund’s activities must:

  1. be focused on low-income and lower middle-income countries, fragile countries and countries in exceptionally challenging conditions, where there is a shortage of risk-tolerant long-term capital and thus where finance generates substantial extra value.
  2. be focused on specific sectors (including renewable energy, sustainable forestry, food security, manufacturing, innovative growth sectors) because of their multiplier effects on the economy and society.
  3. be adequately responsible and responsive to environmental and social responsibilities and human rights aspects
  4. be financially profitable.

Indicators have been defined for Finnfund’s success in these objectives and are reviewed at the start of each following year. Among the objectives for 2017 are that 60 percent of new projects should be assessed as having good or excellent development impacts, that 75 percent of new investment decisions should be targeted at low-income or lower medium-income countries and that 40 percent of new projects should directly serve poor population segments.

Finnfund also reports the number of jobs created by projects and the number of farmers who benefit from them; the tax revenues and official fees paid by projects to their host countries; the additionality of finance and the proportion of risk finance in investment decisions; how projects have generated energy; and how the projects have served to mitigate climate change; and so on.

The development of Finnfund operations is being assessed this year by looking at its proportional operating costs, the company’s return on equity and its equity ratio. One of the aims is also to incorporate a human rights-based approach in its project process, now under revision.
Finnfund aims to continue improving its reporting of development and social impacts and to increase its operational transparency.

Investment in poorest countries above-target again last year

Over the past few years Finnfund has been rather successful in reaching the targets set. The aim, for this year too, has been that at least 75 percent of new investment decisions are in the poorest, low-income or lower middle-income countries. Last year 87 percent of investments were in countries in these three categories and the year before a full 92 percent.

Another objective has been to operate as efficiently as possible; operating costs should be less than two percent of the investment portfolio. Although the number of investments made has risen, it is estimated that the proportion of operating costs last year was only about 1.6 percent. The year before it was 1.5 percent. Efficiency has thus been maintained rather well.

Where there is room for improvement is in the return on equity. The target last year, measured as a five-year moving average, was over two percent. The final figure for return on equity is not yet available but it is expected to be only about one percent.

Final figures for 2016 will be available for the annual report, to be published in May.

Ownership steering
Annual report 2015
Ministry for Foreign Affairs