Memorandum for 2018 on the steering of Finnfund activities by the Ministry for Foreign Affairs

The memorandum for 2018 on the steering of Finnfund has been published.

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 2018 are that

  • 60 percent of new projects should be assessed as having good or excellent development impacts
  • 75 percent of new investment decisions should be targeted at low-income or lower medium-income countries and
  • 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 by looking at its proportional operating costs, the company’s return on equity and its equity ratio.

In 2018, Finnfund will continue to develop environmental and social responsibility assessment and development impact assessment as well as increase its transparency, for example by updating its disclosure policy.

Information on reaching the 2017 targets will be compiled in the annual report to be published in the spring as well as in the development impact publication to be published in the autumn.

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