May 27, 2020
Is this the new normal, asks Ritva Laukkanen, Finnfund’s former Chair of the Board of Directors, in the midst of the Covid-19 crisis.
After being part of a major transformation in recent years, Laukkanen believes that Finnfund is well positioned to face the crisis. How does it look like when looking back on those years as the Chair?
Whole hand for developing issues
“I realised that I am not there just for the money. That’s when I got interested in development finance.”
That is what Ritva Laukkanen says, when asked about the moment she gave her little finger to development issues. At the time, she had spent almost 10 years in the heart of New York, serving financial markets during the hectic 1980s.
Laukkanen moved to Washington DC and served in many positions at the International Finance Company (IFC), the private sector arm of the World Bank, for more than 20 years. After early retirement, as she says, Laukkanen started another career as a full-time board member, using her expertise gained in emerging markets. In April 2013 Laukkanen became the Chair of the Board of Directors at Finnfund.
This April, after having served the maximum of seven years, Laukkanen left the position. Today, the Board of Directors’ new chair is independent banking specialist Robert Wihtol.
Bringing impact investing to mainstream
Now, looking back on those years, Laukkanen sees a path with great changes in the working environment. The world of development finance – and impact investing – has profoundly changed. Not only in Finland but globally. Which, by the way, is exactly the same as Robert Wihtol states in his interview.
“There has been a significant transformation. Impact investing has become more mainstream. It is still not massive, but it is growing rapidly”, she says.
Laukkanen also points out, that the term is still unsettled and may have different meanings for different people.
Simultaneously, according to Laukkanen, public attention is much more intense, and political pressure has become stronger. Populism has also been raising its head, and debate on global challenges such as immigration, youth employment, climate change – all relevant issues for development financing – have become hot topics. Development financiers have found themselves in the midst of this sometimes heated debate.
“In a way it is a validation of your work”, Laukkanen says. “You are needed as a tool as you are among the best to do the job. It means that you are relevant and important.”
This has also enhanced the efforts to develop processes and the means of work, often in close relationship with stakeholders.
“The core of our mandate, such as additionality and impact, remain very valid”, Laukkanen says.
We need cooperation to survive the crisis
Today, developing countries – and development financiers – are facing a new challenge. How to recover from the bruises or even a death blow given by the Covid-19? According to Laukkanen, it is still difficult to say how the world will look like after the pandemic. So far, no one knows how long the situation will last – and how dire the consequences are going to look like.
“Scale of this problem is so large, that it is difficult to say what are the best means to deal with it. What is clear, is that we cannot do much alone. We need cooperation.”
Laukkanen would welcome a multifaceted approach, putting together best resources and expertise of various organisations, including the DFIs, the UN organisations etc. In many developing countries, the governments are neither able nor cannot afford to establish the kind of massive support programmes we have seen in the developed world.
Is this the new normal?
“It has been said there will be a new normal. I do not know if that is true, but one thing is clear: DFIs are needed. There will be tough times ahead for everyone, particularly in the developing world.”
One concrete example of the effective tools in this new Covid world are digital and mobile solutions.
“Digital, mobile solutions are needed excessively, due to lock-downs and particularly in those countries where you need the daily money from government to buy your food”, Laukkanen explains.
Laukkanen sees Finnfund well-positioned to face the current crisis.
“Strategically Finnfund is just where it should be, as climate issues, food security etc. have become even more important. In recent years, we have strengthened our focus on agriculture, health sector, mobile solutions, inclusive finance… There is a lot where we are good at,” Laukkanen says.
Laukkanen is also pleased with Finnfund’s recent efforts to mobilise private sector financing for sustainable development, which is at the very core of its mandate as a development financier. OP Finnfund Global Impact Fund I, new impact fund launched by Finnfund and OP in 2019, is a concrete example of this new type of cooperation.
“I enjoyed it a lot”
“Personally, I enjoyed it a lot. I have worked with committed, interested, devoted…most enjoyable people from top to bottom,” Laukkanen says.
At the board level, Laukkanen has valued the possibility to change views and debate.
“I was lucky to experience this period of time with a strong focus on the SDGs and the role of private sector in fostering sustainable development. At Finnfund, we have been grateful for the support from our government. We have put a great effort to develop our means of work, built new partnerships and strengthen our means to cooperate with various actors,” Laukkanen says.
Laukkanen mentions that compared to many development financiers, Finnfund is a relatively small actor albeit quite rapidly growing. But despite its size, for Laukkanen, Finnfund is first rate and its influence larger than its size.
“Finnfund is very proficient, and among European development financiers, leading current discussion in many fields, such as agribusiness, sustainable forestry, impact measurement, and ESG. I am also very happy with our new policy frameworks e.g. on sustainability, human rights, gender equality, and taxation.”
“I find it particularly striking that Finnfund has been able to balance financial profitability with impact – and this has also been recognised by impartial evaluators. It is a balancing act and you do not always get there. I have seen many institutions where this is not the case, and they have chosen one over the other”, Laukkanen states.
“It has been a major transformation. I am so lucky and privileged that I have been able to be a part of it.”
Ritva Laukkanen worked as the Chair of the Board of Directors at Finnfund from April 2013 until April 2020, having served the maximum of seven years. Having previously served International Finance Company (IFC) for almost 20 years, she has had an extensive career in developing finance. She continues to work in several board positions, for instance, as Director of the Board at Finnvera, and as a member of an investment committee of a climate investment fund launched by German development financier KfW.
Interested to read more? Interview of Robert Wihtol, Finnfund’s new Chair, is available here.