PowerPoint Presentation · 2020-02-20 · 2016. 2017. 2018. East Asia and Pacific. Other high...
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STRATEGY 2019-2022
Transcript of PowerPoint Presentation · 2020-02-20 · 2016. 2017. 2018. East Asia and Pacific. Other high...
STRATEGY 2019-2022
The share of the world´s populationliving in extreme poverty has
fallen substantially
200519931990 20111996 1999 2002 2008 2010 2012 2013 2015 2016 2017 2018
East Asia and Pacific Other high incomeSouth AsiaEurope and Central Asia
Latin America and CaribbeanMiddle East and North Africa
Sub-Saharan Africa
0
250
500
750
1 000
1 250
1 500
1 750
2 000
EXTREMELY POOR(million people living on less than
US$ 1,9 per day, 2011 PPP)
Sources: World Bank PovcalNet; World Bank datablog, September 19, 2018
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THREE PILLARS ARE NEEDED TO ENSURE INCLUSIVE AND SUSTAINABLE
DEVELOPMENT
Institutionbuilding
Sustainableeconomic
growth
Social development
Institutionbuilding
Sustainableeconomic
growth
Social development
MANDATE: Assist in developing sustainable business
and industries in developing countries
THE NEED FOR DEVELOPMENT IS TREMENDOUS…
470437 1.8million million percent
People living in extremepoverty in Sub-Saharan
Africa
New jobs that must be created by 2030
Share of global investments goingto the least developed countries
…THUS NORFUND HAS AN INCREASINGLY IMPORTANT ROLE TO PLAY
Sources: World Bank Data blog September 19, 2018; un.org SDGs; UNCTAD World Investment Report 2019
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(https://unctad.org/en/PublicationsLibrary/wir2019_en.pdf s 66)
MANDATE: Assist in developing sustainable business and industries in developing countries
MISSION Create jobs and improve lives by investing in businesses
that drive sustainable development
Optimise impact by being additional and catalytic
MANDATE: Assist in developing sustainable business and industries in developing countries
MISSION Create jobs and improve lives by investing in businesses
that drive sustainable development
Optimise impact by being additional and catalytic
Clean Energy Green Infrastructure
FinancialInstitutions
ScalableEnterprises
MANDATE: Assist in developing sustainable business and industries in developing countries
MISSION Create jobs and improve lives by investing in businesses
that drive sustainable development
Optimise impact by being additional and catalytic
Clean Energy Green Infrastructure
FinancialInstitutions
ScalableEnterprises
Strengthen investment capacity and quality
Assess cross-cutting issues
Target select developing countries with high impact potential
MANDATE: Assist in developing sustainable business and industries in developing countries
MISSION Create jobs and improve lives by investing in businesses
that drive sustainable development
Optimise impact by being additional and catalytic
Clean Energy Green Infrastructure
FinancialInstitutions
ScalableEnterprises
Strengthen investment capacity and quality
Assess cross-cutting issues
Target select developing countries with high impact potential
Optimise impact by being additional and catalytic
ADDITIONAL CATALYTIC
FINANCIALADDITIONALITY
VALUEADDITIONALITY
CATALYSE MOBILISE
ESTABLISHPortfolio level KPIs:• LDC: 33%• SSA: 50%• Equity: 70%• Greenfield: 15%
AspirationAmount of commercial capital mobilisedto LMIC and below – to be defined on an annual basis
FINANCIAL RETURNS
DEVELOPMENT EFFECTS
Investing in businesses that grow to be healthy and profitable should generate a risk adjusted financial return
• Prioritise markets and sectors with high potential for development
• Contribute to both direct and indirect job creation
• State clear and measurable development objectives for each focus area
• Adhere to high ESG standards
Mission: Create jobs and improve lives by investing in businesses that drive sustainable development
Norfund’s investments will be concentrated in four areas
Clean energy Green infrastructure
Financial institutions Scalable enterprises
883 million people worldwideare living in slums
67% of the adult
population in SSA is unbanked
4% of waste in developingcountries is
recycled
600million
people in Africalack access to
electricity
3 of 4 in SSA lack accessto clean drinking
water in SSA
700 Africancompanies have
revenues of more than USD 500
million
Sources: unstats.un.org; IEA 2018 «World Energy Outlook 2018»; World Bank 2018, «What a Waste 2.0»; World Bank Development Indicators; McKinsey 2016 «Lions on the move II”
CLEAN ENERGY| INCREASE ENERGY ACCESS AND SUPPLY
Our ambitions:1.5 million new households provided with access to electricity
5,000 MW new capacity financed, whereof 4,000 MW renewable
INVEST in greenfield grid-connected power plants, distributed generation and off-grid supply
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Baselines: Households: 100,000 Energy supply, capacity: 4100 MW i totale energiporteføljen, 3100 fornybar Rasjonale: Energisektoren i Afrika og andre lavinntektsregioner er veldig underutviklet både når det gjelder installert kapasitet, tilgang til elektrisitet og elektrisitetsforbruk per innbygger. Investeringer i energiproduksjon bidrar til mer strøm og færre strømbrudd, som igjen gjør at bedrifter kan øke eller forbedre sin produksjon. Dette har positive ringvirkninger i form av flere skapte arbeidsplasser, økte skatteinntekter for staten, mer vekst i leverandørkjeden, økonomisk vekst, og reduksjon i klimagassutslipp Investeringer i tilgang til elektrisitet forbedrer først og fremst folks levestandard: de kan gjøre lekser, det bidrar til økt sikkerhet, bedre helse osv. Investeringsstrategi: Vi skal investere både i nye kraftverk (for det meste i fornybar energi) (energiproduksjon) og i «off-grid»/ «distributed generation»-segmentet (energi-tilgang). Our core focus will be on increasing our equity investment in renewables and power generation in our target markets, largely building on current platforms and partnerships. We will focus on Norfund’s chosen countries, but will follow our core partners into new countries as long as additionality and development impact is high. Our equity strategy for embedded generation will focus on portfolios through our existing partnerships rather than individual projects. In distributed generation, we will seek commercial and industrial captive power opportunities as well as supporting off-grid and mini-grid commercial actors.
GREEN INFRASTRUCTURE | IMPROVE ESSENTIAL INFRASTRUCTURE SERVICES
Our ambitions:Establishpartnerships
Execute investments in wastemanagement, water and power networks
Invest NOK 1 billion in 6-10 investments
INVEST in waste management, water supply and power networks
FINANCIAL INSTITUTIONS | STRENGTHEN FINANCIAL INCLUSION
Our ambitions:Offered financial services to 15 million new clients
Extended NOK 130 billion more in loans to clients
FURTHER GROW bank and microfinance whilst exploring fintech and insurance
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Baseline: Finanstjenester, antall kunder: 23 mill Utlån: USD 32 mrd (target er USD 15 mrd) Problem: Hva er problemet? 67% av befolkningen i SSA erhar ikke tilgang til banktjenester Uformelle lån står for 85% i lav og mellominntektsland Bare 21 % av selskaper i SSA har banklån Finanssektoren I utviklingsland er underutviklet. Only 21% of firms in SSA have a bank loan/line of credit, and 39% of businesses in SSA identifies access to finance as a major constraint to business growth. Across developing countries it is estimated that 65 million formal MSMEs in developing countries have unmet financing needs. While 44% of the adult population in low and middle income countries borrowed money last year, only 15% used a financial institution as a source of the financing needed. Rasjonale: Investing in financial institutions increases access to capital which enables economic growth, job creation and improves living standards Investeringsstrategi: Further grow bank and microfinance�whilst exploring fintech and insurance This means that we will continue our core strategy of providing debt and equity to financially viable bank and microfinance institutions with appropriate growth ambitions in our target markets. This will be done both directly as well as through platforms and funds. We will increase our average ticket size through equity positions in larger banks and the scaling of debt to banks. We will also start to explore fintech and position ourselves for insurance, while opportunistically address other non-bank financial institutions. Whenever possible we will seek to catalyse co-investments from other Norwegian or international non-DFI investors.
SCALABLE ENTERPRISES | GROW COMPANIES IN AGRIBUSINESS AND MANUFACTURING
Our ambitions:50,000 jobs created throughdirect investments and funds
Etablished partnerships withlarger industrial actors
Realised growth so that total revenues have increased by NOK 2 billion
BUILD ENTERPRISES through funds, and industrial partnerships targeting the agribusiness and manufacturing sectors
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Baseline: Permanent jobs: 8800 faste jobber i porteføljen i dag Revenues: USD 320 mill i omsetning i dag Problem: Hva er problemet? Afrika har X bedrifter med over Y i omsetning, like mange som i Norge. Mangelen på store bedrifter hindrer jobbskaping og utvikling. Landbruket fungerer dårlig og begrenser markedstilgang og inntekter for bøndene og gjør mange utviklingsland avhengige av matimport Produksjonsindustrien er liten og lite produktiv med en stor andel små bedrifter med utrygge arbeidsplasser Rasjonale: Investeringsstrategi:
Core countries
SELECTION CRITERIAAdditionality I Opportunities I Knowledge
OUR KPIS33% in LDC I 50% in SSA
29 countries where Norfund:• Actively builds pipeline and deep country
expertise• Seeks to make direct investments, thereby
strengthening our impact
CORE COUNTRIES
TARGET SELECT DEVELOPING COUNTRIES WITH HIGH IMPACT POTENTIAL
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Core countries Angola Myanmar Bangladesh Rwanda Cambodia Senegal Ethiopia Tanzania Laos Uganda Lesotho Zambia Malawi Zimbabwe Mozambique Côte d'Ivoire Kenya Ghana Sør-Afrika Nigeria Colombia Indonesia Dominican Republic Nicaragua El Salvador Sri Lanka Guatemala Vietnam Honduras Extended reach: Benin Burkina Faso Burundi* Cameroon Costa Rica Guinea Haiti* India Liberia* Madagaskar Mali* Nepal Niger Panama Philippines Sierra Leone Somalia* Sør-Sudan* Swaziland Togo*
Core countries
SELECTION CRITERIAAdditionality I Opportunities I Knowledge
OUR KPIS33% in LDC I 50% in SSA
29 countries where Norfund:• Actively builds pipeline and deep country
expertise• Seeks to make direct investments, thereby
strengthening our impact
CORE COUNTRIES
TARGET SELECT DEVELOPING COUNTRIES WITH HIGH IMPACT POTENTIAL
Extended reach Fragile states
Investments are channelled through reputable funds, strategic partners or platforms
EXTENDED REACH COUNTRIES
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Core countries Angola Myanmar Bangladesh Rwanda Cambodia Senegal Ethiopia Tanzania Laos Uganda Lesotho Zambia Malawi Zimbabwe Mozambique Côte d'Ivoire Kenya Ghana Sør-Afrika Nigeria Colombia Indonesia Dominican Republic Nicaragua El Salvador Sri Lanka Guatemala Vietnam Honduras Extended reach: Benin Burkina Faso Burundi* Cameroon Costa Rica Guinea Haiti* India Liberia* Madagaskar Mali* Nepal Niger Panama Philippines Sierra Leone Somalia* Sør-Sudan* Swaziland Togo*
STRENGTHEN INVESTMENT CAPACITY AND QUALITY
Add value through active ownership: equity investments, funds and
loans
Expand footprint through platforms and partnerships
Circulate capital by exiting mature
investments
Continuously improvethe way we work
with a focus on circulating capital
Assess cross-cutting issues systematically in our work and strengthen our efforts
CLIMATE & ENVIRONMENT GENDER EQUALITY HUMAN RIGHTS ANTI-CORRUPTION
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Klima som eksempel: Vurdering av klima på tre nivåer: Motstandsdyktighet: De fattige og mest sårbare er også mest utsatt for klimaendringer. Norfunds prioritering av MUL og jpbbskaping bidrar til å skape mostandsdyktighet for disse gruppene. Reduksjon: Investering I fornybar energi reduserer klimagasser og bidrar til overgangen til en lavkarbonøkonomi. Det gir også tilgang til ren energi. Risiko: Vurdering av klimarisiko (slik som utslippsnivåer, fysisk risiko, regulering, social risiko og konkurranse) for bransjer, markeder og selskaper der hvor dette er relevant og kan påvirke Bidra til en rettferdig omstilling
WHAT IS NEW? CONTINUITY THROUGH BUILDING ON AND ENHANCING THE CURRENT STRATEGY
GROWTH SECTORS GEOGRAPHY SEGMENTS
• Expanded footprint through significant growth in AUM, number of deals and volume of deals
• Two new/revised verticals –Green Infrastructure and Scalable Enterprises
• Adjusted geographic scope to reflect alignment to actual portfolio and growth aspirations
• Adding larger investments –Larger deals and larger companies through direct investments & funds in addition to SMEs
INSTRUMENTS EXITS IMPACT & ESG
• Loan provisioning to be increased. Still, equity at minimum 70% of portfolio
• Fund investments to be increased, to work across all verticals, and to include co-investments and follow-ons
• Increased circulation of funds –strengthening investment capacity and additionality
• Climate higher on the agenda; will be part of risk assessment
• Impact measurement capacity to be increased -through IFC/EDFI platform and new initiatives
• ESG tracking of existing portfolio to be improved
KEY RISK FACTORS IN STRATEGY – EXAMPLESCONCESSIONAL FINANCE ACCIDENTS, KIDNAPPINGS AND TERRORISM
INADEQUATE ESG PERFORMANCE CORRUPTION AND FRAUD
Prepare to change strategy to non-subsidized sectors
Emergency plans, training, insurance and communication preparedness
Strong ESG policies and practices throughout the investment process
Code of conduct, policies, awareness training, and compliance
Our mission is challenging and cannotbe achieved on our own
We are set up to take risk and contribute to development– it is difficult and we will not always succeed
Our ambition is to createjobs and improve lives
We will not succeed alone but in partnership with others
