About DFIs

Impact


As European DFI portfolios have grown, so has their contribution to development outcomes. Their investments are concentrated in regions and sectors with high relevance for international development policy.

DFIs’ commitments support projects that would otherwise not have obtained the same financing. A DFI will typically remain invested in projects for an extended period of five to 10 years, or longer. They track the contributions that these private sector projects make to development outcomes on an on-going basis. The most important direct contributions are job creation and skills development, environmental and social outcomes, investment results, the provision of valuable goods and services, and tax revenues in developing countries. Projects also generate financial returns that can be reinvested in the economy. Over time, these contribute to sustainable growth and improved living conditions in society that go beyond the project’s direct productive activity and lifetime.

DFI investments are guided by three success criteria:

Additionality, catalytic effect and project sustainability. European DFIs have a particularly strong track-record in financial inclusion and climate finance, two investment areas that demonstrate a high level of additionality. They have also, in different ways, succeeded in mobilising a high degree of private participation on their balance sheets, in projects, and through new innovative facilities. They perform well in funding successful development investments that achieve beneficial financial results, contribute to effective development outcomes, and adhere to responsible investment practices with respect for human rights and environmental sustainability.

DFIs’ commitments support projects that would otherwise not have obtained the same financing.

A DFI will typically remain invested in projects for an extended period of five to 10 years, or longer. They track and report on the contributions that these private sector projects make to development outcomes on an on-going basis. The most important direct contributions are job creation and skills development, environmental and social outcomes, investment results, the provision of valuable goods and services, and tax revenues in developing countries.

In addition to the direct development outcomes reported at a project level, there is emerging evidence that DFI investments generate an impact that goes beyond the project’s direct productive activity and lifetime. Although these indirect impacts may seem more difficult to assess, DFIs have started to measure them, with the aim to evaluate the contribution of their investments to reaching the SGDs. For example, the ability of DFIs to contribute to climate change goals depends on their ability to catalyse investment in energy efficiency and green technologies, not just on whether an individual project has an acceptable financial return or saves on energy use*. These indirect effects include: indirect employment effects, labour productivity, economic growth, investment, poverty and environmental impacts.

*Source: Development Finance Institutions Come of Age

European DFI’s contribution to development outcomes

Key contributions to development outcomes in 2016

> 4 million jobs

2 million direct and 1.3 million indirect employees in projects in European DFI portfolios.
2 millions employees in projects in portfolios of institutions with European DFI financing.

67.000 GWH

of electricity generated during year.

€9 billion

in tax contribution to governments.

European DFIs contribute to the SDGs:

Job creation

Is a key channel through which economic growth uplifts the the poor.

Investment in private sector projects

Help create and safeguard jobs and improve the working conditions for the employees.

Investments that are commercially sustainable

And catalyse capital from private investors help strengthen domestic tax revenue.