BRUSSELS, 21 May 2024 –European DFIs made development finance inroads across the globe, helping people and communities thrive, grow local economies, create jobs, fight poverty, and build a sustainable future.

Highlights from 2023 include Belgian DFI BIO joining with IFC, a World Bank Group member, as well as Social Investment Managers and Advisors LLC (SIMA Funds or SIMA) and other financiers in the first close of the $150 million SIMA Commercial & Industrial Solar Green Bond. It will finance small-scale productive-use solar projects throughout Africa.

Cofides of Spain worked in 2023 on the Kuali Fund, which received the approval of Green Climate Fund in 2024. The Green Climate Fund will provide €33 million to support climate change adaptation and mitigation in Latin American and Caribbean countries. This initiative strengthens COFIDES as a relevant player in development and climate impact investment, as well as a benchmark in the design of blended finance structures, as the Fund will have resources from the Green Climate Fund, the European Union, and the Fund for the Promotion of Development (FONPRODE) of the Spanish Agency for International Development Cooperation (AECID), which will be catalysts for private investment.

DEG in 2023 continued to pursue its Impact.Climate.Returns. strategy and expanded the advisory services for companies on their transformation journey. During the COP28 summit, DEG signed US$50 million to the Emerging Markets Infrastructure Fund II (EMIF II) managed by A.P. Moller Capital. The transition to a climate-neutral economy is particularly challenging for emissions-intensive industries such as the transport sector. With DEG participation in EMIF II, the German DFI is participating in the decarbonisation of this industry via the fund’s net zero strategy.

FMO blended finance efforts included the SDG Loan Fund, which mobilised US$1.1 billion of investor capital. Announced in November by Allianz Global Investors, FMO Investment Management (FMO IM), and the John D. and Catherine T. MacArthur Foundation, the Fund successfully mobilised more than US$1 billion in private capital to advance the UN  Sustainable Development Goals (SDGs) in emerging and frontier markets. The Fund’s capital is provided by a group of institutional investors, including Allianz, the Dutch development bank FMO, and Skandia. The Fund’s ‘blended finance’ structure enables leading institutional investors to co-invest in a portfolio of loan participations that support financial institutions and intermediaries serving small and medium-sized businesses in low- and moderate-income countries across Latin America, Asia, Africa, and Eastern Europe in three target sectors: energy, financial institutions, and agribusiness.

Finnfund issued in December its first green private placement bond. Based on the 2022 sustainability framework, the size of the bond was €100 million, and four European institutional investors from outside the Nordic countries invested in it. On the digital front, Finfund launched with the European Union the ‘Africa Connected’ programme. The programme strives to mobilise more than €1 billion euros for Sub-Saharan Africa’s digital infrastructure.

Teachers and pensioners benefited from a lending programme supported by investments from Norfund. The programme addresses the lack of access to finance seen as the biggest constraint to the development of businesses in low-income countries, and Colombia is no different, with just 46% of the population over 15 holding bank accounts, according to World Bank indicators. Contributing to increased financial inclusion is a key priority for Norfund in this target market. Separately, its investment in Novastar grew the circular waste business in Nairobi, Kenya. Norfund invested through funds to reach more companies and other business areas than it could on its own.

Proparco’s trade finance programme provided a concrete solution to supply challenges. Financing international trade through the banking system is essential to facilitating trade between countries. While this type of financing is readily available in developed economies, certain Southern countries are experiencing chronic shortages. On the African continent, for example, the supply of essential goods, especially cereals, represents a specific challenge and is particularly dependent on trade flows – intercontinental as well as internal to Africa – which need to be facilitated to safeguard the continent’s food security. This is exactly what the Trade Finance guarantee programme from Proparco aims to do.

Italian member CDP issued its first Green Bond for €500 million, with orders for more than €2.6 billion. Demand was five times higher than supply, with foreign investors totalling 80% and a strong presence of ESG investors. Proceeds from the issue were earmarked for green initiatives with positive impacts on environmental sustainability and the energy transition. ESG issues placed since 2017 have risen to nine, confirming CDP’s commitment to promoting sustainable development in the country. In addition to the Gren Bond, EIB and CDP provided public authorities with €200 million to finance sustainability projects.

Swedfund opened in 2023 a regional office in Abidjan, Côte D’Ivoire, to scale up investments in West Africa where there are great investment needs and good opportunities for further investments. In January 2024, Swedfund made its first investment using an EU guarantee under the Global Gateway, in Apollo Agriculture. Apollo Agriculture provides smallholder farmers with agricultural products combined with distribution, advice, insurance, and financing in Kenya. Apollo’s risk reduction, adaptation, and resilience measures, such as drought tolerant seeds, blended fertilisers, insurance, agronomic training and certifications play a crucial role in promoting climate-smart agriculture and resilience among small-scale farmers. This can contribute to food security and combat climate change.

Platform of DFIs from G7 countries boosts investment in fragile, conflict-states in Africa

EDFI members continued to work together with other DFIs outside of Europe on joint efforts. BII, FMO, CDP, Proparco, US DFC, and FindDev Canada joined up to create ARIA – The Africa Resilience Investment Accelerator. Funded by G7 nations, the DFIs announced in 2021 the launch of the new platform designed to boost investment in fragile and conflict-affected states in Africa. ARIA aims to unlock investment in fragile states through collective influence and by pooling expertise to overcome the challenges of providing capital in these countries. ARIA matters because historically, DFIs have tried to originate investments in fragile states with mixed results. ARIA aims to engage proactively in such markets in a way that would improve investment-readiness – both a country’s readiness to benefit from DFI investment and DFIs’ abilities to invest in these economies.

Notes to editor:

About the EDFI Association: The Association of European Development Finance Institutions, or EDFI, was established in 1992 to support and promote the work of bilateral Development Finance Institutions (DFIs). With a combined portfolio of €51 billion, including over €15 billion of climate finance, EDFI’s 15 member institutions share a vision of a world where the private sector offers people in low- and middle-income countries opportunities for decent work and improved lives, and where private investment flows are aligned with the Sustainable Development Goals and the Paris Climate Agreement. EDFI’s mission is to promote the joint interests of its members, inform policy, and drive innovation in industry standards.

EDFI membership: BII (UK), BIO (Belgium), Cofides (Spain), DEG (Germany), Finnfund (Finland), FMO (The Netherlands), IFU  (Denmark), Norfund (Norway), OeEB (Austria), Proparco (France), SIFEM (Switzerland), Simest and CDP Development Finance (Italy), SOFID (Portugal), Swedfund (Sweden).

DFIs in Europe post record new investments in 2023: The 15 Europe-based development finance institutions who comprise EDFI recorded in 2023 their strongest year for total level of combined commitments. DFIs channelled €9.5 billion in capital to private sector clients in emerging and developing economies who would otherwise not have accessed capital for impact-rich business activity. Despite a lumpy macro-economic landscape and geopolitical unease, EDFI members grew  new investments by 10%, bringing them beyond the pre-Covid commitment level. Read more.