Government proposes new Finnfund Act

The Government will submit a proposal to Parliament for a new act on Finnfund, Finland's development financier and impact investor. The new act would replace regulation that has been in place for almost 50 years. The reform is intended to improve the administration of the Finnpartnership programme, which channels development finance to businesses, and enhance the services available to companies.

The aim of the legislative reform is to strengthen opportunities for Finnish companies to take part in international development cooperation, improve development finance services for businesses and clarify the performance of public administrative duties. The proposal would establish a subsidiary within the Finnfund Group and transfer to it the public administrative duties related to managing the Finnpartnership programme.

Strengthening the role of businesses in development cooperation

The proposal implements an objective set out in the Government Programme to increase the participation of Finnish companies in development cooperation and development policy investments and to promote their opportunities to operate in developing markets.

Finnfund already works with Finnish companies in projects where they act, for example, as technology suppliers, owners of investee companies and co-investors. The legislative amendment would give Finnfund greater flexibility to finance projects through a Finnish company when the project is carried out in a developing country.

“We want more Finnish businesses to participate in development cooperation and development policy investments in ways that support both their commercial interests and Finland’s development policy objectives. This legislative reform will create better conditions for that and make practical work easier,” says Minister for Foreign Trade and Development Ville Tavio.

Responding to constitutional and operational needs

The reform also addresses the need to define Finnfund’s duties more clearly, as required by the Constitution of Finland. The Finnpartnership programme, funded by the Ministry for Foreign Affairs and managed by Finnfund, awards discretionary government grants to companies seeking to expand into developing countries. Finnfund has long carried out work for Finnpartnership, including public administrative duties. Under the reform, these duties and the related decision-making would be transferred to a new subsidiary established for that purpose. The provisions on performing the duties would be expressly laid down by an Act of Parliament, as required by the Constitution. Concentrating public administrative duties in a subsidiary would clarify the structure of the Finnfund Group and make responsibilities more transparent.

The reform would make the administration of Finnpartnership more straightforward. It would allow applications to be processed more efficiently and reduce processing times.

The proposal would also enable technical assistance to be provided for project preparation. This is expected to make it easier, particularly for SMEs, to enter developing markets and increase the number of investment-ready projects.

The parent company, Finnfund Oy, would remain responsible for development finance and investments in developing countries. The parent company-subsidiary structure would maintain a clear separation between the Group’s commercial investment activities and its public administrative duties.

The Ministry for Foreign Affairs would continue to be responsible for ownership steering of Finnfund’s parent company and would supervise and guide the subsidiary in performing its public administrative duties.