Evaluation on Finnfund Special Risk Instrument
The state-funded development finance company Finnfund's investment portfolio has invested more in the poorest countries and in projects with a high risk profile but with important development impacts.
Assigned by the Ministry for Foreign Affairs (MFA), KPMG evaluated the EUR 50 million Finnfund Special Risk Instrument (SRI) that was in use between years 2012 and 2015. The evaluation is a requirement for the possible renewal of the SRI. In the SRI the MFA takes part of Finnfund’s investment risk in projects that are risky but at the same time have good development and/or environmental impacts. The SRI was taken into use in 2012 at the same time as the MFA ownership steering of Finnfund was changed so that the company was to make more investments in poorer countries.
According to the KPMG evaluation the SRI has been successful. Finnfund used it according to MFA instructions; the investments that have benefited from it have had more risk and according to KPMG more development and environment impact than Finnfund’s other investments. Over 80 % of the investments that have benefited from the SRI are in Least Developed Countries (LDCs). KPMG undertook a field mission to four investments in Ethiopia and Rwanda and found that Finnfund’s financing had been essential to their business. The investments had positive employment, environmental and technological impacts.
Summary Report of the Evaluation on the Finnfund Special Risk Instrument (PDF, 492 kb, 25 pages)