First Evaluation of Finnfund Carried out by Particip and Indufor for Ministry for Foreign Affairs

December 10, 2018

The final report of the Ministry for Foreign Affairs’ evaluation of Finnfund was published today. Development financier Finnfund has succeeded in investing more and more in the world’s poorest countries and most difficult sectors, while maintaining its commercial viability. The most positive development impacts can be seen in the company’s investments in agriculture and forestry.

According to the assessment, Finnfund consistently complies with, and sometimes even exceeds, the corporate responsibility requirements of the IFC, the World Bank Group’s private sector branch.


Minister for Foreign Trade and Development, Ms Anne-Mari Virolainen opening the seminar.

The Ministry for Foreign Affairs has commissioned the first independent assessment of the activities of development financier Finnfund. The assessment focused on Finnfund’s activities in 2008–2017 and how it has observed the policy guidance offered by the Ministry for Foreign Affairs, as well as how likely it is that Finnfund’s strategy for 2018–2025 will materialise.

“The investments that produce the most positive development effects are quite often also the most financially challenging due to their high risks. Finnfund appears to have been very successful in this balancing act – in other words, it has managed to invest more and more in the poorest countries and most difficult sectors while also maintaining its commercial viability,” says Stephen Spratt, who headed the international assessment team.

The evaluation recommends that Finnfund make improvements to its evaluation of development impacts over the entire lifecycle of investments. Finnfund currently has good conditions for evaluating development impacts before making its investments, but not for sufficient assessments during the investment period or afterwards.

“It is difficult to determine to what extent the creation of jobs and payment of taxes by the companies funded by Finnfund is due to Finnfund’s involvement. Finnfund may have had – and in many instances probably has had – a significant impact on this. More work should be done to demonstrate Finnfund’s contribution.”

Greatest added value in forestry and agriculture

According to the assessment, Finnfund’s involvement provides the greatest added value in the forestry sector, as the company has special expertise in the field and forestry is a sector where it is otherwise difficult to secure financing. Finnfund’s activities in the agriculture sector are also particularly valuable due to the relative poverty of the people benefiting from the business activities. However, both of these sectors are commercially demanding and have significant risks.

Finnfund’s strategy for 2018–2025 focuses on agriculture and forestry and renewable energy production, which are integral areas for mitigating and adapting to climate change, along with financial services. The main goal is to double the amount of financing and triple the development impacts.

“Achieving these objectives is possible, but the financial risks increase as the company concentrates more and more on the poorest countries and on sectors that do not produce rapid gains. It is clear that the company needs more public and private funding in order to implement its ambitious strategy, and the way that this is structured will be crucial in this regard”, Spratt argues.

Link to the evaluation report.

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Anni Blåsten

Marketing Manager, Senior Consultant

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