What are the relevant developmental effects of Norfund’s investments?
Norfund’s objective is to contribute towards the establishment of viable, sustainable businesses in developing countries. This is important for development because businesses provides jobs, products and services; generates tax and export incomes; and introduces new technologies and techniques; etc.
The key developmental outcome of Norfund’s activities is therefore profitable, well-run and responsible companies that operate in some of the poorest countries in the world. Profitability is important because only financially viable businesses survive in the long run and can thus provide long-term, reliable jobs. Operating responsibly includes complying to local laws and relevant international standards, including environmental and social standards; ensuring a decent and safe working environment; and good corporate governance.
These are the relevant developmental effects, and Norfund’s methodology for measuring developmental contribution relates to documenting these effects.
Norfund’s methodology and considerations for documenting developmental effects
- Objective: Obtain relevant, reliable information about our investments without inducing unjustifiable reporting burdens onto our portfolio companies.
- Norfund invests in commercial companies that operates in some of the most challenging markets in the world. There must be a balance between reporting requirements and administrative burden for recipient.
- Norfund is a small actor in the countries and sectors in which we invest and the relevant effects are therefore outputs and outcomes, rather than impacts.
- Rather than estimating effects based on heuristics or samples of the portfolio, Norfund wish to obtain information about actual, ex post results from the entire portfolio annually. To limit the reporting burden for the companies, Norfund has selected a few indicators that are relevant and relatively easy to obtain for the companies.
- Norfund measures developmental effects on two different levels: strategic achievements (green indicators in the table below) and project results (all other indicators).