Norfund’s mandate is to establish viable, profita­ble businesses in developing countries that would not otherwise be initiated because of the high risk involved.

The development of sustainable enterprises is essential in promoting economic growth and reducing poverty.

To fulfil our mandate effectively, we focus on countries and investment areas in which capital is scarce and our development impact is likely to be strong. Capital is scarce where other investors are reluctant to invest because of high levels of real or perceived risk. The extent to which an investment contributes to an outcome that would not have happened otherwise is often referred to as ‘additionality’. These two criteria – additionality and impact – constitute the backbone of our strategy.  

The illustration below shows how Norfund works and how investments in 2020 contributed to creating jobs, increasing energy access and supply and strengthening­­­ financial inclusion. When Norfund is no longer considered additional, the investments are exited. The proceeds are then reinvested in new enterprises with greater need for risk capital. ( The exit from SN Power released capital to be deployed in the years ahead, but the settlement and transfer of shares took place in January 2021 and does not appear in the financial statements for 2020).

Norfund strategy 2019-2022

Norfund’s strategy is rooted in the mandate, informed by the UN Sustainable Development Goals and reflects the priorities of the Norwegian government’s development assistance policy.

Norfund invests in four areas where the potential for development impact is substantial and that are aligned with the SDGs.

Eight ambitions are defined for these investment areas to be achieved by the end of 2022:

Clean energy

  • 5,000 MW new capacity financed, of which 4000 MW is renewable
  • 1.5 million households provided with access to electricity

Clean energy investments and results 2020

Financial institutions

  • 15 million new clients are offered financial services
  • 130 billion NOK more extended in loans to clients

Financial institution investments and results 2020

Scalable enterprises

  • 50,000 jobs created through direct investments and funds
  • 2 billion NOK increased total revenues due to realised growth
  • Partnerships established with larger industrial actors

Scalable enterprises investments and results 2020

Green infrastructure

  • 1 billion NOK invested in 6–10 investments in waste management, water and power networks/transmission

Green Infrastructures investments and results 2020

Key Performance Indicators

To track progress Norfund also measure progress towards five key performance indicators (KPIs) :

  • Sub-Saharan Africa > 50%
  • Least Developed Countries > 33%
  • Equity Investments > 70%
  • Greenfield Investments > 15% of three-years moving average of annual commitments
  • Renewable energy > 50% share of accumulated allocated capital from government

Portfolio status in 2020 according to Key Performance Indicators

A responsible and active investor

Norfund is an active owner of our portfolio companies, contributing expertise and sound corporate governance – helping our investees to improve their environmental and social performance.

If environ­mental and social risks are not addressed appropriately, harm can be caused both to people and to the environ­ment. The management of environmental and social risks is therefore an integral part of Norfund’s investment process. Norfund uses the Environmental and Social Sustainability Performance Standards of the World Bank’s International Finance Corporation (IFC). This framework covers eight stand­ards that form the basis for our assessments and follow-up interventions.

Norfund requires high standards of business integrity from employees and business partners and communicates its no-tolerance approach to all stakeholders.

Principles for Responsible Investments (PRI)

Since 2017, Norfund has been a signatory to the Principles for Responsible Investment. (PRI) initiative. The PRI outlines six principles for responsible investment that Norfund has committed to and report on annually. The six principles reflect the increasing relevance of environmental, social and corporate governance issues to investment practices.

Operating Principles for Impact Management

The “Operating Principles for Impact Management” is a new investment tool that has established a market consensus for the management of investments for impact. The principles were developed by the International Finance Corporation (IFC), in consultation with a core group of stakeholders and draw on emerging best practices. They provide a reference point against which the impact management systems of funds and institutions may be assessed.

Norfund was among the first founding signatories. In April 2020, Norfund signed its first Disclosure Statement which affirms that Norfund investments and operations are managed in alignment with these Principles.

A minority investor

Norfund invests jointly with other partners, and always as a minority
investor. By being a significant minority investor, Norfund has influence, while supporting local ownership and encouraging other investors to invest in developing countries.

Strategic partners and co-investors

Norfund’s ownership will normally not exceed 35 per cent of a company. This means we always depend on competent and trusted partners. Norfund has clear guidelines for how to analyse and evaluate potential partners. The partner’s areas of expertise and knowledge, previous and existing positions and relationships, other roles in the society and reputation are among the factors that are carefully considered.

Being a minority investor is a principle that is defined in Norfund’s mandate. This can enable other international investors to invest in developing countries and also supports local ownership.

Co-investing this way enables Norfund to leverage additional capital and to provide the industrial and local knowledge needed for each investment.

Overview of Norfund partners at

Responsible Tax Policy

Norfund’s Responsible Tax Policy, adopted by the Board of Directors in 2019, sets out the principles that guide our approach to tax-related issues and what we expect from our portfolio companies and co-investors. The guidelines are based on internationally agreed principles and were drawn up with input from civil society. It consists of seven fundamental principles. They include requirements regarding transparency, that Norfund’s investees shall pay taxes to the countries in which they operate and where the income occurs, and that third countries must only be used when necessary to meet the fund’s development priority of investing in high risk markets and to protect the fund’s capital.

In 2020 Norfund’s investments in funds increased, and hence so did the use of third countries. Norfund is actively tracking and monitoring the use of third countries.

The policy shall be reviewed minimum every second year, with a view to remain consistent with evolving international standards and the best practice of multilateral and bilateral development finance institutions. It is thus due for a review in 2021.

Business Support

The Norfund Business Support Programme is a tool to enhance the sustainability and capacity development of our investees (SDG 12-6). It is used by Norfund to sup­port portfolio companies in the following areas:

  • Enterprise improvement, climate and ESG: projects that aim to reinforce the climate and ESG standards, procedures and capacity of a company.
  • Local community development: projects that consolidate local development effects in host com­munities by supporting a company’s local commu­nity outreach efforts.
  • Sector-related initiatives: projects that support an entire sector, for example E&S training for the banking sector in a particular country.

The Project Development and Risk Mitigation Facility (PDRMF)

The Project Development and Risk Mitigation Facility is funded by the Norwegian Ministry of Foreign Affairs.

The facility has two purposes:

  • Enabling early phase project development within Norfund’s investment areas
  • Risk mitigation for commercial investors that wish to invest in Norfund funded projects, throughout the project cycle

The Project Development and Risk Mitigation Facility is used for projects that have a risk level which is higher than other investments in Norfund’s core portfolio. These projects are managed as a separate facility and are not included in Norfund’s overall portfolio valuation.

Projects supported by the facility in 2020

By the end of 2020, the PDRMF portfolio consisted of seven active projects, with a total value of 111.59 MNOK. In 2020, two new projects were committed under this facility:

  • A foreign exchange guarantee to the Nordic Microfinance Initiative (NMI) for the benefit of NMI funds. This guarantee allows NMI to provide local currency to Microfinance Institutions making them able to provide microloans without taking on FX risk or transfer it to their borrowers.
  • Investment in the Antler East Africa Fund. The fund invests in early stage and pre-seed entrepreneurs establishing businesses in East Africa.