Letter from the CEO

Last year, while traveling through some of our markets, I had the opportunity to spend time with investees, partners, and local team members. Beyond the insights and knowledge I gain from such travels, I find it particularly inspiring to meet entrepreneurs. The resilience and optimism they demonstrate give me hope and renew my drive as CEO of Norfund.

From the board’s visit to microfinance clients in Sawda, Dehli.

For instance, I met with the management team of the Kenyan textile producer Balaji. The founder, Mr. Pankaj Bedi, informed me that they employ 12,000 people, including 500 former inmates and 500 individuals with physical impairments. Their salaries support ten times as many people, with approximately 120,000 people dependent on Balaji’s business. They are indeed making a significant difference.

2023 proved to be a challenging year in the developing world. First, we faced the aftermath of COVID-19, followed by the repercussions of the Ukraine War. Inflation surged, interest rates spiked, and currency volatility, along with a strong USD, affected many of our markets. State finances were severely strained, and many companies struggled to survive at the micro level. Nonetheless, our entrepreneurs continued to demonstrate that defying the odds and achieving remarkable results is possible.

While total foreign direct investment in developing countries dropped by 9% to 841 billion USD last year, Norfund committed over 6.5 billion NOK, reflecting our record investment from the previous year. Our approach has not only shown resilience in demanding times but has also enabled us to generate a profit. The total annual investments now amount to 2.5 times the funds transferred from the state budget due to returns and sales.

Since our inception in 1997, Norfund has consistently grown and increased its impact. Our progress was built on Norfund’s clear mandate and stable governance structure. We have benefited from strong political support across the political spectrum, with additional funding provided each year. On this solid foundation, Norfund has recruited a highly competent team of dedicated professionals and established a strong presence with local offices in our key markets.

Norfund operates under two mandates: the Development Mandate, where our primary goal is to reduce poverty through job creation, and the Climate Mandate, where we aim to maximize CO2 emissions avoidance. Under the Development Mandate, seeking to maximize our additionality, 38% of our funding is invested in the Least Developed Countries, and no less than 64% is invested in Sub-Saharan Africa.

The Climate Mandate targets ODA countries heavily reliant on fossil fuels, such as India and South Africa. In 2023, we committed 1.6 billion NOK through the Climate Mandate and also mobilized substantial private funding. In total, the projects funded by the Climate Investment Fund are expected to avoid 8.5 tons of CO2 emissions annually.

Earlier this year, I travelled to India and Sri Lanka with our board of directors. In addition to visiting some of our large-scale renewable investments, we met with some of our microfinance clients on the outskirts of New Delhi. Meeting families who have secured loans enabling them to buy proper houses leaves a profound impression. They also shared how life-changing it was to own a fridge and not have to buy groceries every single day.

I am proud to serve as the CEO of Norfund. I have the privilege of leading a group of dedicated and highly competent staff. Working with exceptional entrepreneurs in challenging markets makes our mission incredibly rewarding. Through our investments we are making a significant difference, and our goal is to further increase our impact in the years to come.

Tellef Thorleifsson

Chief Executive Officer
May 2, 2024