Financial Inclusion is Norfund’s largest investment sector under the Development Mandate, with a focus on commercial banks, microfinance institutions, fintech ventures, and other financial services such as non-deposit taking lenders, insurance, and leasing. By investing in financial institutions Norfund contributes to increased financial inclusion and in particular to support jobs in micro-, small- and medium-sized companies.
Key achievements in 2024
committed
new clients reached
increase in lending to clients
Norfund invests both equity and debt in financial institutions, enabling them to offer essential financial services to their customers. We focus on investing in financial institutions that target unbanked and underserved customer segments, typically private individuals and micro, small and medium-sized businesses (MSMEs) that are too small for Norfund to reach directly and who operate across all sectors and industries, such as agriculture, manufacturing, services and energy production. MSMEs are the backbone in economies worldwide and are essential for job creation and economic development. Affordable and accessible financial services can enable both individuals and businesses to access necessary resources to fulfil their financial needs. This includes the ability to leverage business opportunities, investing in housing or education, and being able to navigate unexpected circumstances through the ability to build savings or take up loans.
In many of the regions where Norfund operates the financial sector is underdeveloped, resulting in limited access to fundamental financial services like bank accounts, payment methods, and access to capital. The World Bank has estimated that around 65 million micro-, small-, and medium-sized enterprises face a lack of financing options in developing nations, a serious obstacle to business development.
Furthermore, approximately 1.4 billion adults worldwide remain unbanked, with many more underserved by the financial sector. They often reside in rural areas where traditional banking services are scarce. Microfinance institutions and new financial technologies are crucial in reaching these underserved segments and ensuring their financial inclusion.
Traditional banks, microfinance institutions, and other financial service providers rely heavily on access to both debt and equity to be able to extend loans to their clients. The lack of efficient capital markets in Norfund’s regions creates challenges for companies in raising equity or debt instruments at competitive prices. This issue is significant for financial institutions that require long-term funding, often both in local currency and foreign currency (primarily USD), to complement their short-term customer deposits in order to serve their loan customers. Investments qualifying as regulatory capital, such as equity and subordinated debt, are also crucial for financial institutions as they create a multiplier effect on the volume of lending they can undertake. Increasing the availability of capital enables the financial service providers to not only grow existing credit facilities, but also to develop products, increase their market reach and pay for costly yet crucial capital investments.
Norfund provides debt and equity to financially viable banks, microfinance institutions and fintech companies aiming to reach underbanked customer segments in our core countries. Our investments are made both directly and through investment platforms and funds, focusing on growing locally owned financial institutions.
Our main vehicle for equity investments in African banks is Arise, a 1 billion USD bank investment company in which Norfund owns more than 40% of the shares. We also invest in Abler Nordic (formerly the Nordic Microfinance Initiative) to reach microfinance institutions.
Strategic ambitions
Norfund has defined two strategic ambitions for the investments within Financial Inclusion for the strategy period 2023-2026. There are related to the offer of financial services by our investees to new clients and the amount of outstanding loans.
- Offer financial services to 40 million new clients
- Extend 280 billion NOK more in loans to clients
Investments and results in 2024
At the end of 2024 Norfund was invested directly in 75 financial institutions, accounting for 31% of Norfund’s total portfolio. The FI portfolio consists of 41,3% equity investments, 47,3% loans, and 11,4% fund investments. The significant loan share ensures strong capital reflow, with 2024 repayments totaling 134 million USD. The FI department grew its loan portfolio by committing 10 new loans worth 154 million USD in 2024.
committed in 2024
committed in total FI portfolio
Investments per region
In 2024, a total of 22 commitments were signed with financial institutions in Sub-Saharan Africa, Asia and Latin America.
Investments per region in 2024
Total portfolio by instrument
Total portfolio per region
Continued challenges due to the macro environment
The financial sector in Norfund’s core countries is strongly affected by weakening macroeconomic factors. Higher-for-longer interest rates and increasing sovereign risk due to high sovereign debt levels, are the main trends that posed challenges during 2024. Defaults in recent years by Zambia, Sri Lanka, Ghana and Ethiopia illustrate these risks, and there is a risk of more to come. The significant holding of government securities in some banks is a particular concern. Sovereign defaults have significant implications for economic growth, inflation, exchange rates, and the solvency of a country’s financial sector. While the banks’ interest margins are strong, we see increasing risk for repayment issues for the banks’ customers resulting in higher impairment and weaker profits in several financial institutions.
Strong portfolio performance
Despite the macro challenges, the FI portfolio delivered strong results in 2024, achieving a USD IRR of 12.4%. Additionally, 45 million USD was received in interest payments and 33 million USD in dividends and capital returns from our equity and fund investments.
We experienced three new non-performing loans in our debt portfolio, all of limited size and spread across Asia, Sub-Saharan Africa and Latin America. Our equity valuations increased overall, mainly driven by positive valuation developments in Arise. Our investments in Myanmar struggle to operate in a difficult environment and have been in need of restructuring on the debt side.
Arise
Arise is a bank investment firm with significant minority stakes in several leading African banks, including in Kenya, Tanzania, Zambia and Uganda. Norfund is the main shareholder with more than 40% ownership of the company. While there continues to be some challenges in the portfolio largely due to the macroeconomic situation in the region in which the company has investments, Arise received substantial dividends in 2024 totaling 48 million USD (gross), consistent with the level received 2023. Arise management, together with the company’s board and owners, is in the process of finalizing a strategy for the 2025-2029 period. The strategy incorporates an ambition to grow the portfolio, further improve the level of support to the Arise-investees and expand the shareholder base.
Highlights of 2024
new investee companies
follow-on investments
In 2024 the Financial Inclusion department entered into 16 new investment agreements for a total of 239 million USD covering 9 different countries and 3 regional companies.
Mobilizing Nordic private capital through investment in Abler Nordic’s Fund V
Abler Nordic serves as Norfund’s primary platform for bottom of the pyramid financial inclusion investments in Sub-Saharan Africa, South Asia, and South-East Asia. In 2024, Norfund committed 30 million USD to Abler Nordic’s Fund V, which had a first close of 93 million USD, alongside IFU, Ferd, KLP, and DNB. The new fund will invest in institutions offering financial inclusion to low-income households in developing countries.
Strengthening Guatemala’s microfinance sector in rural areas through Genesis
Norfund provided 20 million USD in local currency funding through an FMO-led syndicated loan of 85 million USD to Genesis, a microfinance entity in Guatemala. Genesis serves over 340,000 clients, with 72% being women and 76% in rural areas. Most clients come from low-income backgrounds. The company addresses clients' basic needs first, then offers personal and microbusiness loans, along with guidance to strengthen their businesses. They also provide financial education programs in 23 indigenous languages.
Fintech
Access to high quality, affordable financial services is essential for social and economic development, gender equality, resilience, and livelihoods. Unfortunately, globally around 1.4 billion people are unbanked and even more are underbanked. It is also a gender issue: women are disproportionately affected: 74% of men and 68% of women in developing countries have account ownership.
Small- and medium-sized companies (SMEs) are also underserved by financial institutions in our markets. The use of digital technology and AI simplifies the on-boarding and credit processes thereby making it more financially attractive to take on SMEs as clients. Our mandate is to increase financial inclusion in both the personal and business segments, making fintech a natural area of interest for Norfund.
In 2024, two new direct commitments were made in this area, including Norfund’s first direct fintech equity investment. Norfund committed up to 9.2 million USD for a shareholding in Awantunai, a fintech company that offers solutions to increase access to capital for micro and SME enterprises in the supply chain of the fast-moving consumer goods (FMCG) industry in Indonesia. The investment will enable Awantunai to scale up its operations and reach more underbanked and underserved companies. Norfund also provided a local currency loan equivalent to 10 million USD to Lula, a fully digital SME lending fintech in South Africa.
In addition, the four fintech funds in which we have ownership, Accion Quona Inclusion Fund, Quona Accion Inclusion Fund III, Integra Partners Fund II and APIS Growth Markets Fund III, executed several new equity investments in fintech companies across Africa, Asia and Latin America.
Financial Inclusion portfolio
| Investment | Country | Investment year | Sector | Instrument | Ownership share | Domicile | Committed (MNOK) |
|---|---|---|---|---|---|---|---|
| Arise | Regional | 2016 | Banking | Equity | 33% | Netherlands | 2857.9 |
| NorFinance | Regional | 2013 | Banking | Equity | 50% | Norway | 507.5 |
| AfricInvest FIVE | Regional | 2018 | Non-Bank Financial Institution | Equity | 20% | Mauritius | 346.1 |
| Ecobank | Regional | 2021 | Banking | Loans | 0% | Togo | 340.6 |
| Southeast Asia Commercial Joint Stock Bank | Vietnam | 2024 | Banking | Loans | 0% | Vietnam | 340.6 |
| Banco Promerica Guatemala | Guatemala | 2016 | Banking | Loans | 0% | Guatemala | 333.5 |
| LAAD | Regional | 2004 | Non-Bank Financial Institution | Loans | 0% | Netherlands Antilles | 329.2 |
| Yoma Bank Limited | Myanmar | 2019 | Banking | Equity | 11% | Myanmar | 295.0 |
| Amret | Cambodia | 2013 | Microfinance | Loans | 0% | Cambodia | 283.8 |
| Abler Nordic Fund V | Global | 2024 | Microfinance | Funds | 29% | Norway | 283.5 |
| Genesis | Guatemala | 2024 | Microfinance | Loans | 0% | Guatemala | 229.6 |
| Access Bank | Nigeria | 2017 | Banking | Loans | 0% | Nigeria | 227.1 |
| BANCO INDUSTRIAL EL SALVADOR | El Salvador | 2014 | Banking | Loans | 0% | El Salvador | 227.1 |
| City Bank Limited | Bangladesh | 2023 | Banking | Loans | 0% | Bangladesh | 227.1 |
| Apis Growth Markets Fund III SCSp | Global | 2024 | Fintech fund | Funds | 5% | Luxembourg | 225.7 |
| CIFI Sustainable Fund | Regional | 2023 | Infrastructure fund | Funds | 32% | Canada | 216.9 |
| Abler Nordic Fund IV | Global | 2018 | Microfinance | Funds | 18% | Norway | 216.0 |
| Banco Ficohsa Honduras | Honduras | 2012 | Banking | Loans | 0% | Honduras | 204.4 |
| BAC El Salvador | El Salvador | 2023 | Banking | Loans | 0% | El Salvador | 198.7 |
| Vietnam Prosperity Joint Stock Commercial Bank | Vietnam | 2023 | Banking | Loans | 0% | Vietnam | 194.6 |
| Produbanco | Ecuador | 2023 | Banking | Loans | 0% | Ecuador | 187.3 |
| Mutual Trust Bank Limited | Bangladesh | 2019 | Banking | Loans Equity | 10% | Bangladesh | 185.3 |
| Banco BDI | Dominican Republic | 2022 | Banking | Equity | 20% | Dominican Republic | 184.3 |
| The Co-operative Bank of Kenya | Kenya | 2022 | Banking | Loans | 0% | Kenya | 181.7 |
| Growth Investment Partners Ghana | Ghana | 2024 | Non-Bank Financial Institution | Equity | 23% | Ghana | 170.9 |
| Banco Promerica El Salvador | El Salvador | 2015 | Banking | Loans | 0% | El Salvador | 170.3 |
| CRDB - AfDB CRP | Tanzania | 2022 | Banking | Loans | 0% | Tanzania | 170.3 |
| Banco Atlantida | Honduras | 2022 | Banking | Loans | 0% | Honduras | 152.1 |
| Access Bank Ghana | Ghana | 2022 | Banking | Loans | 0% | Ghana | 151.4 |
| Banco Cuscatlan | El Salvador | 2022 | Banking | Loans | 0% | El Salvador | 141.9 |
| Abler Fund III | Global | 2013 | Microfinance | Funds | 26% | Norway | 139.0 |
| Quona Inclusion Fund III | Global | 2021 | Fintech | Funds | 5% | Cayman Islands | 136.3 |
| CRDB Bank DRC | Congo, Dem Rep Of | 2022 | Banking | Equity | 23% | Congo, Dem Rep Of | 121.3 |
| National Development Bank | Sri Lanka | 2021 | Banking | Equity | 10% | Sri Lanka | 120.6 |
| CIFI | Regional | 2004 | Non-Bank Financial Institution | Equity | 34% | Panama | 116.2 |
| Banco BDF | Nicaragua | 2017 | Banking | Loans | 0% | Nicaragua | 113.5 |
| Banco Ficohsa Nicaragua | Regional | 2022 | Banking | Loans | 0% | Nicaragua | 113.5 |
| FCMB | Nigeria | 2019 | Banking | Loans | 0% | Nigeria | 113.5 |
| I&M group | Kenya | 2024 | Banking | Equity | 12% | Kenya | 113.5 |
| Banco Popular Honduras | Honduras | 2024 | Banking | Loans | 0% | Honduras | 111.0 |
| Lula Lend | South Africa | 2021 | Fintech | Loans | 0% | South Africa | 110.9 |
| LOCFUND NEXT | Regional | 2020 | Microfinance | Funds | 29% | Canada | 106.1 |
| Sathapana | Cambodia | 2008 | Banking | Loans | 0% | Cambodia | 102.2 |
| Banco Promerica Costa Rica | Costa Rica | 2018 | Banking | Loans | 0% | Costa Rica | 99.3 |
| AwanTunai | Indonesia | 2024 | Fintech | Equity | 5-15% | Singapore | 96.9 |
| Evolution Credit | South Africa | 2009 | Non-Bank Financial Institution | Equity | 12% | South Africa | 93.3 |
| Bayport Zambia | Zambia | 2023 | Microfinance | Loans | 0% | Zambia | 92.1 |
| Premier Credit Limited | Kenya | 2024 | Microfinance | Loans | 0% | Kenya | 91.1 |
| Hattha Bank | Cambodia | 2007 | Banking | Loans | 0% | Cambodia | 90.8 |
| Locfund Next (Bridge Loan) | Regional | 2024 | Microfinance | Loans | 0% | Canada | 90.8 |
| MI BANCO | El Salvador | 2022 | Banking | Loans | 0% | El Salvador | 90.8 |
| Integra Partners Fund II | Regional | 2022 | Fintech fund | Funds | 10% | Singapore | 87.4 |
| Accion Quona Inclusion Fund | Global | 2019 | Fintech | Funds | 5% | Cayman Islands | 86.0 |
| Fedecredito | El Salvador | 2016 | Microfinance | Loans | 0% | El Salvador | 85.2 |
| First National Bank | Ghana | 2020 | Banking | Loans | 0% | Ghana | 85.2 |
| Banco Multiple Ademi | Dominican Republic | 2023 | Banking | Loans | 0% | Dominican Republic | 79.9 |
| Finsocial | Colombia | 2022 | Microfinance | Loans | 0% | Colombia | 75.6 |
| KREDIT PLUS | Colombia | 2023 | Other financial services | Loans | 0% | Colombia | 75.0 |
| Desyfin | Costa Rica | 2011 | Non-Bank Financial Institution | Loans Equity | 23% | Costa Rica | 70.8 |
| Wave Mobile Money | Regional | 2022 | Fintech | Loans | 0% | Senegal | 60.7 |
| Advans MFI | Myanmar | 2015 | Microfinance | Loans Equity | 40% | Myanmar | 60.5 |
| Norsad | Regional | 2011 | Non-Bank Financial Institution | Equity | 14% | Botswana | 56.8 |
| Funding Societies | Indonesia | 2023 | Fintech | Loans | 0% | Singapore | 56.8 |
| Softlogic Life | Sri Lanka | 2020 | Non-Bank Financial Institution | Loans | 0% | Sri Lanka | 56.8 |
| Bayport Mozambique | Mozambique | 2022 | Microfinance | Loans | 0% | Mozambique | 52.2 |
| Banco BCT | Costa Rica | 2019 | Banking | Loans | 0% | Costa Rica | 47.3 |
| ARREND | Regional | 2015 | Non-Bank Financial Institution | Loans Equity | 22% | Guatemala | 42.8 |
| FDL | Nicaragua | 2013 | Microfinance | Loans Equity | 13% | Nicaragua | 41.6 |
| Abler Frontier Fund | Global | 2008 | Microfinance | Funds | 45% | Norway | 39.8 |
| Abler Nordic GP IV AS | Global | 2024 | Microfinance | Equity | 20% | Norway | 31.5 |
| Optima | El Salvador | 2019 | Microfinance | Equity | 37% | El Salvador | 30.4 |
| Abler Nordic AS | Global | 2008 | Microfinance | Equity | 33% | Norway | 24.2 |
| Abler Nordic GP IV AS | Global | 2018 | Microfinance | Equity | 20% | Norway | 24.0 |
| Myanmar Finance | Myanmar | 2015 | Microfinance | Equity | 25% | Myanmar | 16.7 |
| Abler Global Fund | Global | 2008 | Microfinance | Funds | 45% | Norway | 15.9 |
| NMBZ | Zimbabwe | 2013 | Banking | Loans | 0% | Zimbabwe | 12.4 |
| Bina Artha | Indonesia | 2021 | Microfinance | Loans | 0% | Indonesia | 10.0 |
| Abler Norwegian AS | Global | 2008 | Microfinance | Equity | 50% | Norway | 10.0 |