The problem                   

The financial sector in low- and middle-income regions is underdeveloped in its depth, inclusion, and the relevance of the products on offer. This prevents firms and individuals from meeting financial needs, such as capitalising on business opportunities, investing in home construction or education and confronting shocks. Only 21 percent of firms in Sub-Saharan Africa have a bank loan/line of credit, and 67 percent of the adult population in the region are unbanked. Investments in financial institutions are clearly needed.

The potential demand for MSME finance in low- and middle-income economies is estimated to be USD 8.9 trillion, but the current credit supply is only USD 3.7 trillion. Despite these needs and the potential opportunities, private investors are often discouraged from investing in financial institutions because of the reputation and perceived financial risk.


Link to SDGs                      

Norfund’s investments in financial institutions contribute directly to the following targets of the SDGs:

8.10: "Strengthen the capacity of domestic financial institutions to encourage and expand access to banking, insurance and financial services for all" and

9.3: "Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets". 

SDG 8.10SDG 9.3


Results 2018

Norfund’s impact objective for the business area is twofold; increasing the provision of financial services and increasing the provision of credit to clients. This enables economic growth and job creation in low- and middle-income regions, and helps to improves living standards.

  • Increased provision of financial services: At the end of 2018, Norfund had helped to strengthen the capacity of more than 100 financial institutions, either directly or through funds. In 2018, the direct investments in our portfolio provided services to 22.6 million clients. Institutions with two consecutive years of reporting increased the total number of clients by 1.8 million (10 percent) during 2018.
  • Increased provision of credit to clients: The combined loan book of the financial institutions reached a total of NOK 274 billion by the end of 2018. Together, these institutions have provided 3.9 million loans to clients; 2.1 million loans to retail clients, 1.4 million loans to microenterprises, and 300,000 loans to SMEs. Institutions with two consecutive years of reporting have increased their credit provision by NOK 24 billion (17 percent) since 2017.
  • The financial institutions in which we have invested through funds have provided an additional 10.1 million loans to clients. 9.3 million of these loans were to microfinance clients.