Norfund matched record for investing in developing countries

March 18, 2024

Norfund invested just over 6.5 billion NOK in developing countries in 2023. This is as much as the record year 2022, despite the fall in the world’s total investments.

“We have succeeded in maintaining a high level of our contributions to creating more jobs in some of the most challenging countries where high risk makes many investors hesitant to invest,”

Tellef Thorleifsson, CEO in norfund

Total foreign direct investment to developing countries fell last year by 9% to $841 billion, with a drop of 12% in developing countries in Asia and 1% in Africa, according to a report by UNCTAD.

Norfund’s investments have seen steady growth in recent years, despite demanding times characterized by, among other things, the pandemic. In 2020, investments increased by 20%, in 2021 by 10% and in 2022 by another 20%. In 2023, the record level of 6.5 billion from the year was thus maintained. Norfund’s total committed portfolio was 36.2 billion at the end of the year.

Invests 2.5 times the amount transferred from the state

Over the past two years, Norfund has received 1.68 billion for the fund’s development mandate and one billion for the Climate Investment Fund over the aid budget. The total annual investments are now 2.5 times the amount transferred from the state budget, as a result of freed up funds from returns and sales.

– By investing instead of giving the money away, we mobilize private capital and use the same funds several times, so we can help fight more poverty and climate change, says Thorleifsson.

Norfund was given responsibility for the new Climate Investment Fund aimed at avoiding emissions in developing countries in 2022. In 2023, Norfund invested 1.6 billion over this mandate in renewable energy in countries with a particularly high proportion of fossil energy in existing and planned power production.

– The need for capital for renewable energy in these markets has grown further as a result of more expensive capital and high gas prices, and we see great opportunities to make a significant difference, says Thorleifsson.

Over half of the investments goes to Africa

Above the development mandate, Norfund invested a further 1.4 billion in renewable energy. Norfund invested 2.3 billion in companies within financial inclusion, 812 million in companies within agriculture and industry, and 412 million in local and regional funds that invest directly in companies.

51% of Norfund’s investments over both mandates in 2023 went to Africa, 34% to Asia and 16% to Latin America. Of Norfund’s total committed portfolio, 62% was in Africa at the turn of the year.

– Through investments that provide access to energy and capital, as well as direct ownership in companies, we see that we can contribute to fighting poverty in an efficient, sustainable and scalable way, says Thorleifsson.