Letter of the Management Board

From left to right: Huib-Jan de Ruijter, Fatoumata Bouaré, Peter Maila, Michael Jongeneel, Franca Vossen

Ambitious choices in critical times

2022 was a year of upheaval. The Ukraine war – first and foremost a humanitarian disaster – led to political and economic crises across the region and beyond. Inequality rose, the climate crisis continued to unfold, and a global recession began to loom, pushing an increasing number of vulnerable people into food insecurity, reduced energy access and poverty. Combined with the fact that climate change disproportionately affects low- and middle-income countries – with the floods in Pakistan as an example – countless communities and countries face an even bleaker outlook. Since then, we have unfortunately also seen the devastating impact of the earthquakes in Turkey and Syria. Our hearts go out to the victims and all who have been affected, including our colleagues and customers with ties to the region.

At FMO, we believe that - in these critical times - we need to make ambitious choices to create more impact by better serving our customers and taking risks that commercial parties are not (yet) willing to take. FMO supports the private sector in low- and middle-income countries to contribute to inclusive and sustainable economic growth. Equally important is that we follow a pathway towards lower greenhouse gas emissions and climate-resilient development. By attracting commercial parties to invest alongside FMO, we contribute towards the "billions to trillions" agenda that is needed in development finance to reach the SDGs and improve the lives of people who need it the most.

Coming out of a two-year period of heavy measures to curb the global pandemic, we set three strategic priorities for 2022: building back business, adapting to regulatory changes, and accelerating the development of our organization.

Building back business

Our focus was on enabling entrepreneurs and the communities they serve to regain their bearings after the COVID-19 crisis.

Impact and investments  

Some of our high impact investments in 2022 included:

  • Showing our support for the Ukrainian economy. We committed US$20 million to Horizon Capital Growth Fund IV (HCGF IV), which invests in fast-growing tech and export-oriented companies in Ukraine and the surrounding region.

  • Supporting Treevive, a carbon development platform, through the UK Government Mobilising Finance for Forests fund. The US$2.5 million facility enables the platform to develop and market natural climate solutions and improve the pipeline for investors looking for tropical forest projects.

  • Contributing to the largest solar power project in Egypt. We supported Abydos Solar Company – subsidiary of our existing customer AMEA Power. The company will develop, build, and operate the project, which will generate power priced at the lowest rate in Africa and among the lowest in the world.

  • Joining an international equity investment in Sahyadri Farms. This farmer-led organization started in 2010 as an initiative of 10 Indian farmers to collectively produce and export fresh grapes to Europe and grew into the leading fruits and vegetable export and processing company that Sahyadri Farms is today. The equity investment will support Sahyadri Farms to reach even more farmers and set a blueprint for further growth in the industry.

  • Issuing the first ever synthetic Sierra Leonean bond. FMO together with TCX, showed there is a viable way to finance the SDGs in local currency by allowing risk to be transferred from borrowers that cannot and should not bear it, to investors looking for the risk and return of frontier currency debt.

  • Arranging a US$116.75 million syndicated loan for our long-standing customer Banco Pichincha in Ecuador. The loan will be dedicated to financing women-owned SMEs and financing green customers or projects. Banco Pichincha is a pioneer in financial inclusion with a well-defined gender strategy, as well as a leader in sustainability that has signed the UN Principles for Responsible Banking and joined the Net Zero Banking Alliance.

For 2022, we set ambitious targets for our total new investment volume of approximately €2.8 billion of new investments. While our overall portfolio grew, we ended the year at €2.4 billion, nearly €500 million higher than the year before. The €2.4 billion constitutes of €1.8 in FMO investments, €153 million in public funds' investments and €457 million in mobilized funds' investments.

Our impact targets were also ambitious. At year-end, we report mixed results. With respect to reduced inequalities (RI), our overall RI-labelled total committed portfolio amounted to €4,453 million, which is above our target of €4,275 million. We achieved €810 million in RI-labelled new investments, which fell short of our €1,105 million target. This can be attributed to several factors including (i) political unrest in a number of least developed countries which resulted in an even more challenging investment climate as well as (ii) the longer lead time it takes to develop these projects post-COVID. With respect to contributing to climate action, our Green-labelled total committed portfolio amounted to €4,427 million, above our target of €4,310 million. This was, among others, driven by an increase in Green-labelled new investments which came in at €1,003 million compared to a target of €1,070 million. This is nearly twice as much as we achieved in 2021.

In addition, we achieved several important milestones to advance our impact, including:

  • Increasing our local presence to manage risk and further connect with local communities. We see local communities as invaluable partners in the impact development process and NGOs as important knowledge partners on local community needs. In 2022, we opened a new regional office in Costa Rica covering Latin America and the Caribbean. We closed our office in Singapore, while we review our options for local representation in Asia;

  • Revising our Customer Disclosure Policy. Upon implementation in 2023, this will increase project level transparency and deliver a better flow of information to stakeholders, including local stakeholders on the ground;

  • Committing to a new Position Statement on Impact and ESG for Financial Intermediaries. It describes our approach to financing and our risk appetite with respect to working with financial intermediaries towards compliance with ESG standards;

  • Publishing our Climate Action Plan, which provides a framework to fulfil our SDG 13 objectives and our commitment to a just and inclusive transition. We aim to reduce emissions in our power generation portfolio by 50 percent by 2030 in line with our commitment to phase out fossil fuel finance in our direct investments;

  • Launching the Joint Impact Model (JIM) Foundation, which aims to increase transparency on key impact indicators in developing countries in a harmonized way.

At FMO, we need to and want to continually improve the way we work. Lessons learned from the more complex projects help us do that, for example from Plantations et Huileries du Congo S.A (formerly known as Feronia), which we exited in February 2022. Another complex project, Agua Zarca, saw new developments in June, related to earlier legal proceedings. More information on both projects and how we improved our impact approach can be found on our website. We value the ongoing engagement with civil society and other stakeholders as this helps us broaden our views and look at impact from multiple perspectives.

Financial results  

Turbulent global macroeconomic conditions impacted FMO's overall financial performance significantly by reductions in equity valuations and an increase of loan impairments. As a result, over 2022, we report a net profit of €1 million. The war in Ukraine, the economic and political crisis in Sri Lanka, as well as the political unrest in Myanmar, all had a profound influence on people's livelihoods, affecting our customers in these geographies as well. Our non-performing loans (NPL) percentage increased from 9.5 percent in 2021 to 11.9 percent in 2022, with the three before-mentioned countries accounting for almost 31 percent of this total (just over €200 million).

Since the implementation of accounting standard IFRS 9, our financial results have been more volatile, as the fluctuations of the valuation of our equity investments are reflected in the profit and loss. The income generated through our loan portfolio, however, more than sufficiently covered our operating expenses.

Adapting to regulatory changes 

Compliance with current and new regulations is an ongoing priority for us. In 2022, we further invested in our risk and compliance framework and took steps to strengthen our organizational risk culture. We kept on track with key regulatory projects such as the LIBOR transition and made progress toward the implementation of the EU’s Sustainable Finance Disclosure Regulation (relevant for the FMO Investment Management funds) and the European Central Bank (ECB) requirements related to the disclosure of climate-related risks.

As progress towards our focus SDGs can be severely hampered by financial economic crime (FEC), we take our role as gatekeeper to the financial system very seriously. In 2020, we launched the Financial Economic Crime Enhancement program to ensure full compliance with the Anti-Money Laundering and Anti-Terrorist Financing Act (in Dutch: Wwft) and the Sanctions Law. We finalized this program at the end of 2021, including the related KYC file remediation.

In 2022, we initiated a follow-up on the recommendations the Dutch Central Bank (DNB) gave in its conclusions and observations, which included acknowledgement of the improvements we made. We have further enhanced our KYC capabilities by embedding the KYC department in the frontline of the investment process, giving KYC a natural position in any project decision.

As a result of the file remediation, we reported a limited number of incidents to DNB at the end of 2021 and the beginning of 2022. These involved late notifications of unusual transactions to the Financial Intelligence Unit (FIU). DNB initiated an investigation into these incidents and the related KYC files. We expect this investigation to result in enforcement measures by DNB.

Accelerating organizational development 

We continued to focus on staff wellbeing and engagement. For instance, we are increasing awareness on mental health in the workplace, offering counselling and training if needed. We introduced the ‘Future of work’ policy, a pilot designed to facilitate hybrid and flexible ways of working in a post-COVID-19 environment. Working remotely abroad is now formalized, providing opportunities for our employees to e.g., spend more time with family abroad.

The focus on wellbeing and engagement is especially important, as FMO is growing the number of employees; we are expanding our team to meet the increased workload related to our rising ambitions and the expectations of our stakeholders. Additionally, we have changed our way of working to fulfil our above-mentioned KYC-objectives and will continue to enhance our KYC capabilities to keep up with our ambitions and requirements.

To further facilitate the growth of and changes within our organization, we are increasingly streamlining our processes and increasing our efficiency. In 2022, we hired a director Business Process Transformation, and together with his team, he will guide our digitalization program and internal efficiency improvements. A core priority for 2023, this multi-year program will start with optimizing efficiency in our investment processes. Additionally, we will implement an agile way of working and effectuate significant upgrades to our IT systems.

We realize that absorbing all these and other changes as an organization can sometimes be challenging. As Management Board, we do our utmost to facilitate this, while keeping an eye on the capacity and wellbeing of our colleagues, and setting priorities and giving guidance where needed. Change is never easy, and we are thankful to our staff for being flexible and for their continued focus on making impact.

In 2022, we completed the expansion of the Management Board from three to five members in December. In September, Franca Vossen joined us as Chief Risk Officer. In December, Peter Maila joined us as Co-CIO next to Huib-Jan de Ruijter, now also Co-CIO. As of September, Fatoumata Bouaré, FMO’s Chief Risk & Finance Officer since 2017, continued as Chief Finance & Operations Officer. With these changes, we believe the Management Board’s capacity will be better aligned with the size and complexity of the organization.


In close collaboration with our stakeholders, we updated our strategy toward 2030, titled ‘Pioneer – Develop – Scale’, derived from our so-called ‘progression model’. This model shows our long-term commitment to companies, supporting them from an initial high-risk phase to the point where commercial investors can (partially) take over financing from FMO.

While we concluded that the direction of our previous strategy was right, we added focus and a clear ambition to maximize our impact. By 2030, our ambitious goal is to have realized ten meaningful innovations, and to have an investment portfolio of at least €10 billion in both SDG 10 and SDG 13. Our investments in SDG 10 are aimed to contribute towards economic inclusion, increase gender-lens investments, and focus on least developed countries and fragile states. Our investments in SDG 13 will focus on climate mitigation, adaptation, resilience and biodiversity, as well as reaching a net zero portfolio by 2050 through a just and inclusive transition. We also expect to have doubled our public and mobilized portfolios.

To achieve these ambitious goals, we need more bankable opportunities in emerging markets. Hence, we added market creation to our focus: we will structurally approach market creation and develop bankable opportunities in nascent and fragile markets. We will enable ecosystem development, intensify our partnerships and strengthen business development by working together with local partners such as civil society organizations, incubators, accelerators, business networks, and universities.

We are setting yearly ambitions to step-by-step together further strengthen our organization. For 2023 the focus lies on growing impactful business, on continuing to ensure that our regulatory foundation is solid and on improving our capabilities. The latter ‘pillar’ focuses specifically on enhancing efficiency/digitalization, as mentioned above, and on further developing our people’s skillsets and capabilities. Now that the Quality of Direction – our long-term strategy and its implementation plan – has been renewed, we will zoom in on the Quality of our Interaction, how we work together to maximize our impact. We will do this – amongst others – by further embedding the desired behaviors related to FMO’s values within the organization and through senior leadership development, as we acknowledge the importance of role modelling.

Given the current geopolitical conflicts, high levels of inflation and threat of a global recession, the global outlook remains uncertain. While achieving growth and maximizing our impact will be challenging, we see it as our role to be countercyclical and focus on the long term, to invest when others shy away. Ultimately, it is people in emerging markets who suffer the most and we are driven and determined to do everything in our power to support them.

Fatoumata Bouaré, Chief Finance & Operations Officer
Franca Vossen, Chief Risk Officer 
Huib-Jan de Ruijter, Co-Chief Investment Officer
Michael Jongeneel, Chief Executive Officer
Peter Maila, Co-Chief Investment Officer