FMO: Building Prospects: Enabling high impact for people
New name and mandate for the Infrastructure Development Fund (IDF)
The Dutch Ministry of Foreign Affairs renewed the mandate of FMO’s Infrastructure Development Fund (IDF) and topped the fund with EUR 100 mln. A new strategy has been formulated as part of the mandate renewal, directing investments to agribusiness, infrastructure and climate change mitigation and adaptation. The fund will continue under a new name: Building Prospects.
Every country needs roads, ports, railways, sanitation, energy and communication systems to prosper and provide a decent standard of living for their population. That’s why in 2002 the Dutch government and FMO established the MOL Fund (Minst Ontwikkelde Landen, later called the Infrastructure Development Fund or IDF). The Fund was specifically designed to facilitate basic infrastructure services as they often lead to direct and immediate impact on economic growth, employment, empowerment and poverty reduction.
At the end of 2018, IDF received a new mandate from the Ministry of Foreign Affairs including a top-up of EUR 100 mln. Coupled with its renewal came a new and broader funding strategy, and with it, a new name: Building Prospects.
Linda Broekhuizen, Chief Investment Officer at FMO: “Building Prospects is designed to drive private sector development through the creation of reliable infrastructure in many sectors, including agribusiness, energy, transport, ports, water, and social infrastructure. It follows an inclusive approach to reduce – particularly gender - inequality by financing companies that serve people at the base of the pyramid. Each Building Prospects investment is additional, providing funding for initiatives that the market cannot fulfil due to elevated risk.”
Building Prospects first and foremost drives job creation through private sector development, amongst which the agriculture sector. Creating jobs here is the most effective way to strengthen local economies and reduce inequality, particularly for those at the base of the pyramid (often women). Investing in the development of infrastructure related to agriculture relies on a strong enabling environment with proper access to natural resources, electricity and logistics.
In addition, Building Prospects aims to mitigate the effects of climate change. Creating a robust private sector means taking into account climate change. As climate change tends to strongly affect low income countries, investees need to strengthen their ability to reduce GHG emissions and / or adapt to the consequences of climate change. The fund has an official climate marker, indicating that it contributes to the climate goals set by the Dutch Government.
Director Sustainable Economic Development at the Ministry of Foreign Affairs, Hans Docter: “The Sustainable Economic Development Department of the Ministry of Foreign Affairs views the development of good infrastructure as one of the most important enabling factors for generating sustainable, inclusive economic growth in developing countries. FMO has an excellent track record in investing in private infrastructure projects in the developing world, thereby contributing to sustainable economic growth, and, most importantly, jobs. We are proud to announce that Building Prospects will continue to do so and will expand its infrastructure investments in the years to come. In that way, the fund will contribute to eradicating the root causes of poverty in the developing world, which is one of the central priorities of Minister Kaag for Foreign Trade and Development Cooperation.”
With Building Prospects, we can invest early on, take high risks and in doing so, realize projects with high development impact that would otherwise not have been bankable.