news - Evaluation by Dutch State: FMO provides much-needed flexible and long-term financing


Evaluation by Dutch State: FMO provides much-needed flexible and long-term financing

April 8, 2021

The Dutch State evaluated FMO. The findings underwrite the need for FMO’s funding and recognize FMO as a leading organization in the Environmental & Social (E&S) arena.

Every five years, the Dutch State – the 51 percent shareholder of FMO – evaluates if FMO lives up to its mandate, following article 11 of the Agreement signed in 1998 between the State and FMO. This evaluation measures the achievement of our strategic objectives of development impact, additionality and mobilization of capital, while putting strong attention to the management of environmental and social issues. This assessment mainly concerns FMO-A, FMO’s investments made through our own balance sheet.

The evaluation for FMO-A covering the period 2014 to 2018 was recently completed. The Dutch State commissioned Itad, a specialist consultancy firm focused on monitoring and evaluating the impact of international development, to complete the evaluation. They reviewed 30 sampled investments in detail and conducted four country case studies to assess how FMO’s policies and principles are operationalized in practice. FMO’s Environmental and Social (E&S) policies and processes were also benchmarked against peer organizations.

In line with our strategy

The evaluation results confirm that the portfolio developed in line with our strategy and the Dutch development cooperation policy, especially regarding increasing our lending in Africa. We are pleased with the recognition of FMO's additionality to the markets by providing much needed flexible and long-term financing for our customers, which is even more relevant in these times of crisis. The findings also underscore FMO's experience in blended finance (a combination of development finance and concessional funds) and the capacity to mobilize private capital from institutional investors.

FMO highly appreciates the recognition as a leading organization in the E&S arena, which has been researched thoroughly in this evaluation. An essential aspect of our E&S strategy is the incremental approach we take with clients whereby we aim to improve the conditions in the company over the course of the investment. For FMO, this approach is central to the long-term success of the companies in which we invest.


The evaluation also provides recommendations in areas where FMO can improve. We take these very seriously and our follow up is explained in full in the management letter (see below for link). Key recommendations relate to further developing and broadening the framework for impact measurement, deepening local partnerships, and potentially opening more local offices. Another suggestion relates to how FMO assesses additionality. Where alternative finance was available on less favorable terms, it is important to specify why better terms are needed.

On ESG (Environmental, Social, and Corporate Governance), the evaluation recommends developing a self-reflective approach. FMO should engage with a wider range of stakeholders, particularly in partner countries, examine the trade-offs facing FMO, and communicate the value of its incremental approach to E&S more clearly. The evaluation also recommends improving the awareness of the Independent Complaints mechanism and internal monitoring and communication of progress of issues projects.

Read here the full evaluation report (pdf)

Read here FMO’s management letter (pdf)


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