Norfund’s investees contribute to reducing poverty by creating jobs and increasing government revenues.
Creating jobs for the large number of new workers who will enter the labour market in the years ahead is one of the main priorities for low-income countries. The companies in Norfund’s business areas contribute to job creation through five channels:
- By hiring new workers.
- By purchasing goods and services from local enterprises, and enabling the enterprises to grow and hire more workers.
- By paying wages to workers who then spend the money in the local economy.
- By reducing critical obstacles to the development of other enterprises, such as a lack of electricity or finance.
- By paying taxes that enables the government to increase spending.
The relative importance of each channel differs by sector. Direct jobs are very important in sectors such as manufacturing, for example, whereas indirect job creation is more important in sectors such as tourism. For energy projects, second-order effects are typically the most important. Providing reliable energy supplies makes production more efficient and can therefore help to increase employment.
Development effects 2015
At the end of 2015, 382,000 people were employed in companies in which Norfund had invested, directly or through funds. 34 percent of those employed were women. From 2014 to 2015, the number of jobs in the companies in which Norfund has invested rose by 9 percent.
Our investee companies purchased goods and services worth NOK 22 billion from local suppliers in 2015, thereby contributing further to the growth of these companies.
The energy companies in Norfund’s portfolio produced a total of 18.5 TWh of electricity in 2015 – an amount equivalent to the annual consumption of 25 million people in these markets. By increasing electricity supplies, our investees are making it easier for new firms to be established and for existing firms to expand.
Providing access to finance enables micro-, small- and medium-sized enterprises to grow and hire more workers. At the end of 2015, the financial institutions in which Norfund has invested had issued loans to 36.5 million customers. The microfinance portfolio of the Norwegian Microfinance Initiative (NMI) accounted for 31 million of these customers.
In 2015, Norfund's agribusiness companies cultivated 45,000 hectares of land, and produced 125,000 tonnes of food. About 12,000 smallholder farmers were associated with the enterprises through outgrower contracts or similar arrangements.
12,000 smallholder farmers were associated with the enterprises.