In 2017 Norfund proudly celebrates twenty years of developing economic growth in poor countries.
The Norwegian Investment Fund for Developing Countries (Norfund) was established by the Norwegian Government (Storting) in 1997.
The initial proposal to establish Norfund was submitted to the Storting as a separate matter in Proposition No. 13 to the Odelsting chamber (1996-1997), and the Norfund Act was approved on 9 May 1997 (No. 26). The proposal was based on recommendations from the “North-South aid commission” (NOU 1995:5), who argued for the establishment of an investment fund for private sector development, as a new important tool in the Norwegian development aid policy.
Developing a strategy with concentration on country, sector and instrument
The intention was to establish a Norwegian Development Finance Institution (DFI) that could contribute to economic growth and poverty reduction in developing countries through private sector investments. It was decided that Norfund should to operate in countries with limited access to commercial finance. Its role was to be additional - investing in areas where commercial entities were abscent because of high risk, and catalytic - encouraging for commercial investors to invest in developing countries together with Norfund.
During the first years of existence, Norfund invested in several developing countries and in a large variety of sectors.
In 2007, the newly elected Norfund board and CEO designed a new and more focussed investment strategy. The main elements of the strategy were geographic and sectoral concentration, as well as prioritization of equity as the principal instrument. This strategy has remained relatively stable since 2007, albeit with some adjustments over time. Financial institutions and renewable energy has been priority sectors during the whole period. Food and agribusiness became the third priority sector in 2011, and a 2012 revision of the strategy placed greater emphasis on building up expertise and a stronger regional presence. The emphasis on additionality in every investment has also been increased. Geographically, East and Southern Africa, Central America and selected countries in South-East Asia are prioritized regions. From 2016 the geographic area has been extended to include Ethiopia, Somaliland and gradually also West Africa.
Since its establishment, Norfund’s annual investment portfolio has increased to NOK 15,1 billion by the end of 2015. Norfund is fully funded and owned by the Norwegian Government through the Ministry of Foreign Affairs.