The share of the world’s population living in poverty has fallen substantially in the past 30 years. Covid-19 reversed the trend, increasing the number of people living in extreme poverty by 70 million.
Today, an estimated . The global macroeconomic effects of the war in Ukraine are further worsening the situation in developing markets with the combination of these two crises hitting hard.
Key figures clearly show the need for creating jobs, improving access to energy and finance as well as strengthening infrastructure:
- did not have a job in 2023, equating to a global jobs gap rate of 11 percent.
- , mostly in Africa and Asia.
- face a lack of financing options
- from 2.3 billion tons in 2023 to 3.8 billion tons by 2050.
Before Covid the funding gap to reach the UN Sustainable Development Goals for developing countries was USD 2.5 trillion, however the global economic contraction caused by the pandemic is estimated to have increased the gap by at least 50%, putting the
A significant increase in private capital inflows is required to bridge the gap. Norfund is the Norwegian government’s main instrument for strengthening the private sector in developing countries and therefore an important tool to help close this gap.
For the development mandate, Norfund’s mission is to create jobs and improve lives by investing in businesses that drive sustainable development. Read about Norfund and the SDGs here.
Our strategy
2023 marked the beginning of a new strategy period for Norfund. The strategy towards 2026 is anchored in Norfund’s mandate, informed by the UN Sustainable Development Goals, and reflective of the priorities of the Norwegian government’s development assistance policy. Leveraging our position as a responsible minority investor, the new strategy builds upon the elements of the previous period to ensure continuity and utilize our strong track record and competence.
Capital is scarce where other investors are reluctant to invest because of high risk. These two criteria – additionality and impact – remain the backbone of our strategy. Being additional also means adding non-financial value in the form of expertise and active ownership to the investments we make. Through our value-additionality, we can improve both the financial profitability and the development impact of the companies. Norfund believes that targeted asset allocation is the best way to deliver impact, and the strategy underpins this.
Investment areas
Norfund invests in four areas where the potential for development impact is substantial and that are aligned with the SDGs: Renewable Energy, Financial Inclusion, Scalable Enterprises and Green Infrastructure. Access to electricity and finance are crucial for growing businesses. Scalable enterprises are companies with significant potential for growth and job creation, while essential infrastructure is key to the development of sustainable cities.
Investments in these sectors contribute to job creation and improved lives in developing countries. At the start of the strategy period clear impact ambitions were set for each investment department and progress towards these are tracked every year.
The Norfund strategy for 2023-2026 contains ambitions for each investment area to reflect accumulated organic growth (that is, development in the companies after Norfund has invested) on sector-relevant parameters:
- Renewable Energy: 6.5 million new households provided with access to electricity and 6.5 GW new capacity financed.
- Financial Inclusion: NOK 280 billion increase in lending provided and 40 million new unique clients.
- Scalable Enterprise: NOK 3 billion additional revenues generated and 10,000 new direct jobs created. In addition, the ambition for Norfund’s investments through funds are NOK 16 billion additional revenues generated and 70,000 new direct jobs created.
- Green Infrastructure: 50 million m3 water and wastewater treatment capacity enabled, and 20,000 tons of waste treatment capacity enabled.
Norfund has a KPI set out in the statutes that at least 60% of allocated capital from the government over time should be invested in renewable energy. All numbers for development effects are unattributed, meaning they show the total effect of Norfund’s portfolio companies and do not account for Norfund’s ownership stake.
Priority countries
Norfund targets 30 core countries that were selected based on three criteria:
- Competence – Norfund has solid market knowledge of and expertise in these countries.
- Additionality – they have considerable investment needs but few alternative investors.
- Attractiveness – each country has sufficient investment opportunities within Norfund’s investment areas.
Norfund’s strategy gives priority to investments in Least Developed Countries (LDC) and Sub-Saharan Africa (SSA), with targets of at least 33% and 50% of the total portfolio in LDCs and SSA respectively. It is increasingly important to be countercyclical in a world where investors are becoming more risk averse because of the uncertainty of the macroeconomic outlook.

Priority instruments
Norfund provides capital in the form of equity, debt and fund investments. Preference is given to equity investments, as this remains the scarcest form of capital in the developing world. Our provision of debt to financial institutions increases the ability of companies to provide loans to clients.
Debt investments also help diversify Norfund’s portfolio, both in terms of risk and capital reflows. Investing in funds via trusted and skilled partners is a way to channel funds to companies that may be difficult to invest in directly, for example due to size or market and to build competent local fund managers. For the 2023-2026 strategy period, Norfund targets a minimum of 70% equity.
