Naana Winful Fynn: Norfund to Drive Sustainable Development in Nigeria through Private Sector Investment

Nigeria’s current economic landscape is characterised by both challenges and opportunities. On the one hand, the country is facing a number of headwinds, including high inflation, unemployment, and foreign exchange shortages. On the other hand, Nigeria has a large and young population, a growing middle class, and several untapped resources. Despite these challenges, there are many development financial institutions (DFIs) that are working to support businesses in Nigeria by supporting businesses that create jobs, improve lives, and protect the environment. One such is Norfund, the Norwegian Investment Fund for Developing Countries. In this interview with Naana Winful Fynn, Regional Director – West Africa of Norfund, she highlights the fund’s focus on investing in businesses and projects with strong developmental impact and commercial returns. Precious Ugwuzor brings excerpt 

Can you share an overview of Norfund and the role it plays in sustainable development?

Norfund, also known as the Norwegian Investment Fund for Developing Countries, is a state-owned investment fund based in Norway. It was established in 1997 to promote sustainable economic and social development in developing countries. Norfund is owned by the Norwegian Ministry of Foreign Affairs and operates under the guidance of the ministry.

Our primary role is to provide investment capital and expertise to businesses in developing countries and markets that would otherwise have struggled to obtain financing. We focus on investing in profitable and sustainable companies that have a positive impact on economic growth, job creation, poverty reduction, and transition toward a more sustainable and inclusive economy in these countries. We primarily target sectors such as renewable energy, financial services, agribusiness and manufacturing, and green infrastructure.

We play a crucial role in sustainable development by addressing the funding gap faced by businesses in developing countries. We provide long-term risk capital, including equity, mezzanine, and debt financing, to support the growth and expansion of enterprises. 

Moreover, we place a strong emphasis on environmental and social sustainability in our investment decisions. We assess potential investments based on their environmental and social impacts, aiming to support projects that promote sustainable practices, resource efficiency, and social responsibility. This approach ensures that our investment contributes to sustainable development goals (SDGs) while generating financial returns.

Additionally, we collaborate with local partners and stakeholders to build capacity, transfer knowledge, and foster sustainable business practices in the regions where we operate. We seek to promote good governance and support the development of vibrant private sectors.

What are some of the businesses Norfund has invested in or partnered over the years in Nigeria and West Africa?

We have made several investments and partnerships in Nigeria and other countries in West Africa. We recently invested in OH Ecosystems Ltd, a player in Sub-Saharan Africa’s cocoa processing and confectionery industry. The company recently successfully acquired a majority stake in FTN Cocoa Processors Plc, and our investment will go toward upgrading FTN’s facilities and extending its reach to produce and sell additional products into the cocoa supply chain.

We also committed to investing in WeCyclers, a for-profit social enterprise operating in Nigeria focusing on waste management and recycling with the aim of promoting environmental sustainability, improving waste management practices, and creating economic opportunities for low-income communities. Our investment will finance a new plant for the recycling of PET bottles for use locally and in Europe.

In 2017, we made an initial commitment to Sundry Foods, a leading indigenous food services company that operates bakeries, canteens and the ‘Kilimanjaro’ Quick Service Restaurant Food chain across Nigeria. Since our initial investment, the Company has grown its footprint to over 180 QSR outlets across the country.

Through our Frontier Facility, Norfund invested in Arnergy Solar, an early-stage solar systems provider that provides solutions for residential, commercial and industrial clients. Norfund has been a shareholder in Arnergy since 2019. We have also exited two investments in Nigeria; an investment in Starsight (2017 & 2022), a C&I solar power provider; and Access Bank Nigeria (2017).

Across other West African countries, some selected investments include Miniplast Ghana Ltd (2023), CBI Ghana Limited (2022), Nouvelle Mici Embaci [NME] (2023), CIV (2022), First National Bank Ghana (2020), Ecobank Transnational Incorporated (2021), AktivCo (Solar Power, 2021), and Baobab+ (Solar Power, 2021).

The mission to create jobs and improve lives is a challenging mandate due to its scope. What specific investment areas does Norfund focus on? 

We focus our investments in Sub-Saharan Africa across various sectors that align with the United Nations SDGs. Some of our key investment priorities in the region include renewable energy, financial institutions, agribusiness, manufacturing, and green infrastructure. We place a strong emphasis on investing in renewable energy projects such as solar, wind, hydro, and geothermal power. These investments contribute to SDG 7 (Affordable and Clean Energy) by increasing access to reliable and sustainable energy, reducing greenhouse gas emissions, and promoting climate change mitigation.

We invest in financial institutions such as banks, microfinance institutions, and fintech companies. These investments promote SDG 8 (Decent Work and Economic Growth) by expanding access to financial services for underserved populations, fostering entrepreneurship, and supporting the growth of small and medium-sized enterprises.

We support agribusiness investments that promote sustainable agricultural practices, increase food production, and improve food security. These investments align with SDG 2 (Zero Hunger) by enhancing agricultural productivity, promoting sustainable farming methods, and supporting rural livelihoods.

By investing in manufacturing businesses, we aim to support local industries, enhance productivity, and foster economic diversification. These investments can contribute to value addition, technology transfer, and the development of local supply chains. Our investments in the manufacturing sector may cover various subsectors, including but not limited to textiles and apparel, food processing, consumer goods, and industrial equipment.

Lastly, we invest in green infrastructure projects such as waste management, including waste-to-energy, and water supply and sanitation, including waste-water treatment. These investments contribute to SDG 11 (Sustainable Cities and Communities) by improving the sustainable growth of cities and towns, reducing adverse environmental impact and improving people’s standards of living in the region.

Through our investments in these key sectors, Norfund aligns with multiple SDGs, including but not limited to SDG 7, 8, 9, 2, and 17. Norfund’s focus areas contribute to poverty reduction, inclusive economic growth, improved access to essential services, and sustainable development in Sub-Saharan Africa, in line with the broader global agenda set by the United Nations.

How does Norfund’s investment strategy in the region differ from its investment strategy in other countries/markets?

Irrespective of region, Norfund’s strategy is led by its mission to provide sustainable economic development in developing countries. Norfund’s Development Mandate is consistent across all our investment departments, with Scalable Enterprises being the only department with a specific regional focus (Sub-Saharan Africa).

That said, we utilise the local context of our West African team to better understand local market dynamics, assess risk and identify specific sector opportunities. This local market knowledge, coupled with our overall strategic focus on promoting sustainable development, allows us to effectively have the positive impact that we seek to make in West Africa.

As a responsible investor, how does Norfund address cross-cutting issues in its investments?

Norfund has recognised four main areas of concern that need to be considered in our projects, i.e., Gender Equality, Human Rights, Climate and environment, and Corruption Prevention.  As a responsible investor, we look to take an active role, bringing value to our portfolio companies in terms of Environmental, Social, and Governance (ESG) performance through the following approaches – board representation, capacity building, ESG integration, knowledge sharing, and stakeholder engagement.

Kindly expatiate on Norfund’s additionality framework and how the fund adds value beyond capital.

Norfund’s mandate requires that our investments are both financially and value-additional. Financial additionality is gauged on whether our investments are in underserved, risky, capital-constrained markets that not only provide much-needed development financing but also help mobilise other private investors.

Norfund’s role in the market is to provide support to companies beyond our financing – we typically like to take a hands-on role in our investments, contributing with our expertise in various verticals of a business, particularly on the Environmental, Social and Governance fronts. We also have a Business Support facility that provides technical financing assistance to our portfolio companies to undertake non-commercial projects and initiatives that are ultimately beneficial to the investee company.

What are Norfund’s plans for expanding its investments in Nigeria and the West African region?

Nigeria is a very important market for Norfund – we believe that it is a market that is brimming with potential. We will continue to invest across all our investment sectors, i.e., Renewable Energy, Agribusiness and manufacturing, Financial Inclusion and Green Infrastructure, to promote sustainable development and private sector development within the region. 

We are actively looking to build pipelines and support businesses that are aligned with our mandate not only in Nigeria but across the entire West African region. 

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Through our investments in these key sectors, Norfund aligns with multiple SDGs, including but not limited to SDG 7, 8, 9, 2, and 17. Norfund’s focus areas contribute to poverty reduction, inclusive economic growth, improved access to essential services, and sustainable development in Sub-Saharan Africa, in line with the broader global agenda set by the United Nations.