New development policy investment strategy emphasises mobilisation of private capital

The Ministry for Foreign Affairs has adopted a development policy investment strategy for 2025–2027. The strategy guides the use of the appropriation allocated to development policy loans and investments in accordance with the Government Report on International Economic Relations and Development Cooperation. The general terms and conditions for development policy loans and investments are published concurrently with the strategy.

The aim of development policy investment in 2025–2027 is to mobilise private capital for responsible and financially sustainable business activities and investments in developing countries. This is to support sustainable development in line with Finland’s development policy. More detailed development impact objectives and target countries are determined on an investment-by-investment basis. 

“Only a small proportion of the financing needed to implement the sustainable development goals can be covered through official development assistance. By leveraging private capital, we can achieve greater impacts and more jobs,” says Minister for Foreign Trade and Development Ville Tavio.

Investments are used to channel financing to businesses and investments that do not receive commercial financing due to gaps in the financial market. These may include early- and growth-stage businesses and small and medium-sized enterprises that create development impacts as well as investments requiring long-term risk capital, for example, that use new technologies or service models. The aim is to also look for opportunities to promote the reconstruction of Ukraine.

Sectors in which Finland and Finnish businesses can offer expertise and technology will be prioritised in this strategy period. Opportunities are seen in investments that promote, among other things, the clean transition, circular economy and digitalisation.

The Ministry for Foreign Affairs’ main partners in development policy investments are international development banks and other development finance institutions. The possibilities of investing in funds managed by private asset managers will also be looked at in this strategy period. Relating to this, the Ministry for Foreign Affairs is carrying out a legislative project to reform the legislation on development policy loans and investments.

Development policy loans and investments are part of Finland’s development cooperation. Contrary to other development cooperation appropriations administered by the Ministry for Foreign Affairs, they have a yield and reflow expectation set for them by Parliament. This means that the invested capital is expected not only to create development impacts but also to flow back to Finland with a nominal yield.