1. Why Invest in Financial institutions

2. How financial institutions contribute to development
Access to finance
Employment
Corporates
> 300 employees
Medium-sized businesses
50 – 300 employees
USD 3 – 15 mill in revenues
Small businesses
10 – 50 employees
USD 0.1 – 3 mill in revenues
Microenterprises
< 10 employees
Poverty reduction
Banks
More than 50% of SMEs identify access to finance as a key constraint
The missing middle
Creating jobs in economically sustainable businesses
Total credit gap USD 1.3 trillion
Increased tax base
Micro-
finance
SMEs %of jobs less in dev.countries than in Developed countries
From informal to formal sector, pay taxes
Source: World Bank

3. Core norfund focus : funding of sme-banks
Few pure SME-banks
Several inhibitors for SME-banking
Norfund contribution
Corporate banks
Microfinance banks
Non-bank FIs
… seen as a growth area
Different skill set required
Bank access to finance
Bank ownership
Regulations
Training support
Stable long-term funding
Active ownership
Influence strategy
Governance and compliance
We look for the players we believe will be the winners in this segment
Financial success and development effects are interrelated
SMEs ~50% of jobs
From informal to formal sector, pay taxes

4. Critical to reduce the large unbanked population
Opportunity for banks
Served by microfinance
Subscale and inefficient
Limited product offering
Banks have been reluctant
Too costly to serve
New distribution channels
Mobile and agency banking
Cheap funding
Reduce foreign reliance
Upsell opportunities
Growth business
70-80% of adult population unbanked
Informal sector
Economically inefficient
Norfund’s contribution
Finance mass market banking
Deposit taking microfinance
Electronic distribution channels
“Stamp of approval”
SMEs ~50% of jobs
From informal to formal sector, pay taxes

5. Current norfund fi portfolio
Direct Norfund
30 loans
9 equity investments
4 FI funds
Nordic Microfinance Initiative
About 10% of Norfund FI portfolio
MFIs in Africa and South Asia
Arise
About 50% of Norfund FI portfolio
10 banks in Sub-Sahara Africa
MNOK
3 240
MNOK
1 220
MNOK
590
Asia
Central America
Africa
COMMITMENTS
5,048 MNOK
(~650 MUSD)
SECTORS
as of