The state has funded Finnfund annually through equity financing and sometimes also through loans. The Ministry for Foreign Affairs has not prepared a strategy regarding the extent to which Finnfund’s state funding can be or is intended to be increased. Ownership steering should set limits on Finnfund's funding and take into account the risks caused by the ownership to the state.
Finnfund provides companies operating in developing countries with financing, loans and investment-related special expertise. Finnfund’s funding comes from the State of Finland, the private capital market and the returns on its investments. Finnfund makes annually around 20–30 new investments, totalling approximately EUR 200–250 million. At the end of 2021, the balance sheet value of its investment assets amounted to EUR 657 million.
The audit examined the possibilities of Finnfund’s investment activities to achieve the objectives set for them and whether the company’s risk management is sufficient so that its investment activities do not cause avoidable costs and risks to the state. The audit also examined how the ownership steering by the Ministry for Foreign Affairs has promoted the company’s objectives and risk management.
The state has provided Finnfund annually with additional funding. Funding provided in the form of a convertible bond is considered a financial investment and thereby expenditure falling outside the spending limits. This may result in the loan financing of Finnfund being favoured over the financing of such policy measures aiming at corresponding development impacts that are financed within the spending limits. Measures aiming at similar objectives should be compared genuinely with each other, and the most effective means of achieving the objective should be selected. The Ministry for Foreign Affairs should also plan to what extent Finnfund’s state funding can be increased.
The ownership steering of Finnfund focuses on the setting of objectives and on assessing their achievement. The ownership steering should also pay attention to the financial and other risks caused by Finnfund’s activities to the state. For example, it would be good to assess the liabilities arising from the policy line in the Government Programme on ensuring that sufficient resources are budgeted for Finnfund.
The monitoring of the development impacts of Finnfund’s investment activities is based more on quantitative statistics on the activities of the target companies than on the impacts of the activities. The ex-ante assessment of Finnfund’s development impacts has improved in recent years, but the role of development impacts in the making of project decisions could be further strengthened. The financial profitability of the project has the most significant steering effect on the project selection. In most cases, the financed companies primarily seek financial profits, and the desired development impacts are considered to arise when the project meets Finnfund’s requirements for location, sector and sustainability.