Efficient fund management and project implementation
Nefco was established in 1990 to support the Nordic countries in their efforts to increase environmental awareness in Eastern and Central Europe through the financing of projects to reduce the amount of harmful emissions to the environment. Since pollutants do not recognise national borders, it was reasoned that it made better financial sense to support new investments in Eastern Europe – adjacent to the Baltic Sea – that aligned with the environmental priorities of the Nordic countries compared with the rising marginal cost of introducing increasingly stringent requirements at home. Cost-efficiency remains a hallmark of all Nefco’s activities.
While continuing to fulfil its initial mission above, during the last 30 years Nefco has developed an extensive network within the green community and a proven ability to connect stakeholders to relevant projects. As a result, Nefco has attracted a number of fund management assignments, in particular related to climate financing in emerging markets and financial support to Nordic SMEs, as well as to green projects in the Baltic Sea, Arctic, Barents and Eastern European regions. Recently Nefco has also taken new fund assignments to support results-based financing for clean off-grid energy and modern cooking in Africa.
Nordic SMEs
Nefco supports the implementation and scale-up of Nordic environmental technologies and climate solutions in global markets. Nefco finances green projects by Nordic small and medium-sized companies (SMEs) that aim to scale up on global markets through our own capital (Investment Fund) to complement private capital and other funding. Loans and equity-type financing can be used for green investments in new markets. The fast-track Green Recovery Loan Programme can be used to finance investments and business activities in support of international growth to help SMEs overcome recent economic challenges due to the pandemic.
We also finance feasibility studies for internationalisation of Nordic small and medium-sized companies and their green solutions in countries outside EU/EFTA through Nopef, the Nordic Project Fund, which is financed by the Nordic Council of Ministers and has been managed by Nefco since 2014.
Eastern Europe
In the Eastern Partnership region, Nefco has continued its original regional mandate of financing small and medium-sized, municipal sector projects using concessionary loan financing and loan financing blended with grant programmes from Nordic governments, the EU and other countries.
Due to Russia’s full-scale invasion of Ukraine, and the severe damage caused to municipal infrastructure, former initiatives funded by the Nordic countries and the EU have been repurposed to green recovery activities, including the repair and reconstruction of water supply, wastewater management, heating, electricity, housing, schools and health facilities.
Special funds
Our Special Funds area involves environmental and climate fund assignments from governments and agencies in the Nordics and beyond, with specific mandates. These can be results-based or other types of grant programmes that do not include investments from Nefco’s own funds.
Combatting the eutrophication of the Baltic Sea
The ecological state of the Baltic Sea is one of Nefco’s main priorities, has been since it was founded. Since its establishment in 1990, Nefco has been actively engaged and invested its own funds in upgrading wastewater treatment plants in the Baltic Sea catchment area and reducing discharges from the agricultural sector into the Baltic Sea.
In addition, we also finance project preparation and technical assistance through the Baltic Sea Action Plan Fund. The Fund can provide grant based financing to projects that address the various environmental challenges and problems facing the Baltic Sea, with a particular focus on combatting eutrophication.
Clean energy access in Sub-Saharan Africa
Nefco is the fund manager for the Beyond the Grid Fund for Africa facility, which in September 2020 opened its first Call for Proposals in Burkina Faso, Liberia and Zambia and separate Calls for Mozambique and Uganda during spring 2021 and in the Democratic Republic of Congo in summer 2022. The goal for this programme is to accelerate access to affordable, clean and modern energy for people living in rural and peri-urban areas by building up a market for off-grid electricity solutions. The programme is funded by Sweden, through the Swedish International Development Cooperation Agency (Sida) and Swedish embassies in the target countries, Denmark, through the Ministry of Foreign Affairs, Norway, through the Norwegian Agency for Development Cooperation Norad and Germany through KfW. Power Africa, an initiative administered by USAID, is providing an in-kind technical assistance contribution.
In November 2021, Nefco and Sweden announced a new facility Modern Cooking Facility for Africa for market development and scale-up of clean cooking solutions in six Sub-Saharan African countries; Democratic Republic of the Congo, Kenya, Mozambique, Tanzania, Zambia, and Zimbabwe. The first Call for Proposals-based funding round closed on 21 June 2022. The programme is funded by Sweden and the European Union. Read more about the programme at www.moderncooking.africa.
Carbon funds and Article 6
Nefco works together with the Nordic countries and the Nordic Council of Ministers through the Nordic Initiative for Cooperative Approaches (NICA), established in 2018, on issues related to the Paris Agreement and in particular Article 6 to support sustainable development and climate action.
Nefco was a very early starter in the project-based carbon market and since 2003 has managed a number of carbon funds, including the Nefco Carbon Fund and the Nefco Norwegian Carbon Procurement Facility. These two carbon funds closed at the end of 2021 as planned.