Finland’s development finance institution aims to mobilise private capital to fund critical digital infrastructure projects and boost inclusive growth in emerging markets.
Finnfund, Findland’s development finance institution, has raised €80m at first close for its new digital access fund, which is targeting digital, financial and gender inclusion in underserved regions in Africa, Asia and Latin America.
Finnfund acted as an anchor investor of the Digital Access Impact Fund I LP (DAIF) alongside the Finnish ministry for foreign affairs. The fund also benefits from technical assistance and a risk-sharing facility backed by the European Commission’s European Fund for Sustainable Development.
The new fund not only focuses on critical digital infrastructure needs but also helps local communities gain better access to key services, according to Hanna Loikkanen, Finnfund´s chief investment officer.
“We are excited to offer professional investors a chance to partner with us in driving meaningful change in these rapidly growing markets”, Loikkanen said.
Major opportunity
DAIF is targeting investments in telecom towers, digital infrastructure and scalable high-impact technology solutions. It is currently considering an investment in bringing unlimited high-speed internet to more low-income households in Latin America.
While most Africans rely on limited mobile data, the rise of e-commerce and remote working has led to increased demand for more bandwith and improved connectivity across the continent, according to Loikkanen.
“This is where the fund’s portfolio companies come into play. The rise of unlimited home wifi, especially in countries that the fund targets, presents a major opportunity to drive digital inclusion and economic growth”, said Loikkanen.
Doubling digital investments
Each year, Finnfund makes 20-30 new investments worth between €200-€250m in portfolio companies in emerging markets, with a strong focus on digital infrastructure, clean energy, forestry, agriculture and small- and medium-sized businesses. Finnfund’s current investments, commitments and investment decisions total about €1.3bn.
Heikki Cantell, Finnfund’s chair of the board of directors, told Impact Investor in an interview in May he aims to double the institution’s investments in digital technology.
“By mobilising private capital, we can enhance the efforts to finance sustainable development in partner countries. This fund exemplifies Finland’s commitment to leveraging innovative financial solutions to address critical infrastructure needs and promote inclusive growth. We support initiatives that not only drive economic development but also improve the quality of life for many communities in emerging markets,” said Ville Tavio, Finland’s minister for foreign trade and development.
