IFU's success criteria model, ex ante og ex post, estimates the effects of investments on the host country. The performace can be compared from year to year.
IFU has for more than ten years evaluated all investments based on a success criteria model.
The model estimates the effects that an investment will have on a host country by way of creating employment, transferring knowledge and the impact on CSR issues. These effects are added up in the category development impact, which carries a 50 per cent weighting in a project’s total score.
Moreover, IFU estimates the Fund’s additionality, which focuses on IFU’s relative financial participation, capital mobilisation and mitigation of political and financial risk, among other things. Finally, investments are assessed on sustainability and profitability and efficiency and effectiveness of Fund operation.
The success criteria of all new projects established during the year are consolidated into four main categories. When added up, the scores indicate the total fulfilment of IFU’s success criteria, ranging from 25–100 per cent.
As a result, IFU can track the development impact of new investments annually and compare performance from year to year.
In 2012, IFU reviewed the model revising a number of the indicators. The review was based on the experience from similar models used by other European development finance institutions. One of the new indicators introduced is tax payments to the host country.
The updated model puts greater emphasis on good project management, corporate governance, community impact, environmental and climate technology and on CSR management, and was taking into use from 2013.
IFU applies its success criteria model in the appraisal of all investments and in connection with exiting individual projects. Applying the model twice facilitates a comparison of expected and actual effects.