The investments were made together with Danish companies, thus diversifying their global activities.
The Industrialization Fund for Developing Countries (IFU) is a self-governing institution established by an act of the Danish government. IFU offers to partipate in the Danish companies’ investment projects in the developing countries. Danish companies utilize this opportunity for financial risksharing, when they invest in developing countries.
Last year the Industrialization Fund’s investments amounted to DKK 520 million. It is the first time that the investments exceed DKK 500 million. Just two years ago the total investments were DKK 176 million.
The investments were distributed over 22 new companies (DKK 333 million) and 19 additional investments (DKK 187 million) in already existing companies.
A large share goes to Africa
17 out of the 41 projects are situated in the African countries. Hence, IFU’s strategy of many years to create an interest among Danish companies to invest in Africa, is now beginning to yield results. In general, Africa is considered a difficult investment area and receives only a fraction of the world’s total private investments. Thus, Denmark contributes to a positive trend in a part of the world, where the need for commercial development is big.
The Danish investments in new projects in Africa are made in a.o. infrastructure. Among the projects are a container terminal in Nigeria and in Uganda and a concrete factory in Egypt. IFU has also invested in a special infrastructure fund for Africa. It is expected to result in a number of projects with Danish participation in the coming years. Other shareholders in the fund are IFC, the World Bank’s equivalent to IFU, and a number of private companies.
In Asia, China and India each account for three out of the 22 new projects. The number of Danish investments in Latin America is also growing but is still modest. In 2000 IFU participated in five Latin American projects – two in Peru and one in each of the countries Brazil, Chile and Cuba
Generates additional investments
Often the projects are established as joint ventures, where the Danish company and IFU – often together with a local partner – establish a new private limited company.
Normally IFU participates as co-investor for the first 6-8 years of the project companies, and contributes a.o. with knowledge of the host country and experience from earlier projects. Generally, IFU aims at selling its shares, once a project is well consolidated. The funds thus released can be invested in new projects.
“The Industrialization Fund’s money and advice are often the incentive needed in order for the private investors to take the risk by investing in the developing countries. With comparatively small amounts the Fund can start many projects. Every time IFU invested DKK 1000 in 2000 others invested DKK 20,000 in the same projects”, says the Fund’s managing director Sven Riskær.
For further information please contact:
Deputy Managing Director J. Dan Jensen