This year for Building Prospects has focused on ‘creating opportunities’ initiatives and to continue the execution of the mandate outlined by the Dutch Ministry of Foreign Affairs to promote private sector development and job creation in emerging markets. The fund closed nine new transactions totaling EUR 74.2 mln commitment.

In the wake of profound global shifts and disruptions throughout the previous year, the economic landscape is undergoing transformative changes, presenting both challenges and opportunities for emerging markets. The turbulence in global trade, coupled with economic uncertainty, the enduring impact of a global pandemic, and geopolitical events, has compelled manufacturers worldwide to reevaluate and diversify their production locations.

With an expected growth in population from 7.9 billion people to 8.6 billion people in 2032, an average annual growth rate of 0.8%, with the fastest growth rate at 2.4% p.a. over the coming decade concentrated in sub-Saharan African low-income countries, the urgency to strengthen agribusiness value chains is very high. Africa has a unique prospect to position itself as a burgeoning hub within recalibrating global supply chains. With the continent boasting the youngest and fastest-growing population, representing approximately 60% of Africans under the age of 25, Africa stands at the forefront of a demographic dividend that holds immense potential for economic growth. Furthermore, there is an opportunity for Africa to expedite climate action by expanding energy supply chains within the continent, leveraging its vast reserves of critical minerals vital for the global energy transition.

The war in Ukraine continues to disrupt value chains and Building Prospects is proud to indirectly support the troubled region with an investment towards Trans-Oil to provide a loan that will source from the local region for export. With a perceived switch away from traditional global supply chain routes, emerging markets are presented with the challenge of relying on domestic demand for sustained growth, especially in the face of anticipated economic slowdowns in developed countries.

It is within this context that central banks of emerging markets have notably succeeded in managing inflation, although the large fiscal support during the pandemic has accentuated debt positions and raised questions about governments' capacity to stimulate economic growth. The economic terrain remains dynamic, calling for strategic and adaptive measures to navigate the evolving opportunities and challenges in the global market.

Building Prospects' ability to invest in private sector development through enabling infrastructure in agribusiness value chain contributes significantly to economic development. Allowing businesses to grow along the value chain creates employment opportunities at various stages of production and distribution. Increasing the development of skills and expertise within the workforce contributes to human capital development and ensures a sustained economic growth. With the broad scope of the fund mandate allowing for focused attention towards Climate and Gender, Building Prospects is also able to contribute to SDG 8 ‘Decent Work and Economic Growth’ and 13 ‘Climate Action’.

The effects of the pandemic are wearing off which is evident in the increase of Building Prospects' production in 2023. This year we closed nine new transactions in a variety of countries and helped to support numerous existing clients with additional funding requirements. We are very pleased with the level of transactions finalized in 2023 which span a wide and diverse range of investment initiatives. Two main themes are addressed through these investments that focus on private sector development through strengthened value chains in countries like Sri Lanka, Uganda, Moldova, Burkina Faso, Cote d’Ivoire and Mozambique and supporting energy sector investments in Africa and Asia.

2023 saw a combination of negative impact of FX results across the board, negative Fair Value results on PE investments and write-offs resulting from on a combination of country-related and investee-related adverse circumstances. On the positive side, there was a positive loan impairment result in 2023.

Climate remains high on the agenda for Building Prospects and has been taken into account through various investments made in 2023. One such focused investment in Responsibility Climate-Smart Agri and Food Fund targeting food systems transformations to help mitigate climate change, to help to build resilience for smallholder farmers and to reduce food loss.

Building Prospects remains a highly relevant and impactful policy instrument and will continue to create improved economic prospects for people in developing countries, through sustainable social and economic growth.

The coming years remain challenging, and we approach 2024 to maximizing development impact and creating new opportunities, ideas and perspectives whilst adapting to meet the challenges we know lie ahead that affect people, planet and prosperity.