Annual Report 2011

N O R D I C D E V E L O P M E N T F U N D • A N N U A L R E P O RT 2 0 1 1

Summary of 2011

INDEX Report by the Board of Directors 2011

02

Income Statement

07

Balance Sheet

08

Changes in Equity

09

Cash Flow Statement

09

Notes to the Financial Statements

10

Auditors’ Report

16

NDF Today

19

Climate Change Portfolio

23

Credit Portfolio

24

Board of Directors

29

Control Committee

29

Management and Staff

30

During 2011, the Board approved grant financing for 18 projects for a total value of EUR 32.5 million. Under the climate change mandate, from 2009 to 2011, NDF has approved 39 projects for a total value of EUR 106.6 million for climate change projects.

Under the previous lending mandate - credits - nine projects were completed in the course of the year. A total of twelve projects are still under implementation at the beginning of 2012.

Disbursements of credits amounted to EUR 26.9 million in 2011 (2010: EUR 37.3 million). The disbursements of grant aid amounted to EUR 20.1 million (2010: EUR 8.2 million).

The net result for the year before adjustments for currency exchange fluctuations and disbursements of grant aid totalled EUR -13.7 million in comparison with EUR -1.9 million the previous year.

The effects of currency fluctuations showed a positive result of EUR 6.7 million (2010: EUR 19.9 million).

R E P O RT B Y T H E B O A R D O F D I R E C T O R S 2 0 1 1

NDF’s climate mandate In December 2011, the Board of Directors approved a new strategy document outlining the future activities of NDF during the years 2012-2013 (NDF - Climate Change Strategy 20122013). During the next two years, NDF will focus on implementing the existing portfolio, and to consolidate and benefit from experiences from on-going climate interventions. NDF intends to sharpen its project selection to activities where NDF can add value beyond the financial contribution through leverage and synergies. As a Nordic institution, NDF will continue to promote Nordic priorities in the area of climate change and development.

The Board of Directors adopted the Fund’s first Policy on Access to Information. The policy strives for openness in NDF’s operations while respecting confidentiality. The policy can be found on the NDF website.

During the year, the administration has prepared a Progress Report 2009-2011 which describes NDF’s operations under the climate mandate. The report presents the fund’s experiences and progress, and it also confirms that the fund’s results are in line with the objectives set forth in the paper; Future NDF Operations: An Outline for 2009-2011. The report emphasises that there is a niche for NDF to strengthen the climate change aspects in projects of multilateral banks.

There have also been strong indications that NDF’s contribution has significantly affected the design of projects when NDF has been involved in an early phase of the project cycle.

The Progress Report has also laid the foundations of the strategy document for 2012-2013.

Under the climate change mandate, from 2009 to 2011, NDF has approved 39 projects for a total value of EUR 106.6 million for climate change projects. The objective of the climate change mandate is to support low-income countries to adapt to climate change and to reduce their emissions of greenhouse gases. The reduction of greenhouse gases for all of NDF’s energy projects have been calculated at over three million tons of CO2 equivalents per year.

In May 2011, the Board of Directors decided that an independent evaluation of NDF’s progress under the climate mandate shall be conducted. The evaluation is being carried out by the Norwegian consulting firm Vista Analysis AS and the report is estimated to be ready during spring 2012. The strategy document for 2012-2013 will be adjusted, if necessary, in accordance with the recommendations of the evaluation report.

During 2011, the Board of Directors approved grant financing for 18 projects with a total value of EUR 32.5 million.

NDF has started to develop a system to monitor and evaluate the results of projects under implementation (Project Performance Management System). The system is estimated to be ready for use during 2012.

In the beginning of the year 2011, the administration adopted Identification and screening criteria which the Board of Directors had approved in the end of 2010. The document is an internal guideline to ensure that all projects are in compliance with NDF’s climate change mandate. The identification and screening criteria has received a lot of interest from co-financers since several financing institutions do not have criteria for assessing the climaterelevance of projects.

At the end of the year, the report NDF in Private Sector Projects; Past and Future was presented to the Board. The report has two objectives: firstly, to evaluate NDF’s experiences from the private sector investments during the lending mandate and secondly, to consider NDF’s opportunities in the private sector under the climate change mandate. According to the report, both the financial results and the development effects have been positive in private sector investments made under the lending mandate. The report also notes that NDF has several facilities that align to development projects in the private sector. NDF intends to continue to develop the funds private sector experience.

During 2011, the administration presented two country profiles to the Board.

NDF’s Climate Projects in 2011

The approved projects at the end of 2011 are located in Africa (42%), Asia (28%) and Latin America (30%). The proportion of projects in Africa is estimated to increase during 2012.

Africa

NDF financing M€ Kenya Electricity Expansion Project 4.0 Ghana Greater Accra Septage Digesters Project 2.5 Tanzania Impacts of Climate Change in Coastal Areas 0.8 Regional Adressing the Vulnerability of Africa’s Infrastructure 0.6 Regional Technologies for Low Carbon Development 0.5 Regional Insurance Instruments for Africa Climate Adaptation 0.5

In Africa, NDF is financing six new projects together with the World Bank.

NDF is supporting the Electricity Expansion Project with a grant of EUR 4 million. The overall objective of the project is to increase the country’s quality of electricity supply and increase the populations’ access to electricity. NDF is financing a hybrid energy system that uses wind and solar power, thus reducing the use of fossil fuels in existing diesel power stations. In addition, the project intends to provide basic energy services to rural schools through solar charging facilities, which enables charging of portable lanterns.

In Ghana, NDF is financing the Greater Accra Septage Digesters Project with a grant of EUR 2.5 million. The objective of the project is to improve sanitation and sewage management for the urban population of Greater Accra and thus improve the environment and the water quality in rivers and the sea, and furthermore reduce emissions of greenhouse gases (GHG).

02

R E P O RT B Y T H E B O A R D O F D I R E C T O R S 2 0 1 1

With a grant of EUR 800,000, NDF is financing Impacts of Climate Change in Coastal Areas, a study in Tanzania which aims to examine the impacts of climate change to the coastal areas and identify specific adaptation investments to enhance resilience.

climate financing. The project focuses on the cement sector since it is the largest emitter of industrial greenhouse gases in Vietnam. NDF and other stakeholders launched the Nordic Partnership Initiative at COP17 in Durban.

NDF is supporting Addressing the Vulnerability of Africa’s Infrastructure, a regional study in Africa. The objective of this study is to assist African countries in reducing the vulnerability of regional infrastructure assets to climate change and catalyse the policy dialogue on the development and deployment of climate finance instruments. NDF’s grant is EUR 600,000.

Latin America

NDF financing M€ Regional Climate Change and Sustainable Cities 2.1 Regional Regional Geothermal Training Programme 1.5 Regional Climate Proofing and Review of Infrastructure Investments 1.5 Regional Economics of Climate Change 0.5 Regional Adaptation to Climate Change in Honduras & Nicaragua 0.5 Nicaragua Biogas Market Development Program 1.5 Regional EcoMicro Regional Microfinance and Climate Change Program 1.5 Regional GREENPYME II 3.0

Furthermore in Africa, NDF is financing Technologies for Low Carbon Development. The study intends to review both new and existing low-carbon technologies and then prioritise those that appear most promising in technical, institutional and financial terms. The NDF grant amounts to EUR 500,000.

NDF is supporting Insurance Instruments for Africa Climate Adaptation, a two-year World Bank study in East Africa with a grant of EUR 500,000. The objective of the study is to support the development of climate insurance instruments for specific types of climate risks in Africa.

The introduction of different insurance tools will help reduce the vulnerability of extreme climate events.

Asia

NDF financing M€ Regional Gender and Climate Change 2.0 Vietnam Integrating Climate Change Adaptation to Transport 2.0 Vietnam Nordic Partnership Initiative Pilot Programme 1.5 Together with the Asian Development Bank (ADB), NDF supported three projects in Asia: In an effort to mainstream gender into climate change-related activities, NDF is financing a project in Mekong. With a grant of EUR 2 million, the project aims to improve the institutional settings for gender and climate change considerations. The project, Gender and Climate Change, will focus on capacity-building and policymaking on national and sub-national levels in Cambodia, Lao PDR and Vietnam.

In the northern areas of Vietnam, NDF is financing an infrastructure project, Integrating Climate Change Adaptation to Transport, with a grant of EUR 2 million. The project adds a climate change adaptation aspect into an ongoing ADB-funded transport project. The NDF component will primarily focus on technical assistance and capacity-building of relevant stakeholders, so that climate change adaptation strategies are considered in the design, planning and maintenance of Vietnam’s road infrastructure.

Another project in Vietnam that NDF is supporting is the Nordic Partnership Initiative. The grant of EUR 1.5 million goes to improving Vietnam’s readiness to benefit from international

03

In Latin America, NDF has, among others, joined forces with the Inter-American Development Bank (IDB) and is supporting five new projects: With a grant of EUR 2.1 million, NDF is supporting the project Climate Change and Sustainable Cities. Three studies will be financed which focus on the development of climate change action plans for emerging cities in Bolivia, Honduras and Nicaragua. The project will develop and implement a methodology that will allow the cities to identify sectors and activities specifically relevant to foster adaptation, and that have potential for emission reduction. The project will increase the level of awareness and knowledge of the beneficiary cities on cross-sectoral climate change mitigation and adaptation actions.

The Regional Geothermal Training Programme aims to increase local knowledge and skills in specific aspects related to geothermal energy and potential in Central America. Geothermal energy is a renewable energy source, and unlike other renewable sources, it is stable irrespective of weather conditions or time of the day. Many countries in Central America depend heavily on fossil fuels and the project is estimated to result in gradually increasing the share of geothermal energy in the region. The grant amounts to EUR 1.5 million.

Another project in the Central American Region is Climate Proofing and Review of Infrastructure Investments. The Structured and Corporate Finance Department (SCF) at IDB finances, among other things, infrastructure investments in Latin America. With a grant of EUR 1.5 million, NDF will finance a study that will review SCF’s loan facilities to identify concrete investment opportunities for climate-friendly improvements. The study is expected to result in projects that increase the energy efficiency and implementation of renewable energy among the clients.

In the Central American region, NDF is supporting the Economics of Climate Change study with a grant of EUR 500,000. The objective of the study is to assess the economic and social consequences of climate change for poor rural communities in the region. It aims to develop

R E P O RT B Y T H E B O A R D O F D I R E C T O R S 2 0 1 1

economic and other measures to adapt to such change, as well as to promote low carbon development. The results of the study will be primarily aimed at Central American countries but it is expected to be of general relevance even outside the region.

With a grant of EUR 500,000, NDF is financing Adaptation to Climate Change in Honduras and Nicaragua. This study intends to determine the additional costs of adaptation actions in the water sector. Case studies on sea level rise impacts are carried out in Honduras and increased hydrologic extremes in Nicaragua. The aim of the project is also to identify adaptation potentials, provide input to policy development and identify feasible investment projects.

Together with the Multilateral Investment Fund (MIF), NDF is financing two projects in Latin America: The Biogas Market Development Programme aims to develop a sustainable biogas industry in Nicaragua. NDF is financing the programme with a grant of EUR 1.5 million. The objective is to help agricultural small and medium-sized producers to access renewable energy by using biogas. The aim is to improve productivity, cut costs and reduce carbon emissions in the agricultural sector.

With a grant of EUR 1.5 million, NDF is supporting the EcoMicro Regional Microfinance and Climate Change Programme. The main objective of the programme is to facilitate the use of green finance instruments by small and medium-sized enterprises by training personnel at the microfinance institutions. The program also aims to help firms and households increase their access to efficient energy products and services as well as to assist in adaptation to climate change.

NDF increases financing for the program GREENPYME in Latin America. The programme is implemented by the Inter-American Investment Corporation (IIC).

During 2011, eight proposals were chosen for implementation under the second call. Additional projects are under review.

In October 2011, NDF launched the third call for proposals with the theme Innovative low-cost climate solutions with a focus on local business development. The second and third call have each been granted EUR 12 million. The total financing for NCF is EUR 18 million.

Signing of Agreements During 2011, NDF entered into agreements regarding five new projects in Africa, five new projects in Asia and six new projects in Latin America. NDF also signed two additional agreements with NEFCO regarding the administration of the second and third calls for proposals under NCF. Furthermore, NDF has signed a Memorandum of Understanding with the Asian Development Bank (ADB) and a Memorandum of Understanding between the Nordic Investment Bank (NIB), the Inter-American Investment Corporation (IIC) and NDF. Credits At the end of 2011, NDF had entered into 188 credit agreements, the total value of which, including additional financing and adjusted for cancellations and calculating the EUR/SDR currency exchange rate as at December 31, 2011, amounted to EUR 924.4 million (2010: EUR 927.7 million). Of these agreements, 160 were credits to public sector projects (EUR 882.9 million), 25 were loans with equity features or equity investments (EUR 29.3 million) and three were other loans (EUR 12.1 million).

As at December 31, 2011, disbursements under signed agreements amounted to EUR 815.1 million; approximately 58.9% of this amount is denominated in SDR. As a result of the strengthening of the SDR against the euro, the value of the outstanding SDR credits increased by EUR 6.7 million in 2011.

NDF’s participation in the HIPC Initiative

GREENPYME aims to increase the energy efficiency of small- and medium-sized enterprises (SMEs). GREENPYME I has been progressing well and NDF is now also participating in the financing of the second phase of the programme, GREENPYME II, with a grant of EUR 3 million.

The second phase will build on the work done and experiences gained under the first phase. It will enable the scaling up of the on-going GREENPYME programme by intensifying the activities in Honduras and Nicaragua, and by expanding the programme to Bolivia.

Since the World Bank and the International Monetary Fund (IMF) adopted the “Debt Initiative for Heavily Indebted Poor Countries” (HIPC), NDF has participated in the initiative through the HIPC Trust Fund, which is administered by IDA. By the end of 2011, NDF had made allocations to the HIPC Initiative for debt relief to nine of the Fund’s borrowing countries.

Nordic Climate Facility

The allocations made in previous years from NDF’s accumulated net income before foreign exchange differences amounts to EUR 29.6 million to cover the obligations of the Fund under the enhanced HIPC initiative. This amount has been paid into the HIPC Trust Fund.

The Nordic Climate Facility (NCF) is financed by NDF and implemented in cooperation between NDF and the Nordic Environment Finance Corporation (NEFCO). NCF provides grants to development projects that have the potential to combat climate change, decrease emissions and reduce poverty in low-income countries. It encourages innovation and promotes technological transfers in sectors susceptible to climate change. The facility is based on calls for proposals and each call has specific themes. The first and second call received 138 and 176 proposals respectively. The implementation of the 14 winning proposals of the first call is ongoing.

Nordic cooperation NDF has close contact with the Nordic Council of Ministers and the Nordic Council. NDF also has a close cooperation with the Nordic bilateral development institutions. NDF strives to promote the cooperation with relevant institutions by inviting representatives to seminars and events with topics of common interest.

04

R E P O RT B Y T H E B O A R D O F D I R E C T O R S 2 0 1 1

During the year, NDF has continued cooperation with the Nordic Environment Finance Corporation (NEFCO) through the Nordic Climate Facility.

At the COP17 climate meeting in Durban, NDF launched the Nordic Partnership Initiative together with NOAK (the Nordic Working Group for Global Climate Negotiations) and NEFCO. The project was initiated by the Nordic Ministries of Environment. The project aims to strengthen the Nordic countries’ commitment to climate change.

Together with the Nordic Investment Bank (NIB) and the Inter-American Investment Corporation (IIC), NDF signed in September 2011 a Memorandum of Understanding regarding the cooperation between the institutions in the Latin American region. At the end of 2011, NIB approved a loan to IIC for financing of environmental projects in Latin America. Some of these projects are expected to be identified through the ongoing GREENPYME programme, which is co-financed between IIC and NDF. NDF has a close cooperation with the Nordic Investment Bank (NIB) mainly regarding office premises, staff administration, IT services, accounting and liquidity management.

During the year, disbursements amounted to EUR 47.0 million (2010: EUR 45.5 million), EUR 26.9 million on credits and EUR 20.1 million on grants. At the end of the year, accumulated disbursements on credits amounted to EUR 815.1 million (2010: EUR 788.2 million) and EUR 28.7 million (2010: EUR 8.6 million) on grants. Upon request by the Board, member countries paid in EUR 8.2 million and SDR 25.0 million of Fund capital in 2011 (2010: EUR 10.9 million).

During 2011, NDF received repayments under disbursed credits amounting to EUR 12.7 million.

Board of Directors and administration The Chair of the Board for the period January 1 to April 30, 2011 was Christoffer Bertelsen (Denmark), with Satu Santala (Finland) as Deputy Chair. As from May 1, Satu Santala took over the chair with the Icelandic member Egill Heiđar Gislason as Deputy Chair. The chair will pass to the Icelandic member on May 1, 2012 and the Norwegian member will then become Deputy Chair. Harald Tolland was appointed the new Norwegian member and Hans Olav Ibrekk the new Norwegian deputy member of the Board of Directors as of August 10, 2011. On May 15, 2011 Flemming Winther Olsen succeeded Mads-Emil Stærk as the Danish deputy member of the Board.

Capital and accounting currency A list of NDF Board members can be found on page 30.

In 2000, the Nordic Council of Ministers decided that the Fund should change its capital and accounting currency from SDR to EUR as from January 1, 2001. In the annual reports for previous years, the Board of Directors has paid attention to the fact that, since NDF will have outstanding credits denominated in SDR for many years to come, fluctuations in the SDR-EUR exchange rates may lead to substantial variations in financial results, positive or negative, from one year to another.

Control Committee

The Fund’s financial result for 2011 shows a positive foreign exchange difference of EUR 6.7 million (2010: EUR 19.9 million). This difference is to a large extent due to the fact that the US dollar represents 41.9% of the SDR currency basket and the ensuing increase of the purchasing power of the US dollar during 2011 against NDF’s capital and accounting currency, the euro.

The Control Committee ensures that the Fund’s operations are conducted in accordance with its Statutes and is responsible for its audit. The Committee presents an annual auditor’s report to the Nordic Council of Ministers. The Control Committee met twice in 2011. A list of the members of the Committee can be found on page 30.

Liquidity and capital

Financial results and allocation

The liquid assets of NDF are managed by the Nordic Investment Bank on behalf of NDF. The average interest rate has been approximately 0.8% (2010: 0.5%). NDF’s deposits are relatively short-term (up to 6 months). The liquidity as per December 31, 2011 was EUR 93.6 million (2010: EUR 83.7 million).

NDF’s total assets as of December 31, 2011 amounted to EUR 877,660,600 (2010: EUR 848,357,001). This amount includes outstanding credits to public sector projects, other loans with equity features and equity investments to the amount of EUR 776,031,567 (2010: EUR 759,449,255) and placements with credit institutions to the amount of EUR 93,594,470 (2010: EUR 83,740,423). A reversal of provisions against possible losses on other loans, loans with equity features and equity investments amounting to EUR 830,439 was made in the accounts of 2011. The previous year showed a reversal of EUR 1,841,353.

The Board has authorised the administration to hedge NDF’s SDR-denominated loan portfolio against currency exchange risk before the end of June 2013. The chosen hedging methods should be commonly accepted on the financial market. As per December 31, 2011 NDF has not yet hedged part of the SDR loan portfolio.

05

Helge Semb is the Managing Director and as of December 31, 2011, twelve people were employed by NDF (2010: 12 employees). In addition, NDF has entered into a long-term agreement with an in-house consultant. A summary of the employees can be found on page 31.

R E P O RT B Y T H E B O A R D O F D I R E C T O R S 2 0 1 1

Commitments under credits, signed but not yet disbursed, were distributed as follows:

MEUR Credits

2011 50.3

2010 76.7 Helsinki, 1 March 2012

As of December 31, 2011, NDF’s capital consisted of SDR 515 million and EUR 245.9 million in paid-in fund capital (2010: SDR 490 million and EUR 237.8 million) and EUR -60,032,975 (2010: EUR -53.098.721) in accumulated net income after adjustments for currency exchange fluctuations.

The Fund’s income during 2011, amounting to EUR 8,334,227 (2010: EUR 7,344,928), consisted of income from credits to the public sector to the amount of EUR 5,871,278 (2010: EUR 5,959,469), interest on placements with credit institutions of EUR 653,299 (2010: EUR 399,921) and EUR 1,808,650 (2010: EUR 985,537) as remuneration on equity loans and other loans. One of NDF’s borrowing countries (Zimbabwe) continues to be in arrears to NDF. All of its accrued, outstanding obligations towards NDF were therefore placed in non-accrual status.

Administrative expenses were EUR 2,853,216 (2010: EUR 2,874,410). The largest single item of expenditure consists of salaries and ancillary expenses of EUR 1,692,811 (2010: EUR 1,492,810).

SATU SANTALA Chair

CHRISTOFFER BERTELSEN

LENA KÖVAMEES

EGILL HEIĐAR GISLASON

HARALD TOLLAN

HELGE SEMB Managing Director

The net income for the year, which after adjustments for currency exchange fluctuations of EUR 6,738,503 (2010: EUR 19,881,181) amounts to EUR -6,934,254 (2010: EUR 17,973,759), is carried forward to the new account.

The income statement, balance sheet, changes in equity, cash flow and notes can be found on pages 8-16.

06

I N C O M E S TAT E M E N T ( a m o u n t s i n E U R )

Jan.1-Dec.31, 2011 Jan.1-Dec.31, 2010 Income Service charges from credits 5,478,780 5,450,580 Income from loans with equity features 1,808,650 985,537 Fee and commission income 392,499 508,890 Interest income from placements with credit institutions 653,299 399,921 Interest income from cash and balances with banks 1,000 - Total income 8,334,227 7,344,928

Expenses Grant financing for climate projects Refund of grant financing Fee and commission expenses General administrative expenses (Note 8) Depreciations, tangible assets (Not 6) Changes in provision for credit losses, write-down of loans and reversals Total expenses Net result for the year before foreign exchange differences Foreign exchange differences Net result for the year

07

20,089,507 -116,900 2,463 2,853,216 9,138

8,209,900 - 3,716 2,874,410 5,678

-830,439 22,006,985

-1,841,353 9,252,351

-13,672,757

-1,907,422

6,738,503 -6,934,254

19,881,181 17,973,759

BALANCE SHEET (amounts in EUR)

ASSETS Cash and cash equivalents (Note 1) Other long-term financial placements (Note 1)

Other assets Accrued income Credits with government guarantee outstanding (Note 2) Other loans outstanding (Note 3) Loans with equity features and equity investments outstanding (Note 4) Intangible assets (Note 6) Tangible assets (Note 6)

Total assets

Dec.31, 2011

Dec.31, 2010

93,369,448 83,740,423 225,021 - 93,594,470 83,740,423 6,771,658 1,241,410 762,887,427 6,697,190

3,877,227 1,272,793 744,508,873 7,792,609

6,446,950 278 21,218 877,660,600

7,147,773 1,500 15,805

848,357,001

LIABILITIES AND EQUITY

Liabilities Other liabilities 357,094

308,305

Equity (Note 7) Fund capital SDR 515 000 000 Fund capital EUR 330 000 000 Paid-in fund capital 937,336,481 901,147,418 Accumulated net result

-60,032,975

-53,098,721

Total equity 877,303,506

Total liabilities and equity 877,660,600

848,048,697 848,357,001

08

CHANGES IN EQUITY (amounts in EUR 1,000)

Paid-in fund capital Accumulated net income Appropriation to HIPC Initiative Result for the year Equity as of January 1, 2010 890,247 -70,066 49

0 Transfers between equity items 17,974 -17,974 Appropriation to HIPC Initiative -1,006 1,006 Paid-in fund capital 10,900 Paid to HIPC Initiative -1,055 Result of the year 17,974 Equity as of December 31, 2010 901,147 -53,099 0 0 Transfers between equity items -6,934 6,934 Appropriation to HIPC Initiative Paid-in fund capital 36,189 Paid to HIPC Initiative Result of the year -6,934 Equity as of December 31, 2011 937,336 -60,033 0 0

Total 820,230 0 0 10,900 -1,055 17,974 848,049 0 0 36,189 0 -6,934 877,304

CASH FLOW STATEMENT (amounts in EUR 1,000)

Dec. 31, 2011 Dec. 31, 2010 Cash flow from operating activities: Net result for the year -6,934

17,974 Depreciations 9 6 Foreign exchange profit/loss -6,739 -19,881 Changes in accrued income 31 507 Changes in provision for loan losses and write-down of loans -830 -1,841 Net cash from operating activities

-14,463 -3,236 Cash flow from investing activities: Credits disbursed -27,058 -37,380 Amortizations of credits 15,556 10,747 Disbursed other loans, equity loans and equity investments -18 0 Repayments of other loans, equity loans and equity investments 1,001 794 Amortizations of other loans and equity loans 1,643 1,305 Paid to HIPC Initiatives 0 -1,055 Changes in placements with a maturity longer than 6 months -225 41,886 Changes in other assets and liabilities -2,846 -1,648 Changes in tangible and intangible assets -13 -10 Net cash used in investing activities -11,960 14,637

Cash flow from financing activities Paid-in fund capital 36,189 10,900

Foreign exchange loss -138 2,626 Changes in cash and cash equivalents 9,629 24,927

Cash and cash equivalents consist of: Dec. 31, 2011 Dec. 31, 2010 Cash and balances with banks 3,387 8,033 Placements with a maturity of less than 6 months 89,983 75,708

Total cash and cash equivalents 93,369 83,740

09

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

General operating policies The purpose of the Nordic Development Fund, NDF, “the Fund”, is to promote economic and social development in the developing countries through participation in financing, on concessional terms, of projects of interest to the Nordic countries.

The headquarters of the Fund are in Helsinki, Finland, at the premises of the Nordic Investment Bank.

On November 9, 1998, a new Agreement regarding NDF was signed by its member countries. The new Agreement, which replaced the earlier Agreement of November 3, 1988, entered into force on September 18, 1999. The new Agreement contains provisions concerning the Fund’s immunity and the exemption of the Fund’s assets and income from all taxation.

The Fund has the legal status of an international legal person, with full legal capacity.

A Headquarters Agreement between NDF and the Government of Finland was signed on October 14, 1999. This agreement is connected to the new Agreement regarding NDF. Pursuant to the recommendation of the NDF Board of Directors to the Nordic Council of Ministers, the Nordic Cooperation Ministers approved amendments to NDF’s bylaws in 2009.

According to these amendments, NDF is given a new mandate to support interventions aimed at adaptation to and mitigation of the negative effects of climate change.

The capital of NDF shall in the future be utilised in the form of grant aid for climate-related interventions in low-income countries. This capital, approximately one billion euros during a period of 35 years consists of repayments on the 190 credits NDF granted during 1989-2005 The last repayment is due in 2045.

Summary of significant accounting policies

Basis of preparation of financial statements The Financial Statements have been prepared in accordance with methods of valuation and recognition of income and expenses as described below. As from January 1, 2001, the Fund’s Financial Statements are presented in euro in accordance with the decision of the Nordic Council of Ministers of August 24, 2000 to replace SDR with EUR. The paid-in fund capital has been converted into euro.

The Fund’s Financial Statements are presented in euro. With the exceptions noted below, they are based on historical cost.

Assessments in preparation of financial statements The preparation of financial statements requires management to make assessments and estimates that affect the result, financial position and additional disclosures. Such assessments and estimates are based on available information. Actual results may differ materially from the assessments made.

Foreign currency translation Monetary assets and liabilities denominated in currencies other than euro are translated into euro at the euro rate quoted by the European Central Bank (see Note 10). Any gain or loss arising from the valuation appears in the Income Statement as “Foreign exchange differences” and are mainly related to the SDR rate. As NDF will for many years to come have outstanding credits denominated in SDR, changes in the SDR-euro rate may lead to the Income Statement showing substantial foreign exchange differences since these currency positions are not hedged against changes in foreign exchange rates.

Non-monetary assets are recorded in euro at the euro rate prevailing on the date of their acquisition.

Cash and cash equivalents Cash and Cash Equivalents consist of monetary assets and placements with an original maturity of up to 6 months.

Placements with credit institutions NDF has invested its monetary assets with the Nordic Investment Bank at current market interest rates. The placements are mainly in EUR and are initially recognised at cost (normally nominal value) at settlement date. Placements are also recorded at cost in the Annual Report.

Accrued interest on placements is recorded within Accrued Income in the Balance Sheet.

Placements with credit institutions longer than 6 months are shown as investments in the Cash Flow Statement. The amount is included in the Balance Sheet as Other long-term financial placements.

Credits with government guarantee outstanding The recipient countries for NDF credits are low-income developing countries. The credit period for credits with government guarantee is 40 years, including a 10-year grace period. The loans are interest-free.

The credits are initially recognised at cost at settlement date. For payments which are more than 180 days overdue, the Fund places all credits to the borrower in question in non-accrual status, whereupon the Fund stops recording accrued service charges and fee and commission revenue as income on the Income Statement. All accrued but unpaid income in respect of the borrower in question that had been recorded as income is then deducted from the Income Statement. As of December 31, 2011, one of the Fund’s borrowing countries (Zimbabwe) was more than 180 days overdue with payments.

There is a considerable concessionality in the credits from NDF as they are interest-free and have very long maturities.

Provision for loan losses NDF’s lending conditions allow for a long-term view to be taken of the repayment capacity of recipient countries. In the event of debt consolidation, it is assumed that credits from NDF will be treated in the same manner as loans from other multilateral institutions.

Credits outstanding are recognised in the Balance Sheet at their recoverable amount. Loans with government guarantee outstanding are recorded net of provisions for possible loan losses and actual loan losses. Provision for possible loan losses is established based on the assessment of the nature and maturity structure of the credit portfolio.

Other loans outstanding Other loans outstanding consist of loans with financial liability features to the private sector.

The loans are initially recognised at cost at settlement day. In the Balance Sheet, other loans outstanding are recorded net of provisions for actual and possible loan losses. A provision for possible loan losses is established based on the assessment of the nature and maturity structure of the loan portfolio.

10

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

Loans with equity features and equity investments During a trial period, the Nordic Development Fund has operated a facility which enables it to provide loans with equity features to private sector projects in developing countries. In September 2001, the Nordic Council of Ministers approved a proposal from the Board of Directors to amend the statutes of NDF enabling the Fund, as an integrated and permanent part of its operations, to provide financing to private sector activities in developing countries without government guarantee.

Loans with equity features and equity investments are recognised in the Balance Sheet at cost after write-down. The value of outstanding loans with equity features and equity investments are continuously revalued by the Fund. If the book value exceeds the valuation made, a corresponding write-down is made. Write-downs are presented separately in the Income Statement.

Intangible assets Intangible assets mainly consist of investments in software and software licenses for IT-systems.

The investments are carried at historical cost and are amortised over the assessed useful life of the assets, which is estimated to be between 3 and 5 years. The amortisations are made on a straight-line basis.

Tangible assets Tangible assets are recognised at historical cost, less any accumulated depreciation based on their assessed useful life. The depreciation period for tangible assets is determined by assessing the individual item, usually 3 to 5 years.

Write-downs and impairment of intangible and tangible assets The Fund’s assets are reviewed annually for impairment. If there is any objective evidence of impairment, the impairment loss is determined based on the recoverable amount of the assets.

Equity In August 2000, the Nordic Council of Ministers passed a resolution to increase the capital of NDF by EUR 330 million. After this replenishment the capital of the Nordic Development Fund amounted to SDR 515 million and EUR 330 million. As of December 31, 2011, SDR 515 million, the equivalent of EUR 691 million, and EUR 246 million, totalling EUR 937 million has been paid in by the owners. Payment of the remainder of the subscribed capital will take place upon request by the Fund’s Board of Directors.

Since the World Bank and the International Monetary Fund (IMF) initiated the “Debt Initiative for Heavily Indebted Poor Countries (HIPC) in 1996, NDF has participated in this debt relief initiative through the HIPC Trust Fund which is administered by IDA. The enhancement of the initiative carried out in 1999 has called for further financial commitments by NDF. To this end, the Nordic Council of Ministers in 2000 approved the amendment of NDF’s statutes in order to provide a general authorisation for the Fund to provide its part of shared contributions under debt relief initiatives in the framework of internationally co-ordinated initiatives in which other multilateral organisations participate.

The allocated funds for HIPC were a total of EUR 29.6 million. These funds have been paid in to the HIPC Trust Fund during 12 years.

11

Income from service and commitment charges, loans with equity features and equity investments The Fund’s long-term lending with government guarantee is interest-free, but a service charge of 0.75% per annum is collected on outstanding amounts. A commitment charge of 0.5% per annum is collected on any undisbursed balance one year after the loan agreement has been signed. Income from other loans is presented within Service charges from credits in the Income Statement. Income from loans with equity features is normally related to the return received by the shareholders of the company.

Income from service charges on lending and income from loans with equity features and equity investments are presented as separate items in the Income Statement. Commitment charges are presented within Fee and commission income.

Grant financing As a disbursement is made to a climate project the cost is accounted under “Grant financing for climate projects” in the income statement. Upon completion of a project or cancellation of a grant, any refund is written back as a reduction of the total costs for the year under “Refund of grant financing”.

General administrative expenses NDF receives a host country payment from the Finnish government equal to the tax levied on the salaries of the Fund’s employees. The host country payment, which the Fund received in 2011, amounted to EUR 363,076 (2010: EUR 354,083). The payment is accounted for as a reduction in the Fund’s administrative expenses.

Employees’ pensions and insurance The Fund is responsible for offering pension protection to its personnel. In accordance with the host country agreement between the Fund and the Finnish Government, the Fund has adopted the Finnish government employee pension plan for the Fund’s personnel. The Fund’s liability in respect of pension rights is completely covered. Contributions to the pension plan, which are paid to the State Pension Fund, are calculated as a percentage of the salaries. The Finnish Government determines the basis for the contributions, and the Republic of Finland State Treasury establishes the actual amount of the contributions.

Under the Finnish pension system at present, the usual age of retirement is 63-68. NDF has also introduced an additional pension system for its permanent employees. The additional pension insurance is a group pension insurance plan that is based on a defined contribution plan.

In addition to the Finnish social security system for its employees, NDF has subscribed to a comprehensive accident insurance, life and health insurance programme.

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

Notes to the Income Statement and the Balance Sheet

Credits outstanding:

(Note 1) Cash and cash equivalents and placements with credit institutions

(EUR 1,000): Bangladesh Benin Bolivia Botswana Burkina Faso Cambodia Cape Verde China Colombia Dominican Republic Ethiopia Ghana Honduras Indonesia Jamaica Kenya Kyrgyz Republic Lao PDR Malawi Maldives Mauritius Mozambique Mongolia Namibia Nepal Nicaragua Pakistan Philippines Rwanda Senegal Sri Lanka Tanzania Tunisia Uganda Vietnam Zambia Zimbabwe Credits outstanding Credits in default (Zimbabwe) Total, credits outstanding

(EUR 1,000) Dec.

Cash and cash equivalents

Cash and balances with banks Placements with credit institution Total

Placements with credit institution

Placements with credit institution Total

Total, cash and cash equivalents and placements with credit institutions

31, 2011

Dec. 31, 2010

3,387 89,983 93,369

8,033 75,708 83,740

225 225

93,594

0 0

83,740

The remaining maturity of placements, counted from the balance sheet date to maturity, is as follows: (EUR 1,000) Up to and including 3 months

Dec. 31, 2011 89,983

Dec. 31, 2010 75,708

(Note 2) Credits with government guarantee outstanding Credits according to lending currency: (Face value in EUR 1,000)

EUR-credits SDR-credits Total, outstanding credits

Dec. 31, 2011 461,547 301,340 762,887

Dec. 31, 2010 447,777 296,732 744,509

Dec. 31, 2011 29,168 18,920 31,354 5,120 10,204 9,262 2,091 4,670 1,227 7,987 27,145 45,882 30,170 12,070 5,961 25,969 4,598 53,587 23,023 9,581 2,924 62,693 26,226 1,696 18,885 47,254 10,579 14,983 12,499 50,552 21,026 23,068 5,305 51,387 24,601 17,832 16,295 765,797 2,909 762,887

Dec. 31, 2010 23,224 18,912 27,892 5,269 10,219 8,267 2,091 4,781 1,229 7,987 25,170 42,713 27,786 12,181 5,962 25,969 4,699 53,734 23,179 9,802 3,086 62,302 26,216 1,735 22,852 47,037 11,007 15,038 12,500 48,807 21,102 23,393 5,427 48,115 23,413 17,910 15,926 746,932 2,424 744,509

In addition, agreements have been signed on a further EUR 50.3 million (2010: EUR 76.7 million) in credits not yet disbursed.

12

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

Amortizations on credits outstanding as at December 31, 2011 show the following maturity profile:

(Note 4) Loans with equity features and equity investments outstanding

(EUR 1,000) Dec. 31, 2011 2011 2012-2015

67,571 2016-2020 119,566 2021-2025 149,148 2026-2030 163,531 2031-2035 139,817 2036-2040 90,714 2041-2045 32,540 Total, credits outstanding 762,887

Loans with equity features and equity investments are distributed as follows:

Dec. 31, 2010 11,959 66,225 116,462 144,429 157,516 133,758 85,638 28,522 744,509

(Note 3) Other loans outstanding Other loans outstanding are distributed as follows:

(EUR 1,000) Dec. 31, 2011 Dec. 31, 2010 East African Development Bank 6,697 7,245 Maputo Port Development Corporation - 1,096 Total, other loans outstanding 6,697 8,341 Provision for loan losses - -548 Total, other loans outstanding after provisions 6,697 7,793 Amortizations on other loans outstanding as at December 31, 2011 show the following maturity profile: (EUR 1,000) Dec. 31,2011 2011 2012-2015 1,505 2016-2020 1,366 2021-2025 1,366 2026-2030 1,366 2031-2035 1,093 Total, other loans outstanding 6,697

Dec. 31,2010 547 2,053 1,366 1,366 1,366 1,093 7,793

(EUR 1,000) Dec. 31, 2011 Dec.31, 2010 China 2,049 2,195 Mekong Enterprise Fund 1,434 2,142 Nepal 2,913 2,913 Central American Small Enterprise Investment Fund 911 911 Aureos Southern Africa Fund 1,742 1,760 Aureos West Africa Fund 231 341 Total, loans with equity features and equity investments outstanding 9,279 10,262 Write-down -2,832 -3,114 Total, loans with equity features and equity investments outstanding after write-down 6,447 7,148

As at December 31, 2011, the write-down for impairment totalled EUR 2,831,907 (2010: EUR 3,114,288) based on assessment of the risk of losses which exists or may exist.

The reversals for 2011 amounted to a total of EUR 282,380.

(Note 5) Loan losses, write-down of loans and reversals The total loan losses, write-down on loans and reversals during 2011 totalled EUR -830,439 (2010: EUR -1,841,353).

Provisions for loan losses and reversals amounted to EUR -830,439 in 2011 (2010: EUR -1,940,202) there were no realised loan losses in 2011 (2010: EUR +98,849).

(Note 6) Intangible and tangible assets

(Amounts in EUR) 2011 2010

Computer Computer Intangible assets software software Acquisition value at beginning of year 5,527 5,527 Acquisitions during the year 0 0 Acquisition value at end of year 5,527 5,527 Accumulated amortization at beginning of year 4,027 2,185 Amortization according to plan for the year

1,222 1,842 Accumulated amortization at end of year

5,249 4,027 Net book value 278 1,500

Office Office Tangible assets equipment equipment Acquisition value at beginning of year 20,168 9,872 Acquisitions during the year 13,330 10,296 Acquisition value at end of year 33,498 20,168 Accumulated depreciation at beginning of year 4,364 528 Depreciation according to plan for the year 7,916 3,835 Accumulated depreciation at end of year 12,280 4,364 Net book value 21,218 15,805

Intangible and tangible assets total 21,496 17,304 (Note 7) Equity The total Fund capital amounts to SDR 515.0 million and EUR 330.0 million. Of this, the paid-in capital as of December 31, 2011 amounted to SDR 515.0 million*) (equivalent to EUR 691.4 million) and EUR 245.9 million i.e. a total of EUR 937.3 million. The payments by the member countries in 2011 amounted to SDR 25.0 million (equivalent to EUR 28.0 million) and EUR 8.1 million, i.e. a total of EUR 36.1 million. *) The EUR value of SDR is based on the historic EUR/SDR currency rate on the date of payment

13

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

The member countries have subscribed the following amounts of the total Fund capital: Subscribed fund capital as at December 31, 2011 (EUR 1,000)

Denmark Finland Iceland Norway Sweden

Subscribed fund capital

SDR 115,067

96,726

5,453

101,591 196,163 515,000

% 22 19 1 20 38 100%

EUR 82,500 58,740 3,300 74,250 111,210 330,000

% 25% 18% 1% 23% 34% 100%

The member countries have paid in the following amounts of the total fund capital:

Fund capital Fund capital Fund capital Paid-in Fund capital (EUR 1,000) Dec. 31,2010 in SDR

Translated into EUR

Dec. 31,2010 in EUR Dec. 31,2010 Total Denmark 109,067 147,129 59,445 206,574 Finland 92,576 125,938 42,325 168,263 Iceland 5,178 6,994 2,377 9,371 Norway 96,716 130,886 53,502 184,388 Sweden 186,463 252,420 80,131 332,551 Paid-in fund capital 490,000 663,367 237,780 901,147

Paid-in fund capital (EUR 1,000) Paid-in during 2011 in SDR Translated into EUR Paid-in during 2011 in EUR Paid-in total during 2011 Denmark 6,000 6,729 2,038 8,767 Finland 4,150 4,654

1,451 6,105 Iceland 275 308 81 389 Norway 4,875 5,468 1,834 7,302 Sweden 9,700 10,879 2,747 13,626 Paid-in fund capital 25,000 28,038 8,151 36,189

Fund capital Fund capital

Paid-in fund capital (EUR 1,000) Dec. 31, 2011 in SDR Translated into EUR Dec. 31, 2011 in EUR Denmark 115,067 153,858 61,483 Finland 96,726 130,592 43,776 Iceland 5,453 7,303 2,458 Norway 101,591 136,354 55,336 Sweden 196,163 263,299 82,878 Paid-in fund capital 515,000 691,405 245,931

Fund capital Dec. 31, 2011 Total 215,341 174,368 9,761 191,689 346,177 937,336

% 23% 19% 1% 20% 37% 100%

% 23% 19% 1% 20% 37% 100%

14

N O T E S T O T H E F I N A N C I A L S TAT E M E N T S

(Note 8) General administrative expenses including compensation for the Board of Directors, the Control Committee and the Managing Director

Compensation for the Chairman of the Board of Directors, the Board, the Control Committee and the Managing Director appears from the table below:

General administrative expenses (EUR 1,000) Personnel costs Pension premiums in accordance with the Finnish state pension system Other pension premiums Office premises costs Other general administrative expenses Cost coverage, NIB Total

(amounts in EUR)

Chairman of the Board of Directors Other members of the Board Managing Director Control Committee

Host country reimbursement according to agreement with the Finnish Government Net

2011

2010

1,472

1,308

281 30 143 998 293 3,216

254 26 145 1,212 284 3,228

-363 2,853

-354 2,874

Compensation for the Board of Directors and the Control Committee is set by the Nordic Council of Ministers. Compensation for the Fund’s Managing Director is set by the Board of Directors and is paid in the form of a fixed annual salary and usual salary-based benefits.

The Managing Director is permitted to borrow from a commercial bank at interest rates that are the same for all of the Fund’s employees. The rates are set with reference to the so-called base rate determined periodically by Finland’s Ministry of Finance. The pension benefits for the Managing Director are based on the Finnish State pension system, with certain additions.

Professional staff (including the Managing Director) who move to Finland for the sole purpose of taking up employment in the Fund, are entitled to certain expatriate benefits, such as an expatriate allowance and a spouse allowance. In addition, NDF assists the expatriate in finding a residence and in other practical arrangements. Such staff members are required to reimburse the Fund part of the rent equivalent to the minimum tax value of the accommodation benefit received. The tax value is determined annually by the Finnish tax authorities.

2011 Compensation/ taxable income 5,325 16,647 336,478 1,921

2010 Compensation/ taxable income

5,326 18,848 329,797 1,333

During 2011 NDF paid a total of EUR 111,054 (2010: EUR 109,347) in pension premiums to the Managing Director

(Note 9) Transactions between closely related partners NDF receives services and enters into transactions with NIB. The outstanding claims and debts between NDF and NIB as well as interest charged during the year are presented in the table below. The interest charged corresponds to the normal market rate (EUR 1,000):

Interest collected NDF’s outstanding debt to NIB NDF’s outstanding claim on NIB 2011 653 11 90,013 2010 400 4 75,762

(Note 10) Currency exchange rates

DKK ISK NOK SEK USD SDR

EUR rate on Dec. 31, 2011 EUR rate on Dec. 31, 2010 Danish krone 7,4342 7.4535 Icelandic króna 158,65 153.1 Norwegian krone 7.754 7.8 Swedish krona 8.912 8.9655 US dollar 1.2939 1.3362 Special Drawing Rights 0.84279* 0.86232*

* The exchange rate is calculated in such a way that the market rate for USD/relevant currency provides the EUR/relevant currency rate. The exchange quotation USD/relevant currency is per December 31, 2011.

15

A U D I T O R S ’ R E P O RT

INDEPENDENT AUDITORS’ REPORT TO THE CONTROL COMMITTEE OF

including the assessment of the risks of material misstatement of the financial statements,

THE NORDIC DEVELOPMENT FUND

whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements

Independent Auditors’ report on the financial statements

in order to design audit procedures that are appropriate in the circumstances, but not for the

In our capacity as auditors appointed by the Control Committee of the Nordic Development

purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit

Fund we have audited the accompanying financial statements of the Fund, which comprise

also includes evaluating the appropriateness of accounting policies used and the reasonableness

the balance sheet as at 31 December 2011, and the income statement, statement of changes in

of accounting estimates made by management, as well as evaluating the overall presentation of

equity and statement of cash flows for the year then ended, and a summary of significant

the financial statements.

accounting policies and other explanatory notes.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a

The Board of Directors’ and the Managing Director’s responsibility for the financial statements

basis for our audit opinion.

The Board of Directors and the Managing Director are responsible for the preparation of the financial statements in accordance with the accounting principles described in the notes to the

Opinion

financial statements and for such internal control as they determine is necessary to enable the

In our opinion, the financial statements, which comprise the balance sheet as at 31 December

preparation of financial statements that are free from material misstatement, whether due to

2011, and the income statement, statement of changes in equity and statement of cash flows

fraud or error.

for the year then ended, and a summary of significant accounting policies and other explanatory notes, are prepared in all material respects in accordance with the accounting principles

Auditor’s responsibility

described in the notes to the financial statements.

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards

Report on the other requirements

require that we comply with ethical requirements and plan and perform the audit to obtain rea-

In accordance with the Terms of Engagement our audit also included a review of whether the

sonable assurance whether the financial statements are free from material misstatement.

Board of Directors’ and the Managing Director’s administration have complied with the Statutes

An audit involves performing procedures to obtain audit evidence about the amounts and dis-

of the Fund. It is our opinion that the administration of the Board of Directors and the Manag-

closures in the financial statements. The procedures selected depend on the auditor’s judgment,

ing Director complied with the Statutes of the Fund.

Helsinki, 1 March 2012 Sixten Nyman

Per Gunslev

Authorised Public Accountant

State Authorised Public Accountant

KPMG Oy Ab

KPMG, Statsautoriseret Revisionspartnerselskab

Mannerheimintie 20 B

Osvald Helmuths Vej 4

00100 Helsinki

2000 Frederiksberg

Finland

Denmark

16

A U D I T O R S ’ R E P O RT

STATEMENT BY THE CONTROL COMMITTEE OF THE NORDIC DEVELOPMENT FUND ON

Following the audit performed, we note that:

THE AUDIT OF THE ADMINISTRATION AND ACCOUNTS OF THE FUND

• the Fund’s operations during the financial year have been conducted in accordance with the Statutes, and that

To the Nordic Council of Ministers

• the financial statements, which comprise the balance sheet as at 31 December 2011,

In accordance with section 9 of the statutes of the Nordic Development Fund, we have been

and the income statement, statement of changes in equity and statement of cash

appointed to ensure that the operations of the Fund are conducted in accordance with the

flows for the year then ended, and a summary of significant accounting policies

Statutes and to bear responsibility for the audit of the Fund. Having completed our assign-

and other explanatory notes, are prepared in all material respects in accordance

ment for the year 2011, we hereby submit the following report.

with the accounting principles described in the notes to the financial statements.

The financial statements show a loss of EUR 6,934,254, which will be carried

forward to new account.

The Control Committee met during the financial year as well as after the Fund’s financial statements had been prepared, whereupon the necessary control and examination measures

17

were performed. The Fund’s Annual Report was examined at a meeting in Helsinki on 1 March

We recommend to the Nordic Council of Ministers that:

2012, at which time we also received the Auditor’s Report submitted on 1 March 2012 by the

• the income statement and the balance sheet be adopted, and

authorised public accountants appointed by the Control Committee.

• the Board of Directors and Managing Director be discharged from liability for the

administration of the Fund’s operations during the accounting period examined

by us.

Helsinki, 1 March 2012

Bill Fransson

Per Bisgaard

Hans Frode Kielland Asmyhr

Tuula Peltonen

Johan Linander Ragnheiður Rikhardsdóttir

Photo: Kim Forss

18

N D F T O D AY

Today, NDF’s goal is to distinguish itself from other development finance institutions by providing financing that adds value to climate change projects beyond the financial contribution. This ambitious goal will push NDF to continue to think creatively in order to stay in the forefront of climate change financing.

NDF today In May 2009, NDF was given a new challenge- to focus NDF’s activities on climate change projects. During the previous 20 years, the Fund had provided soft loans for social and development projects, 198 in all. Reimbursements from these loans would now go to financing climate change and development projects. The year 2009 was an interesting year from a Nordic climate change perspective, as Denmark hosted the fifteenth United Nations Climate Change Conference, COP15. By this time, climate change issues had been on top of the global development agenda for a while and it was into this atmosphere that NDF began a new era.

NDF decided to take a “learning by doing” approach and we contacted our partners, the multilateral development banks, in an effort to indentify climate change projects. Several of the projects presented to NDF had climate change in the title, but it soon became clear that many of these projects focused on other important development objectives but failed to address climate change concerns. Despite climate change being a “hot topic”, NDF found it difficult to find true climate change projects, which raised the question never before answered- what is a climate change project?

Based on the early lessons learnt, NDF developed its own climate change screening guidelines, which provided specific criteria for mitigation and adaptation projects. The purpose of the guidelines was to make sure that NDF’s funds went to projects that truly focused on climate change. The criteria were developed during 2010 and all projects approved during 2010 and onwards have been screened based on these criteria. In two and half years, NDF has approved

Photo: Jørgen Schytte

financing for 39 projects, amounting to EUR 106.6 million.

19

N D F T O D AY

What distinguishes NDF? So far under the climate change mandate, NDF has only provided grants. Climate change is a

agencies, so called joint co-financing, or through entering into an agreement directly with

new topic for many developing countries and grants help provide the initial means to demon-

the partner country in question, so called parallel co-financing.

strate for these countries the benefits of putting resources into combating climate change.

NDF is not only involved in public sector climate change projects, but also in the private sector.

As pointed out in the progress report which was developed by the administration during 2011,

Within the private sector, there are a wide range of projects which are commercial, indirectly

NDF has developed a niche- to influence the design of projects in an effort to strengthen the

commercial or non-profit to their nature. All projects under the Nordic Climate Facility and the

projects’ climate change relevance. The reason for this is similar to the reason we developed our

Energy and Environment Partnership Programme in Mekong are either defined as commercial

climate change guidelines- lack of clarity of what a climate change project is. For mitigation

or non-profit. Indirect commercial projects are where NDF’s funds flow through a multilateral

projects, the relevance is fairly clear- reduce global emissions- while for adaptation projects,

financial organisation but where they will in the end go to a commercial recipient in one of

relevance is more difficult to pinpoint. Early on, projects that were presented to NDF needed

NDF’s partner countries. Projects like GREENPYME and EcoMicro are examples of indirect

stronger climate change relevance and the best way to encourage increased relevance was to get

commercial projects.

involved at an early stage in order to contribute to the actual design of the projects. NDF wants to be known as an institution that adds value to projects beyond the mere financial contribution, not an institution that merely finances climate change projects.

While the climate change criteria have been the main focus of attention in developing an NDF policy that distinguishes it from other institutions, it is clear that we would not be able to finance all projects that pass the climate-relevance test. In common with other development finance institutions, we subject proposed projects to an overall review process. This review process takes into account other development objectives, particularly the requirement that the projects should be justified in standard economic terms, and are supportive of other development objectives such as environmental protection, gender, and poverty alleviation. In addition, the degree of influence that NDF plays in influencing the project design is also considered during the review process.

NDF’s climate change criteria set us apart from many other financiers and are one reason for NDF to get involved at an early stage in the project cycle. If we are involved from the beginning, we can contribute to climate change aspects being taken into consideration within the design, increasing the likelihood of the project passing NDF’s criteria. Our criteria and project input have been well-received among the partner agencies, and we are happy to hear that other climate change projects.

NDF has a strong and close working relationship with its partners. Today the biggest share of NDF financing is provided together with the multilateral banks for projects in the public sector.

NDF has a range of funding modalities and may opt to fund a project through one of its partner

Photo: Max Shapira

financing institutions have developed, or are in the process of developing, guidelines for

20

21 Photo: Gaia Association

N D F T O D AY

N D F T O D AY

The Nordic Angle

Moving forward

As an institution owned by the Nordic countries, NDF reflects the Nordic countries’ priorities in

The past two and half years have provided NDF with many early lessons learnt. These lessons

the area of climate change and development. More concretely, NDF has emphasised the Nordic

were taken into account when we, in late 2011, presented our new Climate Change Strategy for

aspect in two different ways- through the development of the Nordic Climate Facility (NCF) and

2012-2013. The Strategy points out the importance of sharpening project selection, while at the

through the exploration of cooperation opportunities with other Nordic institutions.

same time closely following the implementation of the existing portfolio to consolidate experiences from ongoing activities.

NCF is a good example of how NDF has cooperated with other Nordic institutions, as NCF is developed and run by NDF and the Nordic Environment Finance Corporation (NEFCO). During

To further improve operations, NDF has developed, and will continue to develop, new policies

the development of NCF, NDF was inspired by other institutions’ experiences from other similar

and guidelines as well as review and update existing ones. In addition to the climate change

programs. Today NCF supports partnerships between Nordic stakeholders and local stakehold-

screening guidelines, NDF has developed procurement guidelines for grant projects and a

ers in NDF’s partner countries. The Nordic countries are known for fostering innovative solu-

policy on access to information to ensure transparency in NDF’s operations. We are now in the

tions. The hope is that these partnerships lead to the transfer of innovative climate change ideas

process of reviewing and updating our anti-corruption guidelines, and our monitoring and

and technologies from the Nordic partners to the local partners.

evaluation guidelines. Concerning the anti-corruption guidelines, the aim is to strengthen NDF’s cooperation with the multilateral banks on integrity matters, both in regards to proactive

A similar programme is the Energy and Environment Partnership (EEP) Programme developed

work in the preparation and implementation of projects as well as in regards to handling

by the Ministry for Foreign Affairs of Finland. NDF joined the Finns to co-finance the EEP in

allegations of fraud and corruption. The monitoring and evaluation guidelines will be revised

the Mekong region. The calls for proposals under the programme are open to entities of all

so that they correspond to the climate change mandate. In addition, a project performance

nationalities, however, the relatively strong Nordic presence in this region has been encouraging.

rating system will be developed with the purpose of enhancing NDF’s focus on efficient and

By the end of 2011, 33 projects were being implemented under the EEP Mekong and 19 of these

results-oriented project implementation.

have a Nordic Partner.

At the end of 2011, an external evaluation of NDF’s progress under the climate change mandate Another valuable Nordic co operation is the Nordic Partnership Initiative, a joint effort by

was initiated. Although it is too early to get an assessment of the projects, the evaluation will

the Nordic countries to utilise Nordic experience from climate change mitigation and carbon

provide insight on whether NDF is moving in the desired direction- providing added value to

market mechanisms. The initiative aims to support the ongoing global climate negotiations by

climate change projects in developing countries.

putting new market mechanisms into practice under the UNFCCC framework. Under the initiative, NDF is funding a pilot project in Vietnam. The Nordic Ministries of Environment initiated the Nordic Partnership Initiative based on a feasibility study from the Nordic working group for global climate negotiations (NOAK) and the Nordic Environment Finance Corporation (NEFCO). Together with NOAK and NEFCO, NDF launched the Nordic Partnership Initiative at the 2011 climate conference in Durban, COP17.

A new tripartite platform for cooperation was developed during 2011 when NDF’s sister organisation, the Nordic Investment Bank (NIB), the Inter-American Investment Corporation (IIC) and NDF signed a memorandum of understanding. The memorandum serves as a general framework to facilitate climate change cooperation between the institutions in Latin America.

Emission reductions

About half of the projects in NDF’s portfolio aim to mitigate climate change. The emission reductions out of these projects are estimated at 3.3 million tons of CO2 equivalents per year, a figure that corresponds to 50% of Lao PDR’s greenhouse gas emissions in a year. This estimation includes direct and indirect emission reductions of projects or project components financed by NDF. Indirect reductions are emissions reductions which are likely to be achieved due to the NDF project but will require additional investments. In jointly financed projects, the emission reductions are considered as a proportion of NDF’s contribution to the project.

On the other hand, NDF’s activities cause some emissions. The biggest share of NDF’s carbon footprint comes from air travel, which in 2011 amounted to 119 tons of CO2 equivalents.

22

C L I M AT E C H A N G E P O RT F O L I O

Signed Grant Agrements; Volume mEUR and number (cumulative)

23

Regional Distribution of Approved Financing

Distribution by Lead Agency

C R E D I T P O RT F O L I O

AFRICA

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

Public Sector Projects Benin Transport Sector Investment IDA 4.7 SDR 1997 Energy Services Delivery IDA 13.8 EUR 2005

Burkina Faso Power Sector Development IDA 10.2 EUR 2005

Botswana Mochudi-Molepolole Groundwater Exploitation NIB 1.1 EUR 1990 Trans-Kgalagadi Road AfDB/NIB 0.5 EUR 1992 Transmission Line Francistown-Maun NIB 5.0 EUR 1993 Cape Verde Integrated Fisheries Development

ICEIDA

2.0 SDR

1994

Ethiopia Addis Ababa Airport Improvement Energy II Road Sector Development Road Sector Development II

EIB IDA IDA IDA

5.0 7.0 4.8 8.6

1998 1998 1998 2003

SDR SDR SDR EUR

Ghana Urban II IDA 5.2 EUR 1994 National Electricity IDA 6.1 EUR 1994 Accra Tema Water Supply Rehabilitation AfDB 5.2 EUR 1994 Urban Environment Sanitation IDA 2.6 EUR 1996 Mining Sector Development and Environment IDA 4.0 SDR 1996 Health Sector Support IDA 5.0 SDR 1998 Urban V IDA 2.1 SDR 2000 Health Services Rehabilitation III AfDF 8.3 EUR 2003 Land Administration IDA 6.9 EUR 2004 Urban Water Project IDA 6.0 EUR 2004 Urban Environment Sanitation II IDA 9.0 EUR 2004

Kenya Northern Transport Corridor Improvement IDA 16.0 EUR 2004 Energy Sector Recovery IDA 10.0 EUR 2004

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

Malawi Fisheries Development IDA 2.8 EUR 1991 National Water Development IDA 5.3 SDR 1995 Power V IDA 5.0 SDR 1997 Preparatory Programme to Support the Telecommunications Sector Danida 5.1 EUR 1998 Road Maintenance and Rehabilitation (ROMARP) IDA 4.8 SDR 1999

Mauritius Environmental Investment for Sustainable Development IBRD 4.1 EUR 1990

Mozambique Urban Household Energy IDA 5.6 EUR 1989 Cahora Bassa Interconnection NORAD 4.6 EUR 1994 Danida/ICEIDA 3.6 SDR 1996 Semi Industrial Fisheries National Water Development IDA 5.2 SDR 1997 Municipal Development IDA 3.4 SDR 2001 Mineral Resources Management Capacity Building IDA 12.6 EUR 2001 The Roads and Bridges Management and Maintenance IDA 11.7 EUR 2001 Agricultural Sector Public Expenditure (PROAGRI) IDA 7.2 EUR 2002 Energy Reform and Access (ERAP) IDA 10.1 EUR 2003 Namibia Seaflower - Whitefish Corporation

NIB

2.0 EUR

1994

Rwanda Urgent Electricity Rehabilitation Urban Infrastructure and City Management

IDA IDA

7.5 EUR 5.0 EUR

2005 2005

AfDB IDA IDA IDA

4.3 6.1 5.0 2.1

EUR EUR SDR SDR

1992 1995 1997 1999

IDA AfDB IDA

3.7 SDR 7.5 SDR 1.9 SDR

1999 1999 2000

Senegal Women’s Groups Support Water Sector Integrated Health Sector Development Second Transport Sector Long Term Water Sector Project Water Resources Management Poverty Alleviation Quality Education for All

24

C R E D I T P O RT F O L I O

Lead Agency

Investment million, NDF

Year of signing

Benin Cimbenin S.A.

Swedfund

0.7 SDR

1996

Ghana Paper Conversion Company Ltd. Ghana Emulsion Company Ltd. Danafco Ltd.

Swedfund IFU IFU

0.5 SDR 0.4 SDR 0.2 SDR

1995 1996 1998

2005

Mozambique Maputo Port Privatisation and Rehabilitation

Swedfund

0.9 SDR

2003

4.4 EUR 1.8 EUR

1994 1996

Namibia Seaflower Whitefish Corporation Ltd.

NBVF

0.7 SDR

1999

IDA IDA IDA IDA

4.9 5.8 5.8 4.4

EUR EUR EUR EUR

1990 1991 1994 1994

South Africa Nielsen Tap (Pty) Ltd. Princeton Computing Training Solutions (Pty) Ltd. New Africa Signs and Graphics (Pty) Ltd. Danforge Engineering (Pty) Ltd.

IFU IFU IFU IFU

0.1 0.02 0.04 0.04

SDR SDR SDR SDR

1995 1996 1997 1998

IDA IDA IDA IDA

5.0 3.2 7.0 12.7

SDR SDR SDR EUR

1998 2000 2001 2002

Tanzania Sao Hill Timber Ltd.

NORAD

0.3 SDR

1997

IDA

6.0 EUR

2005

Uganda MTN (Uganda) Ltd.

Swedfund

1.5 SDR

1999

AfDF

5.0 EUR

2006

IDA IDA IDA

0.9 EUR 6.1 EUR 9.6 EUR

1997 1999 2003

Zimbabwe Imperial Derby Refrigeration Ltd. Oscars Fine Foods Frese (Zimbabwe) (Pvt) Ltd. Powervision (Pvt) Ltd.

IFU IFU IFU IFU

1.0 0.1 0.3 0.1

SDR SDR SDR SDR

1995 1995 1996 1997

IDA

8.0 EUR

2004

Regional African Infrastructure Fund Aureos Southern Africa Fund (ASAF) Aureos West Africa Fund

Swedfund Norfund Norfund

1.5 SDR 3.4 EUR 3.0 EUR

1999 2003 2004

IBRD NORAD Sida

4.4 SDR 3.5 SDR 5.9 SDR

1990 1994 1996

AfDB

6.8 EUR

1995

n/a

4.2 EUR

2003

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

Long Term Water Sector Project Urban Sanitation, Thiès Urban Mobility Improvement

IDA IDA

11.5 SDR 5.1 SDR

2000 2002

AfDB IDA IDA IDA IDA

6.1 6.0 6.7 1.3 4.1

EUR EUR SDR EUR EUR

1993 1995 1999 1999 2004

AfDF

6.0 EUR

IBRD IBRD

Tanzania Electricity IV Power VI Mineral Sector Development Technical Assistance Songwe River Stabilisation Study Central Transport Corridor Roads The Lake Tanganyika Integrated Regional Development (PRODAP) Tunisia Second Forestry Development Water Supply and Sewerage Uganda Second Power - Installation of SCADA System First Urban Third Power - Owen Falls Extension Transport Rehabilitation Northern Reconstruction Telecommunications component

Second Economic and Financial Management (EFMP2)

Roads Development Program, Phase II (RDPPII) Fourth Power Sustainable Management of Mineral Resources (SMMRP) Farm income Enhancement and Forest Conservation Project Zambia Environment Support Power Rehabilitation Copperbelt Environment Road and Rehabilitation and Maintenance Project - In Support of ROADSIP II (Phase I) Zimbabwe Urban Sector and Regional Development Cahora Bassa Interconnection Pungwe Mutare Water Transfer

Country/ Project Private Sector Projects Loans with equity features

Credit Lines Fifth Line of Credit and Technical Assistance to the East African Development Bank Second NDF Credit Line to the East African - Develpment Bank (EADB)

25

C R E D I T P O RT F O L I O

ASIA

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

Public Sector Projects Bangladesh KAFCO Jamuna Bridge Access Roads Urban Primary Health Care Southwest Road Network Development West Zone Power System Development Dhaka Clean Fuel Project

Power Sector Development

IFU ADB ADB ADB ADB ADB ADB

4.0 SDR 1.5 SDR 1.2 SDR 2.7 SDR 10.0 EUR 9.4 EUR 8.3 EUR

1993 1997 1998 2000 2002 2003 2004

Cambodia Greater Mekong Subregion (GMS) Transmission

ADB

9.3 EUR

2004

China Beishigiao Wastewater Treatment Plant, Xi’an City Hedong Wastewater Treatment Plant, Urumqi City Tanggu Geothermal Plant

NIB NIB NIB

1.6 EUR 3.1 EUR 0.8 EUR

1993 1993 1994

Indonesia Central Nurseries Establishment Indonesia/Nordic Forestry Digital Marine Mapping

NIB NIB NORAD

3.9 SDR 3.8 SDR 5.0 SDR

1990 1993 1995

Kyrgyz Republic Power and District Heating Rehabilitation

ADB

5.1 EUR

1997

Lao PDR Highways Improvement Airports Improvement Bridge Construction Theun Hinboun Hydropower Third Highway Improvement Power Transmission and Distribution Road Maintenance

Northern Area Rural Power Distribution

IDA ADB Sida ADB IDA ADB IDA ADB

4.8 5.7 6.0 6.0 3.9 6.4 4.5 12.3

1991 1994 1994 1995 1997 1997 2001 2003

EUR EUR EUR EUR SDR EUR SDR EUR

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

Roads For Rural Development Maldives Third Fisheries Male-Water and Sewerage Third Power System Development

ADB

7.4 EUR

2004

IDA IFU ADB

4.2 EUR 2.1 EUR 4.7 EUR

1992 1995 1998

Mongolia Telecommunications Power Rehabilitation Transport Infrastructure Development Social Security Sector Development, SSSDP Second Education Development

ADB ADB IDA ADB ADB

4.9 3.9 3.8 4.4 8.5

SDR SDR SDR EUR EUR

1994 1995 2001 2001 2002

Nepal Power Sector Efficiency Fifth Telecommunication Biratnagar II Multifuel Power Plant Extension Khimti Power Transmission Melamchi Water Supply

IDA IDA Finland Finland ADB

5.1 EUR 5.8 EUR 5.4 EUR 1.7 EUR 7.5 EUR

1992 1993 1996 1997 2001

Pakistan NLC - Radio Link WAPDA Twelfth Power Sector Provincial Highway

NIB ADB ADB

3.3 EUR 6.9 EUR 4.3 EUR

1993 1993 1994

26

C R E D I T P O RT F O L I O

Country/ Project

27

Lead Agency

Investment million, NDF

Year of signing

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

Bangladesh Scancement International

Norfund

1.4 SDR

2000

China Scana Leshan Machinery Company Limited

IFC

1.6 SDR

1999

Private Sector Projects Loans with equity features

Philippines Industrial Restructuring

Leyte-Cebu Geothermal Local Government Units (LGU), Urban Water and Sanitation Mindanao Basic Urban Services Sector Technical Education and Skills Development

IBRD IBRD

2.8 EUR 4.2 EUR

1992 1995

IBRD ADB ADB

0.6 SDR 4.3 SDR 5.0 SDR

1998 2000 2000

Sri Lanka Second Power Distribution and Transmission Southern Transport Development Skills Development Secondary Education Modernization

IDA ADB ADB ADB

5.4 3.7 6.3 4.5

EUR SDR SDR SDR

1996 1999 1999 2000

Nepal Khimti Hydropower

ADB / IFC

2.1 SDR

1996

Vietnam Song-Hinh Hydropower Vocational and Technical Education Bai Bang Paper Mill Central Region Transport Network

Thailand Thailand Research Test Center (TRTC)

Norfund

0.3 SDR

1998

Sida ADB Sida ADB

7.4 EUR 4.3 SDR 5.9 EUR 11.6 EUR

1996 1999 2001 2005

Regional Mekong Enterprise Fund Ltd. (MEF)

ADB

3.4 EUR

2002

C R E D I T P O RT F O L I O

LATIN AMERICA AND THE CARIBBEAN Country/ Project Public Sector Projects Bolivia Energy Generation, Transmission and Distribution Environment, Industry & Mining National Land Administration Ventilla - Tarapaya Highway Institutional Reform Project (IRP) Bolivian Epidemiological Shield and Support for Health-Sector Reform Program Road Rehabilitation and Maintenance Environmental and Social Protection in the - Santa Cruz-Puerto Suàrez Corridor

Colombia Pacific Coast Sustainable Development Dominican Republic Energy Control Center / SCADA System Health Sector Modernization and Restructuring Honduras Road Reconstruction and Improvement Potable Water and Sanitation Investment National Education Reform Three National Sustainable Development Program for - Upper Lempa River Basin Land Administration Support for Rural Electrification and the Energy Sector

Jamaica Primary Education Improvement Multisectoral Pre-investment Airport Reform and Improvement

Lead Agency

Investment million, NDF

Year of signing

IDB IDA IDA IDB IDA

4.8 5.0 5.0 2.6 1.3

1991 1995 1996 1999 2000

IDB IDA

5.0 SDR 4.8 EUR

2000 2002

IDB

3.5 EUR

2002

IDB

1.4 SDR

1997

IDB IDB

5.1 SDR 2.7 SDR

1993 1998

IDA IDB IDB

7.8 SDR 1.5 SDR 7.0 EUR

2000 2000 2001

IDB IDA

3.4 EUR 6.0 EUR

2002 2005

IDB

5.6 EUR

2005

IDB IDB IDB

2.0 SDR 1.8 SDR 2.0 SDR

1993 1994 1997

EUR SDR SDR SDR SDR

Country/ Project

Lead Agency

Investment million, NDF

Year of signing

IDB

2.7 SDR

1992

IDB IDB IDB IDB IDA IDA

4.8 4.0 3.2 6.9 2.3 2.5

1992 1993 1996 1997 1997 1999

Sida

3.0 SDR

2000

IDB IDA IDB

2.5 EUR 4.6 EUR 9.5 EUR

2002 2003 2004

Colombia Owens Corning Andercol TuberÌas S.A.

NORAD

1.4 SDR

1996

Regional Central American Small Enterprise Investment Fund (CASEIF)

Norfund

3.1 EUR

2003

Nicaragua Electric Power System Rehabilitation Rehabilitation of the Water Supply & Sewerage Systems Rural Road Rehabilitation and Upgrading Forestry Resource Management and Conservation Management of Lake Managua Atlantic Biological Corridor Health Sector Modernization II Road Yalag¸Ìna-Las Manos, Rehabilitation and Improvement Socioenvironmental and Forestry Development Program II - (POSAF II) Land Administration Transport Program for Improved Competition

SDR SDR SDR SDR SDR SDR

Private Sector Projects Loans with equity features

28

BOARD OF DIRECTORS *)

CONTROL COMMITTEE *)

DENMARK Christoffer Bertelsen, Senior Adviser, Ministry of Foreign Affairs Deputy: Flemming Winther Olsen, Senior Adviser, Ministry of Foreign Affairs

CHAIRMAN Bill Fransson, Managing Director

FINLAND Satu Santala, Director, Ministry for Foreign Affairs, Chair of the Board Deputy: Riikka Laatu, Director, Ministry for Foreign Affairs ICELAND Egill Heiđar Gislason, Advisor, Deputy Chair of the Board Deputy: Anna Karlsdóttir, Assistant Professor, University of Iceland NORWAY Harald Tollan, Senior Adviser, the Royal Ministry of Foreign Affairs Hans Olav Ibrekk, Policy Director, the Royal Ministry of Foreign Affairs SWEDEN Tomas Danestad, Director, Ministry for Foreign Affairs Deputy: Lena Kövamees, Senior Programme Manager, Sida

DENMARK Per Bisgaard, Member of Parliament FINLAND Tuula Peltonen, Member of Parliament ICELAND Ragnheiđur Ríkharđsdóttir, Member of Parliament NORWAY Hans Frode Kielland Asmyhr, Member of Parliament SWEDEN Johan Linander, Member of Parliament

AUDITORS APPOINTED BY THE CONTROL COMMITTEE Observer: Johan Ljungberg, Senior Director, Nordic Investment Bank

Sixten Nyman, Authorised Public Accountant, KPMG, Finland Per Gunslev, State Authorised Public Accountant, KPMG, Denmark

*) As of December 31, 2011

Secretary to the Control Committee Birgitta Immerthal, KPMG, Finland *) As of December 31, 2011

29

MANAGEMENT AND STAFF Helge Semb, Managing Director Leena Klossner, Deputy Director Juhani Annanpalo, Country Program Manager Hannu Eerola, Country Program Manager Martina Jägerhorn, Country Program Manager Aage Jørgensen, Country Program Manager Linda Lundqvist, Country Program Manager and Legal Counsel Johanna Palmberg, Country Program Manager (from 1.5.2012) Emeli Möller, Program Officer Mats Slotte, Manager, Financial Administration Jessica Suominen, Financial Administrator (on maternity leave until 12.1.2012) Henna Vuorinen, Financial Administrator (until 14.2.2012) Stella Eckert, Manager, Administration and Corporate Affairs (until 31.1.2012) Ann-Christin Lundin, Secretary Maria Talari, Administration and Information Officer

441 014 Printed matter

Nordic Development Fund • Annual Report 2011 • Lay-out: Kubik advertising • Photos: Gaia Association, Kim Forss, Max Shapira, Jørgen Schytte, cover image Suomen Kuvapalvelu / Hugh Sitton • Printed by Libris, Finland

Cover image Suomen Kuvapalvelu / Hugh Sitton.

Nordic Development Fund (NDF) P.O. Box 185 FIN-00171 Helsinki, Finland Offices: Fabianinkatu 34 Telephone +358 10 618 002 Telefax +358 9 622 1491 E-mail: info.ndf@ndf.fi Internet: http://www.ndf.fi