Technical assistance at Finnfund: What consultants need to know

Finnfund, Finland’s development finance institution, is entering a new chapter — one that allows it, for the first time, to offer dedicated funding for technical assistance, or TA, thanks to a new pot of money provided by the European Union. For DFIs, TA is a tool that strengthens the viability and impact of investment projects. It can include advisory services, capacity building, and targeted support for investees. Finnfund is preparing to roll out a significantly expanded technical assistance portfolio of about €15 million in the upcoming years. In a recent Devex Pro Funding live session, Juho Uusihakala, senior development impact adviser at Finnfund, shared how this shift will create new consulting opportunities. Finnfund at a glance To understand how this new TA funding fits into Finnfund’s work, it helps to look at the institution’s investment footprint and strategic approach. Finnfund makes around 20-25 investments annually, totaling €200 million–€250 million, with a current portfolio of approximately €1 billion across 120 active investments in emerging markets. Its key sectors of activity are agriculture, forestry, digital, renewable energy, and financial inclusion. Every investment is guided by three core criteria: • Profitability. • Socially and environmentally sustainable and responsible conduct. • Positive development impact. In the case of the second criterion, this means that any investment must adhere to a set of national and international requirements, including the International Finance Corporation’s performance standards. On the third criterion — impact — it means that observable outcomes are a must-have. Importantly, TA and guarantees serve as key risk mitigants in Finnfund’s continuous risk management processes. About 20% of its portfolio is dedicated to financial inclusion, often working through financial intermediaries such as commercial banks and microfinance institutions. A game changer: New TA funding through EFSD+ Until now, Finnfund hadn’t been funded to provide dedicated TA support — either by its Finnish government owner or external partners. “This is the first time we get TA, and we of course love it more than we love eating ice cream. It’s sort of like something we always dreamt of having,” Uusihakala said. This new TA funding is linked to the European Fund for Sustainable Development Plus, or EFSD+, guarantee programs. EFSD+, a core component of the EU's Global Gateway initiative (Europe's response to narrowing the global investment gap for the SDGs), acts as a “financing instrument to allow for de-risking” private investments. Finnfund can utilize these EU funds because it is “pillar-assessed” by the European Commission, meaning it has validated its internal processes for managing European funds. However, a crucial distinction is that Finnfund is pillar-assessed for procurement, not for grants. This means it must use consultants to support its investees, rather than providing direct grant money. Where do the TA opportunities lie? Finnfund participates in five EFSD+ guarantee schemes. The only one with approved TA funding so far is Africa Connected, which focuses on digital infrastructure and solutions in Africa. Finnfund will deploy €7 million of TA over six years. To streamline the hiring of consultants, Finnfund issued two framework agreements — competitive tenders used to pre-select firms for a pool, from which future assignments can be contracted without launching a new procurement each time. These agreements are now closed. However, TA funding is expected to be approved for the other four guarantee schemes, and consulting opportunities will be available on those funds. Uusihakala anticipates TA expertise to be needed to support the three core criteria of Finnfund’s investments mentioned above, which could include commercial and financial analysis to verify commercial viability and business cases, environmental social responsibility, impact studies, gender gap assessments, Paris Agreement-alignment assessment, and market studies to build a robust pipeline of bankable projects. The other programs are related to small and medium-sized enterprises, carbon sinks, renewable energy, and transforming global value chains. They all have their TA agreements pending to be signed — which Uusihakala said could happen before the end of year, as a sort of “Christmas” present for business development leaders. “All [programs] combined, the Finnfund share would be roughly in the tune of maybe €15 million” Uusihakala said, which means the institution will have a “hefty technical assistance budget” in the coming years that will be used mostly for hiring consultants. “If you are specialized in carbon sinks, in forestry, in agriculture, in renewable energy, or in value chains in general, I think there'll be plenty of opportunities there. Also if you are from a consultancy that is specializing in responsible sustainability and [the] responsibility side of the operations like the IFC performance standards, there'll be a lot of work in that in those areas as well, and then of course, in [the] impact side, doing impact analysis on projects” Uusihakala said. Finnfund is looking for “industry-leading consulting companies” familiar with DFI operations, specific sectors, geographies, and international standards. Experience working with DFIs and understanding their expectations and operational logic is highly valued. Uusihakala’s advice for those hoping to engage with DFIs such as Finnfund? He suggested starting by researching the institution’s website to identify the most relevant areas of overlap. “We all have very good websites,” he said. “Check there and see where your niche is.” Reaching out with broad or general inquiries, he noted, can often lead nowhere, as they tend to get lost internally. Instead, he recommended directing specific questions to the right contact person whenever possible. When in doubt, the communications team is a good starting point.