Even if you never stopped, it’s time for a restart

Noah Law

What a year it’s been – the global pandemic has not been easy for many – but, whilst my colleagues were stuck at working from home, I was fortunate enough to be expanding my network across the developing world through the MBA programme at Oxford’s Saïd Business School. With the world slowly opening up, it’s time for both individuals and businesses to think about how to get the most out of this forced restart. For me, this means taking on new challenges while at the same time hoping to be able to visit our investee companies in person again.

Focusing on manufacturing and industrial sectors to boost development

Now back at Finnfund, it’s a great privilege to be focused on originating new deals in the manufacturing and industrial sectors which are so critical to our development mission. And, although not one of our recent focus sectors, Finnfund has long supported innovative and sustainable manufacturing firms in developing countries – it’s in our name and heritage as the Finnish Fund for Industrial Cooperation. I’ll be bringing to bear my experience as an industrial sector banker and my research on the circular economy during my MBA to improve firms’ place in the value chain, as we are already doing in our forestry and agriculture portfolios.

Since at least the 1940s, economists have argued for the value of import substitution in improving developing countries’ terms of trade. However accurate their theses then or today, we see that our strongest companies are those generating export revenues, building productive capacity and providing high-quality jobs in the process. In economies where exports are scarce, these companies are also a vital source of hard currency which helps stabilise the local macroeconomy. We see this in our investee companies such as Africado, exporting primarily to the EU, and Miro Forestry, where the FSC certification opened up access to international markets.

Looking for the next success

The (literal) road isn’t always easy, with many of our markets facing infrastructural hurdles in terms of logistics, power, labour, and raw materials, but, as seasoned investors in developing countries, we are well placed to navigate these. Manufacturing industries include some of the most stubborn ones to decarbonise but once the change happens, the impact can be massive. For example in Africa, sectors such as cement (accounting for 32% of manufacturing emissions) and fertilizer (accounting for 4%) are something the continent imports close to 5 million nutrient tons every year. Fortunately, Finnfund’s home base Finland is among the world leaders in innovative, clean technologies, most famously in biofuels, but also in alternative cement technologies. Moreover, in Oxford, I was lucky enough to work with a team developing cutting edge green ammonia production technology for fertilizers as part of my Entrepreneurship Project.

So, Finnfund is calling for high-quality manufacturing projects, backed with the capital and expertise of local leaders or global industrial firms to come and pitch to us. We’re ready to support both established technologies implemented in a more sustainable way and innovative new clean technologies with a proven commercial track record.

During the COVID-19 pandemic, we have managed to find ways to keep our investment process rolling. The team learned a lot about conducting due diligence virtually and we got used to meeting people online. However, I’m looking forward to networking with connections old and new in person and I am enjoying being able to participate in live conferences again!

Noah Law
Investment Associate, Finnfund

The picture is from Finnfund’s investee ETC Group that has developed into a global player with a diverse portfolio of expertise across multiple industries, encompassing agricultural inputs, logistics, merchandising and processing, and supply chain optimization, with most of its footprint in Africa.