Oikocredit confident about staying at the forefront of impact investing
Amersfoort, the Netherlands – Social impact investor and worldwide cooperative Oikocredit today published its Annual Report for 2022, including its consolidated financial statements.
The cooperative has achieved solid financial and social results, finalised its 2022-2026 strategy, created a new capital-raising model and strengthened its governance and leadership.
Net consolidated result: € 8.5 million (2021: € 15.3)
Total consolidated assets: € 1,238.2 million (2021: € 1,258.1 million)
Total member capital: € 1,110.7 million (2021: € 1,129.0 million)
Net liquidity as % of total assets: 23.9% (2021: 21.7%)
Net asset value per share (NAV): € 213.95 (2021: € 213.58)
Development financing portfolio: € 1,007.2 million (2021: € 995.9 million)
519 partners in 55 countries (2021: 517 partners in 55 countries)
54 current and potential partners benefiting from € 0.6 million of capacity building (2021: 50; € 0.4 million)
56,300 individual and institutional investors (2021: 58,900)
Proposed dividend yield: 0.5% (2021: 0.5%)
Reconnecting, engaging and renewing
In 2022, after the end of Covid-19 restrictions in most countries, Oikocredit reconnected and re-engaged with partners, members and investors. We finalised our new strategy to achieve greater impact for low-income people and communities, confirmed our new capital-raising model, welcomed new board members and aligned our governance and leadership.
Despite challenging macroeconomic conditions, our lending and investing in support of partner organisations in Africa, Asia and Latin America & the Caribbean achieved some portfolio growth and solid improvements in credit quality and social performance. In a difficult macro-environment, closing the year with a positive financial result of € 8.5 million was a fair outcome given the current volatility and uncertainties.
Our investments: credit and equity
Oikocredit’sdevelopment financing showed modest growth, from € 995.9 million to € 1,007.2 million. Global uncertainties and rising interest rates inhibited many current and potential partners from taking on new loans. In financial inclusion, our largest focus sector, the portfolio increased to € 767.9 million (2021: € 761.40 million). Agriculture, especially affected by the macroeconomic context, contracted to € 175.7 million (2021: € 182.6 million). In renewable energy the portfolio reached € 56.0 million (2021: € 43.7 million).
Regionally, our loans and investments in Africa were impacted negatively by external factors and reduced to € 189.2 million (2021: € 204.7 million). Our Asian portfolio also decreased, to € 289.5 million (2021: € 307.3 million), despite our Indian subsidiary, Maanaveeya, achieving robust growth. Latin America & the Caribbean, our largest regional portfolio, saw a significant rise to € 483.4 million (2021: € 454.9 million). Overall lending totalled € 862.4 million (excluding loan loss provisions); equity, € 144.8 (excluding impairments). More of our innovative community resilience-building projects in housing, education, water and sanitation, and infrastructure began to take shape.
Portfolio quality improved appreciably. Portfolio at risk or PAR 90 (the percentage of the credit portfolio with payments more than 90 days overdue) fell to 3.8% (2021: 5.5%). For a few partners, the effects of the Covid-19 pandemic were especially lasting and problematic, and we worked with them and other lenders to reach amenable solutions, which involved relatively large write-offs.
Social performance and capacity building
Fostering beneficial change among low-income people through our partners’ work is central to Oikocredit’s mission. We are focusing more intensively on strategy and sustainable impact, taking account of the mounting climate and biodiversity crises and their effects on our partners.
With the end-client survey programme, we are expanding our pioneering collaboration with partners to respond to clients’ perception of change in their lives. We do this by building partners’ capacity to meet clients’ needs and help them increase resilience in the face of challenges. In 2022 we conducted the survey in seven languages with 19 financial inclusion partners in 12 countries in Africa, Asia and Latin America & the Caribbean. Almost 16,500 clients participated, with the majority saying that Oikocredit's partners had a positive influence on their wellbeing and the study revealing the importance of savings in meeting basic needs. Nearly half the respondents reported extreme weather affecting their income.
Our capacity building with partners continues as a key part of our work. We spent € 0.6 million on 30 capacity building initiatives in 2022 in support of 54 current and prospective partners (2021: € 0.4 million, 21 initiatives, 50 current/prospective partners). Donors contributed € 0.5 million of the capacity building funds, which we mainly allocated to agriculture, financial inclusion, work in Africa and multi-regional initiatives.
Notable among these projects were the extension of our price risk management training for coffee farmers from Latin America to Africa (Rwanda), work on agriculture value chain methodology with a financial inclusion partner in Kenya, and loan management support for farmer-based cooperatives in Kenya and Uganda.
With investors cautious in response to global developments, and with regulatory changes affecting our capital inflow in Germany, total member capital decreased slightly, to € 1,110.7 million (2021: € 1,129.0 million). We were pleased to see that our members and investors remained remarkably loyal to Oikocredit and its mission. Members and investors continued to receive our quarterly updates (unaudited) on the cooperative’s financial and social performance and organisational matters.
Development of Oikocredit’s new capital-raising model to safeguard our mission, improve transparency and ensure all eligible organisations and individuals can invest directly has been a major undertaking in response to evolving financial market regulations. With the new model, investors in our inflow countries will be able to buy and hold the same investment product, a non-voting equity instrument called a participation. Investing in the cooperative will become simpler and more direct, and our work will be more efficient. By end-2022 preparations were well under way to introduce the new model in Germany and then incrementally in other countries.
Looking to the future
In 2022 Oikocredit renewed and strengthened its foundations in terms of strategy, governance, operational leadership and staff. We will carefully monitor implementation of our new strategy, capital-raising model and other changes, thereby protecting our capital, keeping current investors engaged, welcoming new investors and continuing to build a quality social impact portfolio. Our aim is to increase our contribution to global action to address poverty, inequality, climate change and biodiversity loss by helping build community resilience and ensure decent lives for all.
Mirjam ‘t Lam, Oikocredit’s Managing Director, said: “In 2022 Oikocredit brought to fruition several years’ preparatory work to enable us to harness a more robust and resilient collective response to global challenges. I am confident in our cooperative’s ability to stay at the forefront of responsible investing and to help bring about more of the change the world so urgently needs.”
More information is available in the Oikocredit 2022 Annual Report at www.oikocredit.coop/annual-report.
Social impact investor and worldwide cooperative Oikocredit has five decades of experience funding organisations active in financial inclusion, agriculture and renewable energy. Oikocredit’s loans, equity investments and capacity building aim to enable people on low incomes in Africa, Asia and Latin America & the Caribbean to improve their living standards sustainably. For more information: www.oikocredit.coop.
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