1.2 billion people in developing countries are expected to enter the global labour market over the next ten years. At the same time, it is estimated that only 425 million new jobs will be created, meaning that the gap between supply and demand for jobs will be huge. Along with unemployment, the large informal sector is a challenge in many developing countries. In sub-Saharan Africa, around 85 percent of the workforce is engaged in the informal sector, and a significant proportion of these workers are young people and women.

Development finance institutions such as Swedfund invest in small and medium-sized enterprises to help them grow and contribute to more direct jobs with decent working conditions. This means that employees receive fair pay, a safe working environment, access to social protection systems and freedom to express their opinions, join trade unions and participate in decisions that affect their working conditions. Other investments, such as those in renewable energy and digitalisation, also contribute indirectly to job creation. Swedfund’s Project Accelerator also contributes by creating the conditions for more infrastructure projects to be undertaken and financed.

The latest report by the UN Intergovernmental Panel on Climate Change (IPCC) summarises five years of research. The report shows that greenhouse gas emissions will lead to continued global warming in the near term, and we risk exceeding the 1.5 degree limit between 2030 and 2035. The World Bank estimates that the effects of climate change could drive another 100 million people below the poverty line by 2030. In addition, climate change leads to increased competition for resources such as land, food and water, exacerbating socio- economic tensions and causing mass movement. If no action is taken, the World Bank estimates that more than 140 million people in developing countries could be forced to migrate by 2050. Developing countries are particularly hard hit.

Over the past year, the European Development Finance Network (EDFI) invested a total of EUR 3.6 billion in climate-related financing, an increase of 17 percent compared with the previous year. Over the past three years, Swedfund has received capital injections earmarked for climate investments, making it possible to further accelerate the work to meet the challenges of climate change. Given their long experience investing in developing countries and proven business models focused on sustainability and impact on society, development finance institutions also play an important role in mobilising private and institutional capital. New types of climate investments are emerging for reducing carbon emissions, such as investments in emission allowances and in naturebased solutions. Through the Project Accelerator we can support public project owners in strengthening electricity grids, for example, to enable more efficient transmission of renewable energy, and with work on energy storage, adaptation and limitation of carbon emissions.

Extreme global poverty has declined over time as a result of greater economic growth. In spite of this, almost 700 million people still live in extreme poverty, mainly in sub-Saharan Africa and conflict-prone areas. Although the number of countries with major income gaps has decreased over the past two decades, economic inequality remains significant in sub-Saharan Africa and parts of Asia. In addition, there are major differences in access to basic public services such as electricity, internet and banking. This goes against the foundation of sustainable development which is based on the fair distribution of resources. Empowerment refers to the promotion of equal opportunity for all to participate in and influence social development economically, socially and politically.

Development finance institutions contribute to inclusive growth, private sector development and job opportunities by investing in banks and financial insitutions that target lending to groups with the greatest difficulty accessing capital. Swedfund’s investment process systematically integrates women’s economic empowerment and principles to prevent and manage risks related to gender-based violence, discrimination and harassment. Improved access to digital services such as digital solutions that create new jobs, increase access to goods and services, and promote education, healthcare and financial services can also increase empowerment. Feasibility studies can help improve digital storage, strengthen digital resilience and evaluate new digital solutions that can promote long-term sustainable development.