KfW Development Bank Presents Itself German Financial Cooperation with Developing Countries Goals, Approaches and Examples, Bonn Michael Gruber, Sector and Policy Division Urban Development Bank aus Verantwortung
Index 1 KfW Development Bank Who we are 2 KfW Development Bank The principles of our work 3 KfW Development Bank How we support a project 2
KfW Development Bank Who We Are Bank aus Verantwortung
More than 60 years of KfW Financing with a public mission Promotional bank of the Federal Republic of Germany Founded in 1948 as Kreditanstalt für Wiederaufbau Shareholders: 80% Federal Republic, 20% federal states Headquarters: Frankfurt am Main Branches: Berlin, Bonn and Cologne Representative offices: around 70 offices and representations worldwide Balance sheet total as at September 2012: EUR 517.9 billion Financing volume 2012: EUR 73.4 billion 5,440 employees (2012) Best rating: AAA/Aaa/AAA 4
A bank with a wide array of functions Domestic promotion International business We promote Germany We ensure internationalisation We promote development Business Area Mittelstandsbank Promotion SMEs, business founders, start-ups Business Area Privatkundenbank Promotion construction of new housing and modernisation as well as education Business Area Kommunalbank Financing municipal infrastructure projects and global loans Germany/Europe agency business for Federal Government Business Area Export and Project Finance International project and export finance Business Area Promotion of Developing and Transition Countries Promotion of developing and transition countries Promotion of environmental and climate protection 5
Our Work within the System of German Development Cooperation Political framework: BMZ, BMF, BMU, AA and others Implementation Development Bank Financial Cooperation Task: Promote reform processes and public investment Corporate Financing Task: Financing of private investment in developing and industrializing countries Technical Cooperation and Personnel Support Task: Enhancing the capabilities of people and organizations Provision of capital Complementary advisory services Cooperation with state and state-guaranteed private institutions Provision of capital Establishment and expansion of private business structures Provision of expertise 6
KfW Development Bank and DEG Our Competencies We provide more than money our core competencies are: 1. Climate and environment protection We are the world's largest financier of renewable energies in developing countries. 2. Financial sector development We are world leaders in the area of financial system development and microfinance. 3. Water We are one of the most important suppliers of expertise and the world s third largest bilateral donor in the water sector. 4. Development research We promote interaction and synergies between scientific research and practice. 7
Locations KfW Development Bank and DEG Moskau Mexiko-Stadt Tegucigalpa Guatemala-Stadt San Salvador Managua Bogotá Quito Dakar Kiew Belgrad Sarajevo Priština Tiflis Ulan Bator Taschkent Podgorica Istanbul Baku Bishkek Beijing Tirana Ankara Dushanbe Skopje Jerewan Tunis Rabat Ramallah-Al-Bireh Damaskus Kabul Amman Islamabad Kathmandu Neu-Delhi Kairo Abu Dhabi Dhaka Hanoi Mumbai Vientiane Bamako Niamey Sana a Bangkok Ouagadougou Phnom Phen Accra Cotonou Juba Addis Abeba Kampala Jaunde Kigali Nairobi Kinshasa Daressalam Jakarta Manila Lima La Paz Brasilia São Paulo Windhoek Lusaka Pretoria Lilongwe Maputo Johannesburg October 2012 8
Joining Forces for Development Our National and International Partners Our national partners Gesellschaft für Internationale Zusammenarbeit (GIZ) Non-governmental organisations (NGOs), churches, political foundations Our international partners Multilateral partners (World Bank, UN organisations and others) Regional development banks (AsDB, AfDB and others) EU Commission, (EIB) Bilateral development banks (AfD, JBIC) Bilateral partners (DFID, ADA and others) 9
KfW Development Bank Our Strengths We combine development-policy expertise with the possibilities of a bank. We offer a range of financing instruments unrivalled by other bilateral development institutions. We invest funds of our own to support developing countries. We evaluate the sustainability of our projects (independent evaluation unit - FZ-E). We have a local presence in many countries. 10
KfW Development Bank How We Work We advise the German Government and our partners on development policy issues and on implementing their country and priority area strategies. We participate in the selection, preparation and appraisal of projects. We assist our partners in the implementation of their projects and programmes. We share responsibility for their developmental success. We supervise the effective and efficient use of the funds provided. 11
KfW Development Bank The Principles of our Work 12
Keeping an Eye on the Impacts Means... Partner Orientation / Partner Responsibility The responsibility for the programmes always lies with our local partners KfW uses the partner systems (financial and procurement systems) Financial Cooperation is not tied to supplies Combining forces / sharing tasks through Donor coordination e.g. in joint EU platforms - Infrastructure Trust Fund for Africa, Neighbourhood Investment Facility, etc... - European Financing Partners (coalition of European private-sector development financiers) Mutual recognition of procedures (Mutual Reliance Initiative AfD-EIB-KFW) Networking with other institutions (practitioner network for European Development Cooperation) Participation in multilateral initiatives (such as Infrastructure crisis) Programme-based approaches rather than "projectitis" Facility, Microfinance Enhancement Facility, Green Technology Fund 13
Keeping an Eye on the Impacts Requires... Leveraging ODA funds: Mobilising additional financial contributions Effective use of scarce public funds In this way we make an important contribution to achieving the ODA goals. Two-pillar approach: Budget funds for projects in LDCs (e.g. for poverty reduction in Africa) Financing at market conditions for projects in more advanced economies (e.g. renewable energies / energy efficiency) 14
KfW Development Bank How We Support a Project 15
Relationship between BMZ and KfW From the Intergovernmental Agreement to the Financing Agreement BMZ Intergovernmental agreement Commitment of trust funds and KfW funds Partner country Mandate Provision of trust funds KfW Project monitoring, Evaluation Project executing agency KfW's partners are public authorities or state-owned enterprises 16
The Project Cycle From the Idea to Operation Programme cycle Reform programme of partner country Country strategy/ Priority area strategy Programme preparation Project apraisal Financing agreement Programme implementation Evaluation The role of KfW To listen and to advise Support BMZ, Coordinate with GIZ Identify programmes, finance feasibility studies Programme appraisal, (programme proposal) Contract negotiations, definition of implementation agreement Progress reviews, tenders, advise executing agencies Final follow-up, ex-post evaluation Strategic direction Inspection Significant part of our work 17
Information www.kfw-entwicklungsbank.de www.deginvest.de Annual Report on Cooperation with Developing Countries: http://www.kfwentwicklungsbank.de/ebank/de_home/i/download_center/jahresberi.jsp Evaluation report on the effectiveness of cooperation with developing countries: http://www.kfwentwicklungsbank.de/ebank/de_home/i/download_center/evaluierung.jsp Special publications / Online Library in the Internet: http://www.kfwentwicklungsbank.de/ebank/de_home/i/download_center/index.jsp Bank aus Verantwortung
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KfW Development Bank and DEG Distribution of new commitments 2012 (6.2 billion EUR) by sector (in %) 4% 10% 40% 24% Social Infrastructure Economic Infrastructure Financial Sector Production Sector Others 22% 16,0% 8,0% 21,0% Infrastructure Industrial Sector Financial Sector Agribusiness and Industrie Services 29,0% 27,0% 20
KfW Development Bank and DEG Distribution of new commitments in 2012 (6.2 billion EUR) by region (in %) 14% 8% 5% 23% Europe Asia/Oceania Sub-Saharan Africa North Africa/Middle East Latin America 18% 33% Transregional 18% 14% 37% 31% Europe Asia Latin America Africa 21
KfW Development Bank and DEG Development of Commitments KfW Development Bank (EUR in millions) DEG (EUR in millions) 1.400 6.000 1.200 5.000 187 1.000 4.000 3.000 68 111 2.135 1.923 183 343 2.840 2.575 3.090 800 600 1.225 1.014 1.226 1.223 1.300 2.000 400 1.000 1.446 1.448 1.430 1.614 1.639 200 0 2008 2009 2010 2011 2012 0 2008 2009 2010 2011 2012 HH-Mittel KfW-Mittel Mandate 22
KfW's Promotional Activities Worldwide Tasks of the different Banks within the Group Tasks Financial cooperation with developing countries Entrepreneurial development work International Export- and Project Finance Objectives Promotion of reform processes, investments and advisory services in cooperation with governments and public sector institutions in developing and emerging countries Promotion of the private sector in developing and transition countries Financing of investment and advisory services for small and medium sized enterprises International lending in the interest of the European, in particular the German economy, to promote exports and foreign investments Economic sectors Climate/Environment Design and Development of financial systems Economical Infrastructure Social Infrastructure All economic sectors Climate/ Environment Infrastructure Transport Manufacturing Energy/Trade Telekom Health Raw materials Market entry Target markets Very early stage Early stage More mature markets KfW Development Bank DEG Developing country KfW IPEX-Bank Emerging nations Industrial country 23