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KfW increases expenditures in the field of development cooperation

23.07.2018 - Article

KfW makes record commitment of 9.7 billion Euro: significant rise in support for developing countries and emerging economies

KfW increases commitment its support
KfW increases commitment its support© KfW

In 2017, KfW further increased its commitments for financing and promotion in the field of development cooperation on behalf of the German Government to 9.7 billion Euro (2016: 8.8 billion Euro). Of this total, the German development bank KfW committed 8.2 billion Euro, and the German Investment section of the KfW, the DEG 1.6 billion Euro. The activities of the German development bank KfW and DEG span 531 projects in developing countries and emerging economies. Sub-Saharan Africa, North Africa and the Middle East accounted for 3.7 billion Euro (2016: 3.0 billion Euro) of total funding.

"KfW has once again set a new record in its support for developing countries and emerging economies. This growth is due to a significant extent to funding in Africa and the Middle East and reflects the increasingly important role that our commitment is having in these regions in contributing to peace and addressing the root causes of migration," said Dr Joachim Nagel, member of KfW Group's Executive Board.

 KfW again increased its commitments further, setting a new record high. Last year, around 8.2 billion Euro in financing was provided to developing countries and emerging economies (2016: 7.3 billion Euro). Around 55 percent of financing was earmarked for climate change mitigation and environmental protection projects. Almost 40 percent of all new commitments go to development projects in Africa and the Middle East; 65 percent of the Government's budget funds are channelled to this region.

Internationally, KfW currently oversees 117 ongoing projects directly related to refugees in 28 different countries with an overall volume of more than three billion Euro. A total of 1.2 billion Euro of new commitments were allocated for projects in this area in 2017. The regional focus of involvement in this field is also the Middle East. These funds will reach around eleven million refugees and people living in the host communities.

Solar plant in the desert
Solar plant in the desert© KfW

KfW also makes a significant contribution to sustainable urban development around the world with 4.7 billion Euro and 58 percent of new commitments, for example with financing for the metro in Lima, the water supply in Timbuktu and flood protection in Tegucigalpa, the capital of Honduras.

Alongside budget funds, which stem primarily from the Ministry for Economic Cooperation and Development (BMZ), KfW committed own funds amounting to 4.9 billion Euro (60 percent). In this way, it helps the German Government to meet its international objectives and obligations in the fields of poverty alleviation, climate change mitigation, environmental protection and – increasingly - supporting crisis regions.

DEG, a subsidiary of KfW, also had a successful financial year in 2017. It pledged about 1.6 billion to finance investments by private companies in developing countries and emerging economies, and thus maintained the previous year's record high (2016: 1.6 billion Euro). At 830 million Euro, financing for small and medium-sized enterprises in developing countries was once again a focus in 2017. Financing for German companies increased significantly by 70 percent to 436 million Euro (2016: 253 million Euro).

The 2017 financial year was also encouraging in terms of developmental impact. DEG's existing customers employ around 1.5 million people and generate annual local income of 67 billion Euro developing countries, of which 14 billion Euro are comprised of wages and salaries. In regional terms, DEG's commitments in Asia developed particularly well at 601 million Euro, recording an increase of around 18 percent over the previous year. Asia was followed by Latin America with 502 million Euro. By sector, the financial sector and infrastructure projects topped the list.

"In 2018, we want to intensify our efforts to promote innovative business ideas, for example in the area of fin-techs. We see digitalisation as an important trend and driver, also in our partner countries. We also aim to promote ideas by female entrepreneurs in developing countries and contribute to greater participation of women in business," said Christiane Laibach, Chairwoman of the DEG Management Board.

© KfW

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