Germany - KfW Development Bank

Donor: 
Bilateral
Geographical focus: 
Africa
Americas
Europe
South Asia
Thematic focus: 
Tourism in general
Social inclusion and Poverty reduction in Tourism
Intro text: 
KfW Development Bank has been helping the German Federal Government to achieve its goals in development policy and international development cooperation for more than 50 years. On behalf of the German Federal Government, and primarily the Federal Ministry for Economic Cooperation and Development (BMZ), it finances and supports programmes and projects that mainly involve public sector players in developing countries and emerging economies – from their conception and execution to monitoring their success. The goal is to help partner countries fight poverty, maintain peace, protect both the environment and the climate and shape globalisation in an appropriate way. With money from the German federal budget and own funds, KfW finances investments and reform programmes in a range of sectors including health, education, water supply, energy, rural development and financial system development. The type of projects and programmes depend on local needs and the general conditions in place.

Official website

https://www.kfw-entwicklungsbank.de/International-financing/KfW-Entwickl...

Who can apply?

Poor and poorly-developed countries if they comply with development policy criteria and partner country commitment.

Objectives and activities

KfW finances and supports programmes and projects that mainly involve public sector players in developing countries and emerging economies – from their conception and execution to monitoring their success. The goal is to help partner countries fight poverty, maintain peace, protect both the environment and the climate and shape globalisation in an appropriate way.

Topics:

-        Poverty and empowerment;

-        Education;

-        Biodiversity;

-        Energy;

-        Financial system development;

-        Peace;

-        Health;

-        Governance;

-        International development cooperation;

-        Climate;

-        Rural development;

-        Social protection;

-        Urban development;

-        Environment and sustainability;

-        Economic growth and employment; and

-        Water.

Type and level of funding

Grants

Under German Financial Cooperation grants funded from the German Federal Government's budget are mainly allocated to poor and poorly developed countries. The funds are not repaid. However, to be eligible to receive this funding, development policy criteria must be met including the partner country's ownership and commitment. We mainly deploy grants and very low-interest standard loans in poor and poorly developed countries: in 2014, 39% of the German Federal Government's budget funds were dedicated to Sub-Saharan Africa. More developed countries are also eligible for grants for projects that contribute directly to reducing poverty or to protecting global public goods such as, e. g., tropical rainforests.

Development loans

In the case of development loans, KfW combines budget funds of the German Federal Government with own funds that it raises at favourable terms on the capital market. The development loans were created in collaboration with the Federal Ministry for Economic Cooperation and Development (BMZ) to increase the funding volume for the projects and programmes in the partner countries. The terms and conditions are structured to ensure that the projects are able to bear the costs and that the loans comply with the international agreements for Official Development Assistance (ODA). Even though the terms of the development loans are higher than pure budget funds, they are significantly below market level.

Development loans are generally structured as reduced-interest loans: only KfW's own funds, which are partially secured by a guarantee line from the German Federal Government, are deployed for the loans. We then lower the loan interest rates with grants from budget funds. The result is that the projects can be financed for the partners and the loans meet the ODA criteria for public development cooperation.

Promotional loans:

Promotional loans are loans to partners in developing countries and emerging economies commissioned by the government that are 100% funded by KfW on the capital market. The loans are deployed for projects that are effective when it comes to development policy and viable in economic terms for which, however, funding is not available from the commercial banking sector (e. g. due to long financing terms required).

The FC promotional loans aim to fill the gap between FC development loans and commercial bank loans and give German Financial Cooperation more flexible options for action. By granting promotional loans, KfW can provide more funding for eligible development projects without burdening the budget.