FC Annual Report 2008
Focal theme for 2008: "Water - fundamental for development"
Commitments reached new record volume of EUR 4.9 billion
In 2008 KfW Entwicklungsbank and DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH - committed some EUR 4.9 billion for the promotion of developing and transition countries. Despite the financial crisis, they have sent out a strong message confirming the continuity and reliability of their cooperation with the developing and emerging nations. This was the highest volume of commitments ever achieved in the history of cooperation with developing countries. On behalf of the Federal Government, KfW Bankengruppe committed around 17% more in funds for development projects and programmes in Sub-Saharan Africa, North Africa, the Middle East, Asia, Latin America and Eastern and Southeastern Europe than in the previous year (2007: EUR 4.2 billion). The strong rise in commitments made by KfW Entwicklungsbank (+23%; EUR 3.7 billion) is mostly due to the higher share of KfW funds provided. DEG was also able to slightly increase its volume of new business by 1.6%, despite difficult overall conditions, to more than EUR 1.2 billion, thus surpassing the one-billion-Euro mark for the second time in a row.
300 projects under implementation in the water sector reach 70 million people
By citing numerous examples, the report illustrates how the financing provided by KfW Entwicklungsbank and DEG is making broad and structurally effective contributions in support of the water sector in developing countries. For nearly fifty years it has been financing projects and programmes in drinking water supply and sanitation, as well as in wastewater management, irrigated agriculture and for the use of water in the supply of energy.
KfW's portfolio in the water sector comprises a total volume of EUR 4.5 billion. With 300 projects under implementation in Africa, Latin America, Europe, Asia and the Middle East, KfW Entwicklungsbank is creating better living conditions for around 70 million people. This makes KfW Entwicklungsbank the world's third largest bilateral financing institution in the water sector.
The EUR 4.9 billion commitment volume across all sectors in the year 2008 consists of EUR 3.7 billion in commitments by KfW Entwicklungsbank and EUR 1.2 billion by DEG. "In 2008, once again more than half of the funds (58%) were KfW Entwicklungsbank's own funds, a volume of EUR 2.1 billion. In this way, it brings its financial options as a bank into play to complement its development-policy mission, thereby supporting the Federal Government in meeting its obligations to increase official development assistance", said Kroh.
Measured against total commitments, at 33% Europe and the Caucasus made up the largest target region, while accounting for only 10% of budget funds. After Asia and Oceania, (33%; approx. EUR 479 million), the second largest portion of budget funds was allocated to Sub-Saharan Africa, which received 27% (EUR 385 million), ahead of North Africa and the Middle East (22%; EUR 324 million), and Latin America (8%; EUR 109 million).
DEG
Dr Winfried Polte, Chairman of the Board of Management of DEG, also emphasised the commitment to the water sector. "Water is a very important factor for development and for the economy. Private investment in water supply is necessary particularly when public budgets are strained - for instance in expanding in modernising outdated pipeline systems. Moreover, wastewater treatment and the development of recycling systems also have to be based on special expertise, which can be supplied by private enterprises. However, without start-up finance these investments cannot get off the ground, and this is where DEG comes in. In developing and emerging nations we directly support entrepreneurial initiatives that contribute to sustainable and efficient water management and to handling this resource more effectively." Furthermore, all DEG customers exercise a very important development function - as social employers, promoters of high standards, taxpayers and exporters. Together with the companies financed in 2008, DEG supported around 153,000 jobs. Of these, 35,000 were newly created. The co-financed enterprises will also contribute more than EUR 360 million a year to projected state revenues and generate net foreign currency of approximately EUR 2.1 billion.
The regional focus of DEG’s new business was once again Asia, with commitments totalling EUR 451 million (2007: EUR 548 million). Latin America ranked second, at EUR 342 million (2007: EUR 193 million). Supporting the private sector in Africa has traditionally been especially important to DEG. In 2008 it invested EUR 179 million there, a similar volume as in the previous year (2007: EUR 187 million). Strengthening financial systems was the main sectoral focus. Here the commitments of EUR 487 million (2007: EUR 596 million) represented a share of roughly 40% of new business. With these funds DEG supported local and regional commercial banks in particular, thereby making an important contribution towards stabilisation as the financial crisis continues to intensify and spread from one region to another.
Further Information
- Annual Report 2008 on Financial Cooperation with Developing Countries (PDF, 9,302 MB, accessible)
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Press Release "KfW Entwicklungsbank and DEG present 2008 Annual
Report on Cooperation with Developing Countries"
25 April 2009
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