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News from 2020-01-20 / KfW Development Bank

KfW presents new green fund for Africa

Federal Minister Müller and KfW Executive Board Member Nagel launch the fund at International Green Week in Berlin

Dr. Nagel im Gespräch auf der Grünen Woche
Federal Minister Dr Gerd Müller and KfW Executive Board Member Prof. Joachim Nagel at Green Week in Berlin

KfW is now rolling out the eco.business Fund in Africa on behalf of the German Federal Government. It will grant “green loans” to companies that operate sustainably in Africa and thus create incentives to switch to environmentally and climate-friendly production methods in order to preserve biodiversity and conserve resources. The fund has already existed in Latin America since 2014. Due to its success there, it is now being expanded to Africa.

Federal Minister Gerd Müller and KfW Executive Board Member Joachim Nagel presented the fund to a large audience at Green Week in Berlin.

The launch was part of a diverse side programme on the opening day of the traditional agricultural fair, which was also attended by creative figures such as filmmaker Volker Schlöndorff and meteorologist Sven Plöger. It was held in the international hall on a stage of the German Federal Ministry for Economic Cooperation and Development (BMZ) and was entitled “EINEWELT unsere Verantwortung – Klima, Wald und Landwirtschaft” (ONE WORLD – Our Responsibility – climate, forest and agriculture).

Federal Minister Müller said that the world “has become a global village” in which we all have to see ourselves “as part of a whole” and thus act responsibly in business and consumption. Because forests are being destroyed and soils degraded and oceans are becoming warmer. According to the Minister, the situation “is dramatic”. “We know what needs to be done. But knowledge is not enough. We have to act.” Sven Plöger stressed that climate change is now becoming “palpable” – “we feel it.” We are getting closer to what researchers have been warning us about for 30 years. “Which is why we need to move from talking to acting,” he said. And KfW Executive Board Member Nagel emphasised: “Now it is a matter of truly putting the good ideas that exist into practice.”

From talk to action – example eco.business Fund

A concrete example of how this can be achieved is the eco.business Fund. It creates incentives for green businesses by granting loans in cooperation with local financial institutions (or directly) to companies that produce sustainably, for example in cocoa or coffee farming. In this way, it motivates people to conserve raw materials and preserve forests and biodiversity.

In Latin America, loans of more than half a billion euros have already been granted since its foundation in 2014. Within a short period of time, the fund has thus helped to protect more than 90,000 hectares of land from deforestation, to save around four million cubic metres of water and to implement soil protection measures on more than 80,000 hectares of farmland. “We have achieved a great deal in Latin America, so we are now bringing the concept to Africa,” said Nagel at the launch.

The fund is a pioneer because it only supports companies that replace conventional production methods with sustainable ones or already operate sustainably. And because it uses public funds to mobilise private funds in industrialised countries, which in Latin America already account for around 30% of the total volume. “The fund should therefore also be seen as an appeal to the private sector to engage more with sustainability,” Nagel said in Berlin. “We are co-financing the fund, but the key is to attract private capital,” added Minister Müller.

Dr. Nagel im Gespräch am Stand der KfW und GIZ
Not far from the BMZ stage – the joint KfW-GIZ booth. Here: KfW Executive Board Member Dr Joachim Nagel and the head of GIZ Tanja Gönner talk to an interested visitor from Rwanda.

In conclusion, Minister Müller established a link between development policy and the European Union's Green New Deal. The EU plans to spend a trillion euros on environmental and climate protection over the next 10 years and make Europe climate-neutral by the middle of the century. “We can only save the world climate on an international scale,” said Müller. At least the same amount is therefore needed worldwide. “The difference is that we achieve a 10 to 100 times greater impact in developing countries” – with projects such as the eco.business Fund.

Dr. Nagel mit Kolleginnen und Kollegen der KfW
Dr Nagel with Silvia Wisniwski from Finance in Motion which administers the fund, and the KfW project manager responsible Vitalis Ritter.