Armenia

In the 1990s, the majority of funds in the energy sector were used for emergency measures, but today KfW Development Bank mainly finances investment measures that secure a long term, sustainable energy supply for the country. This includes the regional transmission network with Georgia and the promotion of renewable energy in the country.

In the 1990s, many micro, small and medium-sized enterprises (MSMEs) emerged in Armenia, most with fewer than ten employees. Modern equipment and management experience were lacking – along with capital. There was not a single bank specialised in loans for MSMEs. In response, KfW Development Bank, together with the Armenian Central Bank, formed the German-Armenian Fund (GAF) in 1999. Since then, loans have been given to MSMEs and private households via the GAF. Mortgage refinancing was introduced in 2009 and gave the market for housing financing new momentum. Furthermore, investments in renewable energy and in the rural sector are financed through the GAF. Another innovative pilot project is the introduction of crop insurance for Armenia’s farmers Two credit lines with liquidity support are expected to help MSMEs survive the impacts of the COVID-19 pandemic.

Project information - Sustainable economic development (PDF, 194 KB, non-accessible)

Due to insufficient investments in the municipal infrastructure for many years, the drinking water supply and sewage disposal system is still inadequate for the Armenian population. With the exception of the capital, Yerevan, drinking water is only available for a few hours a day to many inhabitants, even in towns and cities. Sewage disposal also does not meet minimum standards: sewage is routed to the surrounding bodies of water or is transported directly to the groundwater by rain. The risks for the environment and detrimental health issues are high. One of KfW Development Bank's primary objectives is to establish a hygienically safe water supply and adequate sewage disposal systems. Rural municipalities along the Akhuryan river are also receiving support through integrated water resource management so they can use the available water efficiently, especially for agricultural production. The focus of these efforts is the resumption and completion of the Kaps Dam, which was partially constructed during the Soviet era.

The Caucasus is one of 25 global and one of two European biodiversity hot spots. To preserve this unique natural environment for future generations, KfW Development Bank, on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ), supports Armenia as it fulfils its international obligations, primarily within the context of the Convention on Biological Diversity. The strategic framework is the so-called “Ecoregional Conservation Plan” – a transnational strategy that has been recognised by all three countries of the South Caucasus. The focus of this strategy’s implementation is to identify new areas in need of protection and to strengthen existing protected areas. To ensure operation of the protected areas over the long term, KfW Development Bank is supporting the regionally oriented “Caucasus Nature Fund” (CNF), a non-profit organisation that supports protected areas. It assumes part of the operating costs for protected areas that cannot be completely covered by the national budget. Moreover, KfW is helping the local population to cultivate valuable rural areas between the protected areas sustainably. In these ecological corridors, land users will receive assistance through contractual nature conservation to use their land sustainably and protect valuable habitats.

As part of the “BMZ 2030” reform strategy, the Federal Ministry for Economic Cooperation and Development (BMZ) is ending bilateral development cooperation with Armenia. Apart from the projects and measures still in progress, no further commitments are planned.