Serbia

Given the acute state of emergency, KfW has initially financed a number of aid programmes on behalf of the German Federal Government: electricity imports to ensure the supply, delivery of spare parts for quick maintenance of power plants and district heating systems in the largest cities. The projects have become more sophisticated over time. The district heating programme has been expanded and now reaches smaller cities as well; efficiency gains and environmental impact are becoming more and more important. Promoting renewable energy has also come into focus. In Serbia KfW is relying mainly on hydropower, but also on biomass and wind power plants with new projects. A new project to improve the energy efficiency of schools, which is based on a World Bank project, will contribute to reduce the energy demand. The same can be said for credit lines, which will enable many SMEs and communities to invest in energy efficiency via the Serbian banking sector. Today, the promotion of the energy sector with a commitment volume of nearly EUR 850 million is the most important pillar of the German development cooperation.

At the start of the Financial Cooperation (FC) with Serbia, KfW promoted the expansion and repair of the existing water supply systems in larger cities on behalf of the German Federal Government. This helped improve the supply of drinking water for the majority of people living in urban areas in just a short amount of time. Today KfW mainly supports small and medium-sized cities in building up efficient water and waste water networks. Institutional and financial reforms as well as the establishment of modern workflows are a precondition for investments. Progress is also being made in waste water treatment. Three modern waste water treatment plants are are going to be built in the scenic Morava valley.

For years it was nearly impossible for small and medium-sized enterprises (SMEs) and municipalities in Serbia to obtain loans. The reasons for this were a lack of collateral as well as a shortage of knowledge on the part of lenders and borrowers. Back in 2001 KfW was a pioneer in establishing what would later become ProCredit Bank. This is now the market leader when it comes to comprehensive financial services for SMEs. Since then, KfW has issued numerous lines of credit to other local banks. In addition to the financial backing, banks are also given the necessary expertise. The improved offering has been met with considerable demand in municipalities alone: In just four years, loans have been granted for more than 300 projects in 80 communities. Credit lines by KfW for funding innovative energy efficiency measures have also contributed to the development of an entirely new market segment. Yet KfW is also supporting Serbia’s strongest economic sector, namely agriculture, with special credit lines.