Expansion of infrastructure in Africa

KfW is supporting the expansion of the African infrastructure and of small and medium-sized enterprises in the export sector substantially through two recently signed agreements. In addition, the cooperation with one Kenyan and one Rwandan development bank has been expanded.

Insufficient infrastructure hinders the development in Africa to a particular extent. Only half of the roads on the continent are metalled, many of the other roads are impassable during the rainy season. This results in high transport costs and isolates the landlocked countries, in particular, from global trade. On top of this, the energy requirements are witnessing a particular increase as a result of growing urbanisation and electrification, which cannot be covered by the existing production and distribution capacities.

It is for this reason that KfW has signed a promotional loan totalling USD 100 million with Eastern and Southern African Trade and Development Bank (PTA Bank) in Nairobi. The Bank will make available to businesses in the eastern and southern African states (COMESA/Common Market for Eastern and Southern Africa) urgently needed capital for infrastructure projects. They include, for example, projects in roadbuilding, energy and water supply and information technology.

As financial systems in the region are still not very well-developed, PTA Bank as a development bank anchored in this region plays a crucial role in funding the local economy. “This promotional loan strengthens the strategic partnership of KfW and PTA Bank”, said KfW's Chief Executive Officer Ulrich Schröder. “Both banks are involved in the International Development Finance Club, which is the network of national and regional development banks. The close cooperation of its members enhances the development policy benefits of our work. In this concrete project we work together to create the prerequisites for economic growth and employment, thereby reducing poverty on a sustained basis.”

Promoting the exports of Rwanda's small enterprises

Rwanda's enterprises have many challenges to contend with: this small country in the heart of Africa has no access to any ports, making transport abroad expensive. And yet the country has much to offer: until now tea and coffee have been among the most important export goods, but minerals such as tungsten, tin or coltan have recently also come to number among them.

A funding agreement for EUR 8.5 million between KfW and the Development Bank of Rwanda (BRD) and the Rwandan Ministry of Finance will open up better export opportunities to small producers in future. This is because these funds will enable export-oriented small and medium-sized enterprises to take out loans via local banks. The export of goods to the neighbouring countries of the Eastern African Community or even worldwide would open up new markets for them. Possible candidates are producers of cut flowers such as roses, dahlias or bird of paradise flowers and of fruit such as pineapples, mangoes and Japanese plums. Avocado and tomatoes, the sweetener-producing stevia plant or oils from Rwanda might also meet with demand on the world market

Rwanda was the site of a horrific genocide in 1994, costing the lives of around one million people and putting the country back decades. In recent years the country has staged a slight recovery. In order to stabilise it further, economic development needs to be supported and jobs created for the fast-growing young population.

“Germany has long been a recognised and esteemed partner of the Rwandan government. With this project we are for the first time venturing into the promotion of exports, a sector which will be essential for Rwanda's future development”, explained KfW’s Managing Director Klaus Müller.