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„A marathon, not a sprint“

Interview with KfW Director Arlina Elmiger about the value of digitalisation in development cooperation and why KfW has set such ambitious goals in this area.

portrait Arlina Elmiger
Interview with Arlina Elmiger, Director of the Digitalisation, Innovation and Communication Department at KfW Development Bank
We are still in the midst of the coronavirus pandemic but, even now, it’s already plain to see that it would have been much harder to handle had we not had digital instruments. Does this also apply to developing countries?

By all means, however, the benefits of digital tools are in different areas. In addition to public health issues, here, we are often concerned with opportunities to work from home, cooperate remotely and have children attend school from home. These aspects don’t carry the same weight in developing countries as there are fewer office jobs. The coronavirus pandemic is having a much more dramatic impact on people in developing countries and their livelihoods. So there, it is more a question of the best way to keep the population informed, how case numbers are being documented, to strengthen the healthcare system, roll out vaccines – so ultimately how people can be reached and protected. And digital tools are critical to this.

Developing countries are drifting further away from achieving the key points of the Sustainable Development Goals (SDGs) again due to the pandemic. Can digitalisation compensate for these losses? Or could you go so far as to say: without digitalisation, the goals are unachievable?

That is the way it is. Even before the pandemic, it was clear that we wouldn’t be able to achieve the SDGs without exploiting the potential that digitalisation holds. This is all the more the case now. But here I would like to point out that digitalisation is not an end in itself. It is an instrument, a tool to more efficiently and effectively get closer to achieving the SDGs.

Are there areas in which digitalisation is particularly effective?

Actually, there is not a single sector in which digital technologies, the linking, recording and use of data, is not effective. I’ll share a couple of examples. In the healthcare sector, digitalisation can reduce disparities, for instance by improving the rural population’s access to medical care using telemedicine. When it comes to climate-related issues, digital potential is far from being fully exhausted. Collecting and using climate-relevant data from sensors, satellites, data and management information systems helps to measure carbon reductions or model adjustment scenarios – in our projects, but also above and beyond them, too. And last but not least, of course, the options to edit and advance things remotely are quite promising. The latter is becoming increasingly important for our own activities as a development bank, particularly when travel possibilities are limited.

room with some big screens and staff
Virtual project visit via "Remote Management, Monitoring and Verification" (RMMV)
Has the importance of digitalisation now been universally recognised? Are developing countries also expediting this process?

Nearly all countries we work with are very interested in fast digitalisation. Virtually all of them have recognised the benefits. The question is: how systematic, structured, and regulated can this process be? Sometimes they lack an overall plan, sometimes they require more expertise. Digitalisation involves much, much more than simply implementing a piece of technology; we can see that here, too. It ultimately involves a revolution in all areas of life and economic sectors. There is a reason why we call it a digital transformation, and we need a new culture of thought and action to make it happen.

Are there also things we can learn from developing countries as we all go through this transition? Countries like Rwanda seem to be speeding past some industrialised nations when it comes to digitalisation...

Rwanda is one example, but there are also other countries. Eastern Africa has developed into a digitalisation hub, and we all know how advanced many of the Asian nations are. That means that we at KfW can and absolutely should learn from other parts of the world, as a company and as a development actor. Colleagues repeatedly report back about partners who have well-functioning digital processes that we are still working to introduce at KfW.

How far along is KfW Development Bank in terms of digitalisation?

We are right in the middle of it. This is reflecteAre there already thoughts about that?whole new division was introduced in July 2020 to handle this process. Here, around 20 people focus solely on digitalisation issues at KfW Development Bank, including digital scouts, for example, who track and identify digital potential. We have digital promoters whose job it is to better connect KfW to the outside world. And all together we are trying to design these processes to be more efficient and, above all, to work seamlessly without requiring multiple inputs. Data play a key role in this. Because better data use and analytics will enable us to make more evidence-based financing decisions with a view to the best possible SDG contribution and manage our portfolio to make it more impact oriented. That is an enormous task.

How exactly is that supposed to work?

We are in the process of introducing a portfolio management tool that will place us in a position to organise our everyday work to be more digital and user-friendly. Our colleagues will then be able to quickly access relevant portfolio information and will also be guided through these processes. Using these methods not only makes it possible to digitally manage the portfolio, it also enables impact assessment and climate analysis. From the structure of the project to the payment modalities through to their impacts – this will all be managed and updated in one place. We will use this to reduce media discontinuity and make cooperation easier within the team. Our numerous processes will become much simpler, clearer and more structured.

Can the tool also be linked to others?

That is the next step, but we aren’t ready for that, yet. We are starting in-house. But of course, the goal is to exchange information with partners and customers, working towards open data.

Could a new line of business develop out of this? Are there already thoughts about that?

We are actually thinking about ways in which we could improve the development cooperation finance model by better using data, for example, through more effective analytics or incentive systems. We are also thinking about how the data we collect as a development bank, which we will be able to easily access with our new digital tools, can gain even greater value for climate action and other sustainability issues.

In your estimation, where is KfW in comparison to other development organisations?

In the middle of the pack. But we want to give digitalisation a major boost in the next few years. Currently, only 3% of our processes are truly digitally linked. Around 10% of new commitments have a digital component. We want to substantially increase both, in a step by step process. We have the ability to control one of these aspects ourselves. To exploit the digital potential in our projects and support our partners during the digital transformation process, we need innovative approaches to project planning, implementation and cooperation within Financial Cooperation, with partners and other stakeholders in this very dynamic environment. So, the better we are positioned internally, the better we will be able to use the possibilities of digital technologies in projects. We can only competently advise our partners if we are familiar with these issues based on our own experience.

KfW Development Bank's digital transformation strategy
KfW Development Bank recently adopted a digital strategy. One of the goals contained therein, for instance, is that, by 2025, KfW wants to become a leading partner in the development and financing of digital solutions, thus contributing to the achievement of the SDGs. Is that a realistic goal?

It is clearly ambitious, but not unrealistic. In my view, it is important to set a high standard so that we can really make headway. We are relatively far ahead when it comes to remote management, monitoring and verification of projects. In this area, we were able to use the time during the pandemic to build on our extensive experience working on projects in fragile countries where we have had to plan and implement projects remotely for years due to security risks. Around 200 staff members have already received training in remote project management. We have also now equipped four offices in Frankfurt with the tools needed for virtual project visits, where it is possible to follow a building’s construction process in detail, for example. But our process of improving this area is ongoing as well. Digitalisation is not a sprint; it is a marathon.

Do these changes require a different sort of employee? Are we currently seeing changes to the job profile for development cooperation?

The world has changed as a whole. Digitalisation is taking place everywhere. We all need to increase our technical expertise and integrate digital processes into our work if we want to keep pace in many areas. So I think that the general change we are experiencing at KfW is not any larger than in other areas of life. But it is also clear that we have to become more agile, adaptable and flexible in this new digital world.

So there’s more to it than just technology...

Absolutely. Digitalisation is not an end in itself, something for technology-obsessed nerds. It always needs to have an objective and a direction. So, in addition to technology, systems and strategies, we also need to adopt a certain attitude, for example, when it comes to data protection issues. And we need people who are able to handle this technology. We will only be able to make effective use of the benefits of digitalisation in line with sustainability and the SDGs when all of these factors come together.

The interview was conducted by Friederike Bauer.