KfW presents the 14th Evaluation Report on Financial Cooperation effectiveness

• Success rate of projects in developing countries and emerging economies still high at more than 80%
• Tailored FC financing instruments make positive contribution
• Focus increasingly on prevention and adjustment measures
• Preventive impact of projects for protecting nature, environment and climate confirmed

"Living in a threatened world – Effectively responding to hazards." So reads the title of 14th biennial Evaluation Report on the efficacy of Financial Cooperation with developing countries and emerging economies, which KfW published today. The impact of the 157 projects promoted on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) with a total volume of EUR 1.88 billion (including EUR 1.39 billion from BMZ funds) was examined in 2015/2016 by the independent FC Evaluation Unit of KfW. Within the sample, which is representative of the total portfolio of completed projects, around 83% of the projects comprising approximately 85% of the financing volume (only budget funds) were classified as satisfactory or better. "The tailored adaptation of financing instruments to the type of investment and the prevailing conditions in our partner countries also contributed to this encouraging result," explains Dr Norbert Kloppenburg, Member of the Executive Board of KfW Group.

The main topic of the 14th Evaluation Report "Crises, Catastrophes and Conflicts" shows how FC is increasingly in demand in a world that is under threat from climate change and violent conflicts. "Development cooperation can and must play a role in ensuring that our partner countries can better protect themselves against crises and disasters. When a disaster occurs, our help in providing relief and assisting in reconstruction efforts is important. But it would be far better if the disaster could be averted in the first place. Prevention and adaptation measures can help make developing countries and emerging economies much more resistant to crises," comments Dr Norbert Kloppenburg.

Financial Cooperation supports this increasingly and successfully, as confirmed by the numerous projects classified as satisfactory or better which are designed to protect the environment, nature and the climate, but also to prevent health risks. In the fight against famine, however, help is still often provided afterwards, even though prevention pays for itself many times over in this context too. Innovative insurance approaches, which are being tested in FC, can help in future to cushion the impacts of crises on the population, such as lengthy drought periods.

"Additionally, the report shows that almost every FC measure has a preventive impact indirectly because less poverty and better living conditions make a country less vulnerable to crises," says Dr Kloppenburg.

Just how FC can be successful is demonstrated by the example of decentralisation in the Palestinian territories (rating 3). By means of an independent fund (MDLF), funds of international donors are distributed to municipalities in accordance with objective criteria. Restoring the disposal of waste water in the Albanian city of Korca has enjoyed extraordinary success. Even tourism has benefited (rating 1). The fact that reconstruction aid can come too late, not least because of the renewed outbreak of violent conflicts, is shown by a water supply project in Iraq (rating 4).

While high success rates are nice to see, 100 percent success is neither likely nor desirable. "FC funds are invested by our partners in risky and increasingly even fragile environments. FC should offer financing in places where private investments or national budgets are not available. This is why the possibility that adverse conditions cause a project to fail cannot be ruled out, even with the best possible preparation and support," notes Prof. Eva Terberger, Head of the Evaluation Unit who presented the report.

The report is available online at: www.kfw.de/evaluierungsbericht