Press Release from 2022-05-11 / Group, DEG, KfW Development Bank
KfW commitments for developing countries and emerging economies at EUR 10.1 billion in 2021
Sustainable development goals remain in focus despite challenges expected due to geopolitical situation
- Support during the coronavirus pandemic continued in 2021: Continuation of the fight against human and economic consequences around the world
- No alternative to the sustainable transformation of the global economy – KfW as a partner
- KfW Development Bank is one of the world’s largest donors for the protection of biodiversity. 2021: EUR 685 million (+27 %)
- 2022: Supporting Ukraine for mitigating the impact of war
- DEG: 2021 was a successful year both from development and economic points of view – more funds for private investments
- New DEG business strategy: Greater focus on impact and climate
In 2021, KfW recorded a commitment volume of EUR 10.1 billion for a total of 468 projects as part of the promotion of developing countries and emerging economies (previous year: EUR 12.4 billion). Of this total, EUR 8.6 billion (2020: EUR 11 billion) can be attributed to KfW Development Bank and around EUR 1.5 billion to the KfW subsidiary DEG, which was able to commit more funds to finance private investments in developing countries and emerging economies than in the previous year (2020: EUR 1.4 billion).
KfW Development Bank provided EUR 6.6 billion to support the Emergency COVID-19 Support Programme of the Federal Ministry for Economic Cooperation and Development (BMZ) in 2020 and 2021. Disbursements of EUR 4.2 billion have been made for 212 projects in 71 countries to date. Partners received support for emergency measures, especially in the healthcare sector, in relation to food security and social security, and in order to preserve liquidity for companies and states. Supporting vaccine development and production in Rwanda, Senegal and South Africa is also an important aspect.
In 2021, DEG committed EUR 62 million for 179 projects under its advisory and promotional programmes. Here, Covid-19 response measures in the areas of health and prevention again played a significant role.
“On top of the coronavirus pandemic, the consequences of which will continue to be felt in developing countries for years to come, there is now the war in Ukraine. I see more and more challenges arising for development cooperation. On the one hand, as regards short-term support for food security in developing countries in view of the consequences of the war, and, as soon as possible, for reconstruction measures in Ukraine. On the other hand, we have to keep an eye on tackling long-term challenges such as the unavoidable sustainable transformation of the global economy and think about energy security more than ever before,” said Christiane Laibach, Member of the Executive Board of KfW Group.
KfW Development Bank has supported small and medium-sized enterprises in Ukraine affected by the war through short-term crisis measures of EUR 150 million, to help mitigate the consequences of the war. Moreover, it is currently helping to maintain the social security systems, and it is planned to support internally displaced persons.
“The effects of the war in Ukraine are complex and also threaten the security of supply in developing countries. This makes strengthening the resilience of our partners all the more important, including with regard to climate change as a major global challenge. Against this background, we will be focusing even more closely on high-impact and climate-friendly projects in the future. We see a great deal of potential in assisting businesses who want to tackle transformation with our support,” added Roland Siller, CEO of DEG.
1. KfW Development Bank
KfW Development Bank commitments declined in 2021 compared to the previous year, roughly to the level of 2019 (EUR 8.8 billion). In 2021, KfW provided EUR 8.6 billion on behalf of the German Federal Government (2020: EUR 11 billion) for financing in developing countries and emerging economies. The record commitment from 2020 contained a significant proportion of the Emergency COVID-19 Support Programme.
KfW Development Bank promoted projects in the area of climate and environmental action with EUR 3.7 billion. As a result, 12.5 million people were directly supported in tackling the consequences of climate change, while a further 114 million were indirectly supported – for example through insurance. A total of 1.2 million people received first-time or improved access to a modern energy supply. Commitments in the area of biodiversity conservation amounted to around EUR 685 million in 2021 – an increase of 27 % compared to the previous year – and supported 165 conservation areas.
“We believe that climate protection is closely linked to biodiversity – an invaluable global asset. It is representative of the diversity of animal and plant species as well as the ecosystems of our planet. Their conservation is a prerequisite and guarantee for balance in nature and is the basis for our natural livelihood, for example in the form of food, energy sources, medicines and much more. By supporting more than 800 conservation areas in total, KfW is one of the largest donors worldwide for the conservation of biodiversity,” said Christiane Laibach.
KfW Development Bank’s new commitments for Africa reached EUR 2.2 billion and make up 27 % of total commitments. Making up 24 %, Asia has a commitment volume of around EUR 2 billion.
EUR 3.6 billion of the commitments in 2021 came from the German federal budget; EUR 4.6 billion came from KfW funds. Further funds were provided by other donors, mainly the European Commission (around EUR 430 million).
Commitments for social infrastructure (education, health, water supply and wastewater disposal, government and civil society) amounted to around EUR 4.3 billion. In this area, impacts include: More than 9 million people receive new or higher-quality drinking water as a result of the projects, around 3 million people benefit from improved sanitation and waste water disposal and 2 million are better protected against heavy rain and flooding.
In second place were commitments for economic infrastructure (energy, financial sector and transport) amounting to EUR 1.6 billion. These will help, for example, to ensure that around 1.2 million people will have first-time or improved access to a modern energy supply. A total of 1.8 million people benefit from the development and expansion of sustainable urban transport systems. Commitments to digitalisation are increasing all the time. Meanwhile, the total portfolio amounts to EUR 4 billion with projects in 150 countries.
The KfW subsidiary DEG provided around EUR 1.5 billion to companies in developing countries and emerging economies to finance private investments in developing countries and emerging economies (2020: EUR 1.4 billion). DEG was able to mobilise EUR 507 million from other investors, an increase of more than 30 % compared to the previous year. Financing for small and medium-sized enterprises again accounted for around half of DEG’s new business at EUR 737 million. DEG thus contributed to improving the inadequate supply of long-term financing for these companies in many developing countries. From a regional perspective, financing commitments for Latin America were on a particularly positive trajectory: At EUR 566 million, this was an almost 70 % increase compared to the previous year.
Despite the ongoing coronavirus pandemic, DEG was able to successfully shape the 2021 financial year in terms of development policy and business. For instance, DEG’s existing customers employed around 2.8 million people in 2021 and generated local income of EUR 147 billion.
In view of the war in Ukraine and the related geopolitical tensions radiating around the world, DEG expects that it will be operating in an even more difficult environment in 2022.
“We are following the current conflicts, which are affecting a huge number of people, closely and with concern. At the same time, existing economic, environmental and social challenges are being further exacerbated by the climate crisis. As a development finance institution, our role is particularly critical in this situation. We want to make an effective contribution to finding solutions in dialogue with companies and partners and to assist our customers with suitable instruments,” explained Roland Siller.