Creating a wealth of knowledge

• KfW presents the 17th Evaluation Report on the impact of Financial Cooperation

• Continued high success rate of 84%

• Digital and interactive: more than 1100 evaluation results can be accessed via the new IDEal app

• An even better way to measure impact: KfW Development Impact Lab for rigorous impact assessments

• Now measurable: the positive impact of forest protection projects

• Integration of private capital as a success factor

“Evaluate – Measure – Learn”. This is the title under which KfW is today presenting the 17th Evaluation Report on the impact of Financial Cooperation (FC) with developing countries and emerging economies. The report is published on a biennial basis. The impact of the 152 measures promoted on behalf of the Federal Ministry for Economic Cooperation and Development (BMZ) with a total volume of EUR 4.9 billion was examined by KfW's Independent FC Evaluation Unit in 2021/2022. In the grab sample, which represents the entire portfolio of completed programmes, 84% of the projects were classified as successful, meaning they were rated with at least a 3 in a rating system based on German school grades according to OECD-DAC criteria. The average score was 2.6.

“Evaluation is not an end in itself, as measuring the impact of KfW Development Bank’s projects is becoming increasingly important for the success of the projects. Constructive support, critical evaluation and learning from mistakes through advanced in-house interaction instruments are invaluable for future projects, as they strengthen their effectiveness. This perfectly aligns with the UN Agenda 2030 and its Sustainable Development Goals, which KfW is taking into account as part of the step-by-step introduction of group-wide impact management within the scope of the KfWplus strategy. FC Evaluation is playing a pioneering role for the entire KfW Group here. KfW believes that it has a responsibility to systematically record the economic, environmental and social impacts of its promotional activities, to make them transparent and to derive appropriate control impulses for greater effectiveness. We need to readjust the benchmarks and measure our success more strongly in the future by the impact of our funding,”

says Christiane Laibach, Member of the Executive Board for International Financing at KfW Group.

The Evaluation department is increasingly seeing itself as a knowledge hub that is continuously using new tools, including an increasing number of digital ones. For example, with the new IDEaL app, the evaluation results gathered by KfW Development Bank are being made available to the general public for the first time. Here, the user can find digitised results from over 1100 evaluations carried out since 2007. With just a few clicks, access can be gained to evaluations that are needed for planning new projects and that provide invaluable information on factors that can determine either success or failure.

The KfW Development Impact Lab was established at the beginning of 2023 in order to improve future measurement of impacts. Here, rigorous impact evaluations (RIEs) are carried out. These are experimental methods for causal measurement of impacts. As in medical research, control groups are used in order to determine the effects that can be attributed exclusively to one project. For example, one community receives the promotion, the other does not, or receives it later.

“We want to continuously improve how we measure the impact of KfW Development Bank’s projects and at the same time make it digitally usable. In addition to comprehensive digitalisation, we are increasingly applying rigorous impact evaluation methods to the evaluation process. The initiators of these methods were awarded the Nobel Prize in Economic Sciences in 2019, and their methods allow precise measurement of a project’s impact. We implement them from the very start of selected FC projects, and in doing so provide a supplement to the comprehensive ex-post evaluations”,

says Professor Kluve, Head of the Evaluation Unit at KfW.

How is RIE being used? To answer the question of whether KfW Development Bank’s forest conservation projects have prevented even further forest loss within nature reserves that have already experienced this, a new method was developed based on current research results. The innovative approach compares areas of forest that received financing with areas that did not. The contribution made by FC and its partners is significantly reducing loss of forest within protected areas; these areas are covered by around 8% more forest than comparable areas that did not receive funding.

Additional results from the 17th Evaluation Report

Around half of the projects (51%) achieved success level 2 (successful), while around one third (31%) reached level 3 (partially successful). A total of nine projects were classified as no longer successful with an overall score of 4 or 5. Only one project achieved an overall score of 1 (very successful).

A total of 65 projects, about half of the evaluation portfolio, are located in the sub-Saharan Africa and North Africa/Middle East regions: this reflects the high number of FC projects on the African continent. With an average of 88% and 94%, the success rates in both regions are ahead of all other regions. At 68% and 73%, the success rates in the Asia/Oceania and Latin America regions in particular are significantly lower.

From a sectoral perspective, we can clearly see that the financial sector – measured by the number of projects evaluated – is not only the largest individual sector, but also achieves the best average rating with 2.0. For instance, the InsuResilience Investment Fund, which operates on a cross-regional basis, is breaking new ground in the adaptation to climate change. It allows vulnerable people to receive affordable financial protection against extreme weather events. It became clear that, with innovative approaches, building acceptance and trust on a broad scale takes time (score: 2).

For financial sector projects, the fact that they are more likely to be implemented in more stable countries with established institutions and high-performance partners plays an important role. This becomes clear when drawing comparisons with the water sector, for example, where the project partners often lack the necessary resources for ensuring a sustainable and cost-covering supply. At 3.2, the average score for this area is significantly worse.

The use of private capital is a success factor. This is shown by the evaluations of the two pilot projects in Jordan and Morocco, in which funding for solar power plants was provided. The world's largest photovoltaic system in a refugee camp was built in Zaatari in Jordan using funds provided by private investors. The replacement of oil led to an annual reduction in electricity costs of 90% and helped make Jordan's electricity supply more environmentally sustainable and cost-efficient (score: 2). The use of private capital via a public-private partnership was also a success in the financing of the Ouarzazate solar power plant in Morocco (score: 2).

Evaluations can show whether structural financing gaps can be overcome. One evaluation examined the role of credit lines as a vehicle for promoting renewable energies in India. The result: structural financing gaps can be overcome, as the partner banks were also able to introduce their own specific loan programmes after the end of the promotion programme. The continuous concrete application of environmental and social compatibility standards remains more difficult. The evaluation in this area gave a score of 3.

If a project fails, the reasons are analysed very carefully and lessons to be learned are derived from them. A workshop for ferries in Timor-Leste promised to be highly relevant for future economic growth and improving living conditions. However, there were no sustainable results in the end because no alternative solutions for feasibility and cost efficiency were examined during the planning phase. The project was therefore rated as inadequate (score: 5).

An evaluation of various national parks in Namibia confirms that sustainability remains a key challenge in nature conservation. This evaluation gave a final score of 2. Through successive project phases and close involvement of the local population, park management was improved, poaching cases were reduced and corridors for wildlife migration were established. However, a permanent lack of financing mechanisms repeatedly puts long-term project success to the test.

Climate change will also lead to the sustainable management of water catchment areas becoming increasingly important in water-rich areas. Therefore, the findings from the project on introducing water catchment area management in the Mekong basin in Laos are very valuable for future projects. Sustainable management and the increase in agricultural and forestry production with water-saving cultivation systems and a reduction in rural poverty can be better established if a project approach with few but concentrated measures and a stronger geographical focus is chosen. The project received a score of 4.

The 17th Evaluation Report is available at:­

Evaluation Report 2021-2022.

Further information about KfW Development Bank is available at:­

KfW Development Bank.