Press Release from 2021-04-29 / Group, DEG, KfW Development Bank
Commitments for developing countries and emerging economies hit record high once again in 2020
KfW allocates EUR 12.4 billion for sustainable and climate-friendly development
- 2020 characterised by support during the coronavirus pandemic: combating the human and economic repercussions and securing development progress
- KfW Development Bank: another record commitment volume of EUR 11 billion
- Africa and green growth continue to be a major area of focus
- DEG: EUR 1.4 billion of own funds for business investments
- DEG customers generate EUR 120 billion of local income
KfW significantly increased the high commitment volume of the previous year, with EUR 12.4 billion for a total of 502 projects to promote developing countries and emerging economies (2019: EUR 10.6 billion). EUR 11 billion of this amount was accounted for by KfW Development Bank (2019: EUR 8.8 billion) and EUR 1.4 billion by KfW subsidiary DEG (2019: EUR 1.8 billion).
KfW Development Bank provided EUR 4 billion to support the Emergency COVID-19 Support Programme of the Federal Ministry for Economic Cooperation and Development (BMZ), with 36% of the commitments going to projects in Africa. Through its advisory services and promotional programmes alone, DEG provided private companies with EUR 50 million for coronavirus-related measures.
The programmes during the coronavirus pandemic encompassed 241 projects in 74 countries. 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.
“Following the outbreak of the coronavirus pandemic, KfW responded very quickly to this enormous global challenge, both domestically and overseas, and contributed significantly to the implementation of the BMZ’s comprehensive Emergency COVID-19 Support Programme. This response helped to prevent the loss of development progress and stabilise the economic situation in many countries. At the same time, we maintained our focus on the medium and long-term objectives of environmental responsibility and strengthening partner countries’ resilience to further pandemics and crises,” said Dr Günther Bräunig, Chief Executive Officer of KfW Group.
“During the pandemic, DEG continued to be in demand as a reliable partner for private companies in developing countries and emerging economies. In 2020, we focused on supporting our customers by providing liquidity at short notice and offering specific COVID-19 response measures. At the same time, climate and environmental protection continue to remain important topics during the coronavirus pandemic,” added Christiane Laibach, Chair of the Management Board at DEG and designated KfW Executive Board member responsible for development cooperation.
The business area KfW Development Bank was also able to considerably increase its commitments in 2020 by EUR 2 billion compared to the previous year and, at EUR 11 billion, its commitments hit a record high once again. The increase is due to efforts to combat the coronavirus pandemic.
Significant growth was seen in new commitments for Africa and the Middle East, with EUR 5.2 billion (previous year: EUR 3.5 billion) – equivalent to an increase of almost 50%. In this context, the reform partnerships with Côte d’Ivoire, Ghana, Tunisia, Ethiopia, Morocco and Senegal, chosen in 2017, were further expanded and account for a promotional business volume of EUR 893 million. Through the “Special Initiative for Training and Employment” it has been possible to sustain more than 100,000 jobs in over 2,000 companies in the reform partnership countries.
New commitments for the environment and climate remained high in 2020, at EUR 4.4 billion. The projects receiving new commitments save almost 8.4 million tonnes of CO2 every year in partner countries. KfW systematically aligns its international promotional activities with the 17 UN Sustainable Development Goals (SDGs). For example, EUR 1.2 billion of KfW commitments can be attributed to the goal “Affordable and Clean Energy” (SDG 7). More than 2 million people received first-time or improved access to a modern energy supply and 900,000MWh of energy were saved.
The commitments made for preserving biodiversity remain significant. In 2020, KfW promoted 44 conservation areas, including several UNESCO World Heritage Sites. The protected area encompasses 8.8 million hectares, benefiting 300,000 people.
The aim is still to ensure that recovery and growth in developing countries and emerging economies heavily impacted by the crisis are designed to be “green” and to guarantee that climate and the environment will be a priority.
“The coronavirus pandemic has also demonstrated that digital transformation is essential to the future of developing countries and emerging economies. It creates an opportunity to improve the efficiency and speed of development processes and to steer them onto a more sustainable course. KfW development cooperation will continue to focus on addressing these fundamental challenges that have been further exacerbated by the pandemic,” said Dr Günther Bräunig.
EUR 4 billion of commitments in 2020 are from the German federal budget; EUR 6.4 billion are from KfW funds. Further funds were provided by other donors, mainly the European Commission (close to EUR 470 million).
Commitments for social infrastructure (education, healthcare, water supply and sewage disposal, government and civil society) increased by around 45% to EUR 4.8 billion (previous year: EUR 3.4 billion). These are followed by commitments for economic infrastructure (energy, the financial sector and transport) totalling EUR 4.2 billion – a clear indicator that KfW has not lost sight of its longstanding and long-term priorities for sustainable development.
In 2020, DEG provided around EUR 1.4 billion to companies in developing countries and emerging economies to finance private investments in developing countries and emerging economies (2019: EUR 1.8 billion). DEG was able to mobilise a further EUR 378 million from private investors, considerably more than in the previous year (2019: EUR 277 million). In 2020, DEG committed a total of EUR 508 million to projects which encourage climate and environmental protection. This included financing for solar parks in Kenya, Jordan and Cambodia. In regional terms, the financing commitments for Africa developed particularly well at EUR 386 million, recording an increase of around 12% over the previous year. The majority of new business in 2020 was allocated to Asia, where DEG invested EUR 440 million.
Despite a highly challenging context due to the COVID-19 pandemic, DEG was able to make the 2020 financial year a success from a development policy perspective. DEG’s existing customers employed around 2.3 million people in the past year. In addition, they generated EUR 120 billion of local income in 2020 alone.
DEG anticipates that, in 2021, it will continue to operate in a challenging environment shaped by the COVID-19 pandemic. Additional factors include developments such as accelerated digitalisation and climate change. “Our many years of experience of business investment in volatile markets helps us to provide our customers with prudent support during the current unprecedented situation and to prepare them for the challenges to come,” commented DEG Chief Executive Officer Christiane Laibach.