KfW Development Bank

Document Summary: 

Organizational profile:

KfW Development Bank has been helping the German Federal Government to achieve its goals in development policy and international development cooperation for more than 50 years. In this regard, KfW is both an experienced bank and a development institution with financing expertise, an expert knowledge of development policy and many years of national and international experience. With money from the German Federal Budget and its own funds, KfW finances investments and reform programmes in a range of sectors including health, education, water supply, energy, climate and environment protection, rural development and financial system development.

Through the work of KfW Development Bank (KfW), Germany is one of the world’s biggest donors for the conservation of biodiversity, a significant part of which is the protection of forests. KfW is supporting partner countries and stakeholders to set up and manage protected areas, strengthen fire prevention mechanisms, introduce controls against illegal deforestation, restore forest landscapes, support land titles, as well as municipal and communal forest and wildlife management. It also promotes deforestation free supply chains. Additionally, KfW Development Bank works on behalf of the Federal Government to implement a large part of Germany's contribution to climate-related projects. From 2012 to 2019, KfW invested approximately €31 billion in climate-related projects in developing countries.

The REDD Early Movers (REM) programme was established in 2011 and officially launched at the Rio+20 Conference in June 2012 by the Federal Ministry for Economic Cooperation and Development (BMZ). This innovative initiative financed with German Official Development Assistance (ODA) rewards pioneers of forest protection and climate change mitigation. The programme targets countries or regions that have already taken measures to protect forests. It provides performance-based payments for verified emission reductions from deforestation prevention, thereby managing REDD+ in line with the decisions agreed to in the context of the United Nations Framework Convention on Climate Change (UNFCCC). It is coordinated by KfW Development Bank that implements the climate finance component with support from GIZ providing targeted technical assistance.

Financing Instrument: Grants, low-interest credits, long-term loans

Project scale: KfW currently promotes 225 projects in 35 countries and 14 cross-border project regions which have the primary goal of protecting biodiversity. The total volume of all projects that have biodiversity as either a primary or secondary goal amounts to some €2.6 billion. €2.1 billion of these funds contribute to the protection, sustainable use and restoration of forests. Recent forestry related projects undertaken through KfW and BMZ have stretched from approximately €300,000 to €100 million.

Recipient countries regions/country groups: Global

 

Recipient categories: Governments

Eligibility Criteria: KfW´s partners range from emerging markets, low and middle income countries to what are known as the "Least Developed Countries" ("LDCs" for short), where the UN states that the average gross national income per capita is less than $US992.  Grants funded from the German Federal Government's budget are mainly allocated to poor and poorly developed countries. The funds are not repaid. In the second category, Development Loans, KfW combines budget funds from the Federal Government with own funds that it raises at favourable terms on the capital market. They are generally structured as reduced-interest loans, promotional loans finally are loans to partners in developing countries and emerging economies commissioned by the Government that are 100 % funded by KfW on the capital market. The loans are deployed for projects that are effective when it comes to development policy and viable in economic terms for which, however, funding is not available from the commercial banking sector (e. g. due to long financing terms required).

 

Application guidelines: The projects and programmes promoted by KfW Development Bank are proposed by governments of the partner countries; the respective country's development strategies and structures form the basis. On behalf of the German Federal Government, and primarily the Federal Ministry for Economic Cooperation and Development, KfW checks whether the projects and programmes are sound in terms of their developmental effects and eligible for promotion. If so, KfW's experts assist the partners in any way they can and support the projects throughout their entire duration.
The Financial Cooperation is aligned with the country strategies of the BMZ and the development strategies of the partner country. In bilateral intergovernmental negotiations it is agreed on how much funding the German government will provide and under what conditions. Through these agreements the German Federal Government and the respective partner country usually conclude an intergovernmental agreement.

Publication Date
Wednesday, 10 March 2021
Applicable location
Africa
Americas
Asia
Europe
Oceania
Topic/Theme
Biodiversity conservation
Climate change
REDD+
Forest conservation and management
Sustainable land use
Database
Financing opportunities