KfW Entwicklungsbank (KfW Development Bank) is a German government-owned development bank, which provides financing to governments, public enterprises and commercial banks engaged in microfinance and SME promotion in developing countries.
The German “Reconstruction Credit Institute” (Kreditanstalt für Wiederaufbau) is based in Frankfurt as a Germany’s government-owned development bank, owned by the Federal Republic of Germany (80 %) and the Federal States of Germany (20 %). In 1948 after World War II it was formed as a part of the Marshall Plan. Presently, KfW covers over 90% of its borrowing needs in the capital markets, which allows KfW to raise funds at advantageous conditions.
The entirety of KfW falls into several subsidiaries and group units (figure below): its largest subsidiary, KfW IPEX Bank GmbH, predominantly lends internationally (i.e., financing projects of German and European companies so they can compete in global markets), while a smaller subsidiary, the German Investment Corporation, and one of the group’s smaller business units, KfW Development Bank, are exclusively active in the international arena, each within their particular business areas.
The internal structure of KfW
KfW Development Bank cooperates with partners in in Africa, Asia, Latin America and South-East Europe.
In Asia KfW Development Bank works with many countries on behalf of the German Federal Government to fight poverty and climate change and protect the environment: these efforts include increasing the use of renewable energy sources and preserving biodiversity. Support is provided for efficient financial institutions that help small and medium-sized enterprises create jobs.
At present in Central Asia KfW Development Bank has offices in Uzbekistan, Kyrgyzstan and Tajikistan.
The “Kreditanstalt für Wiederaufbau” (KfW) promotes economic and social progress in developing and emerging countries to improve people's lives. KfW sees its task in providing support and advice for reform processes and investments in developing and emerging countries. KfW sets these objectives:
- Sustainably improve economic and social conditions
- Poverty reduction
- Climate and environmental protection
- Promote the financial sector
Its partners are governments and (non-)governmental institutions and bilateral & multilateral donors.
It is particularly important for KfW that direct poverty reduction be accompanied by the creation of viable structures. Only in a favourable environment can women and men exercise their political rights, secure their economic livelihood and build their lives in dignity. In this sense, KfW is one of the leading financiers of microcredit in developing countries.
The magazine Global Finance rated KfW as the safest bank in its "World's 50 Safest Banks 2014" rating.
KfW Development Bank's financial support is tailored to the circumstances in the respective partner country. The funding model selected will be determined depending on the size of a country's debt, its economic output and level of development, the performance capacity of the project partner as well as the type of project. The funding models include pure grants and loans from budget funds, but also loans that combine budget funds and KfW's own funds. The conditions for these kinds of loans are particularly favourable (interest, term). KfW also grants loans which are only comprised of KfW's own funds at terms and conditions commensurate to risk.
All projects and programmes that are promoted by KfW Devel opment Bank, both financially and in terms of ideas, follow the same project cycle — from conception through to evaluation. Quality is carefully assured at each stage of this cycle. In doing so KfW Development Bank aims to ensure that the projects generate both specific and structural changes.
The preparation phase includes analysis and conception and is aligned with the country strategies of the German Federal Ministry for Economic Cooperation and Development BMZ. The following on-site audit checks the conditions on-site.
The execution phase includes the financing agreement and execution in the technical sense, when the ownership by the partner country is strengthened, e.g. by the local project-executing agency being responsible for all activities.
The inspection phase includes the final inspection (checking if the population actually accepts the services offered), the ex-post evaluation by an independent administrative KfW department and finally transparent information via KfW’s transparency portal, providing information about the origin, use and impact of the funds is provided.
An intergovernmental agreement is generally concluded on any project. KfW checks whether the proposed projects are developmentally sound and realisable. Working together with the partner, specialised consulting firms draw up a feasibility study, which provides answers to all of the project's key questions – economic efficiency, developmental impacts and possible risks.
KfW Project cycle
KfW Office in Kyrgyzstan Blvd. Erkindik 22 / ul. Moskowskaya 101/1, 720040 Bishkek, Kyrgyz Republic Tel: +996 312 90 90 85-88, fax: +996 312 90 90 89, Email: KfW.Bischkek@kfw.de
KfW Office in Tajikistan N. Huvaidulloev Street 2\1, Jaihun Business Center, 3. Floor, 734049 Dushanbe, Tajikistan Tel: +992-44-6006823, fax: +992 44 600 52 04 Email: email@example.com
KfW Office in Uzbekistan 7 A., Chimkentskaya Str.,100029 Tashkent, Uzbekistan Tel: +99 871 280 6759, fax: +99 871 280 6760 Email: firstname.lastname@example.org