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German Financial Cooperation with Europe and Caucasus - Municipal Infrastructure

German Financial Cooperation with Europe and Caucasus - Municipal Infrastructure. Workshop on water / urban infrastructure Brussels, 29th May 2009. Christian Haas, Division Chief, Water and Sanitation Europe Thomas Wolf, Senior Engineer, Municipal Development, Europe & Caucasus.

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German Financial Cooperation with Europe and Caucasus - Municipal Infrastructure

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  1. German Financial Cooperation with Europe and Caucasus - Municipal Infrastructure Workshop on water / urban infrastructure Brussels, 29th May 2009 Christian Haas, Division Chief, Water and Sanitation Europe Thomas Wolf, Senior Engineer, Municipal Development, Europe & Caucasus

  2. KfW Entwicklungsbank - Who we are KfW Entwicklungsbank – How we work Municipal Infrastructure in Europe/Caucasus - Geographic distribution of projects Municipal Infrastructure in Europe/Caucasus - Challenges and solutions Overview

  3. KfW Entwicklungsbank A part of KfW Group. Promotion of SMEs, Business Founders, Start-ups Commitments 2008: 14,3 bn € Promotion of Housing; Environment and Climate Protection; Education, Infrastructure Commitments 2008: 33,8 bn € International Project andExport Finance Commitments 2008: 17,6 bn € Promotion of Developing and Transition Countries Commitments 2008:4,9 bn € Investment Finance Germany and Europe InternationalProject and Export Finance Financial Cooperation

  4. Organisational Structurefrom September 2008 DepartmentEast Asiaand Pacific DepartmentSouth andCentral Asia Regional Team Regional Team Energy Transport, Communications Financial andPrivate Sector Water andVocationalTraining Health Protection of Natural Resources Promotional Loans forInfrastructure Sector and Policy Division InstitutionalDevelopment Division social/economicInfrastructure Board of Managing Directors Evaluation DepartmentFinancial Cooperation Directorate IISub-Saharan Africa Directorate IIIEurope, North Africa and Middle East Directorate IVLatin America and Strategy Berlin Office Transactionand CollateralManagement Directorate IAsia DepartmentStrategy DepartmentLatin AmericaCaribbean DepartmentTransactionand CollateralManagement DepartmentNorth AfricaMiddle East DepartmentEast and WestAfrica DepartmentSouth andCentral Africa DepartmentEurope and Caucasus DC strategies and cooperations Regional Team Regional Team Regional Team Regional Team Regional Team DisbursementManagement I Developmenteconomics and research DisbursementManagement II Governance Health, Education, Social Protection Financial SectorTransform Water Resources,Solid Waste Agriculture andEnvironment General Principles and FC processes Finance and Private Sector Agriculture and NaturalResources Energy, Transport Social Infrastructure,Governance Loan and RiskManagement Promotional instruments and financial products Economic Infrastructure Water Water Resources,Solid Waste Water Resources,Solid Waste(North Africa) Finance,EconomicInfrastructure DisbursementMgmt III, DebtReschedulingand Release Planning and monitoring Municipal Development, Environment IT coordination Financial andPrivateSector

  5. KfW Entwicklungsbank - Who we are KfW Entwicklungsbank – How we work Municipal Infrastructure in Europe/Caucasus - Geographic distribution of projects Municipal Infrastructure in Europe/Caucasus - Challenges and solutions Overview

  6. Relationship between BMZ and KfW:From the intergovernmental agreement to the financing agreement agreement under international law Partner country BMZ commitment of trust funds and KfW funds mandate provision of trust funds financing agreement KfW Project executing agency project monitoring, evaluation KfW's partners are public authorities or state-owned enterprises

  7. Our financial products PhaseInstrumentFunding conditions Project preparation Feasibility Study Grant funding Investment Physical investment Concessional long term loans with maturities between 12 and 30 years (in some countries up to 40 years). Implementing consultant Delivery of services Technical assistance Grant funding

  8. KfW Entwicklungsbank - Who we are KfW Entwicklungsbank – How we work Municipal Infrastructure in Europe/Caucasus - Geographic distribution of projects Municipal Infrastructure in Europe/Caucasus - Challenges and solutions Overview

  9. Municipal Infrastructure Sectorin Southeast EuropeKfW’s Current Project Portfolio Albania: EUR 127.1 million Bosnia Herzegovina: EUR 46.5 million Croatia: EUR 73.5 million Kosovo: EUR 21.5 million Macedonia: EUR 61.4 million Montenegro: EUR 71.5 million Serbia: EUR 105.5 million TOTAL: 507.0 million

  10. Water & Sanitation Projects in TurkeyTotal commitments ongoing projects: EUR 150 million z Concluded On-going / under preparation

  11. Financial Cooperation with South Caucasus:Overview of Water&Sanitation ProjectsTotal commitments ongoing projects: EUR 170 million FZ im Südkaukasus Borjomi Batumi Sheki Gyumri and Vanadzor Ganja Imishli Armavir

  12. KfW Entwicklungsbank - Who we are KfW Entwicklungsbank – How we work Municipal Infrastructure in Europe/Caucasus - Geographic distribution of projects Municipal Infrastructure in Europe/Caucasus - Challenges and solutions Overview

  13. Municipal Infrastructure - Challenges • High investment (and re-investment) needs – but limited financial resources • Insufficient cost coverage leads to poor service quality and lacking maintenance • Limited implementation capacity at municipal and central level • Limited municipal borrowing capacity (financial, legal and political) • Municipalities and their utilities have little or no experience with credit financed investments • Lack of transparency regarding diverse funding sources and their availability

  14. Municipal Infrastructure - KfW’s Approach (1) Quality at Entry: • Hands-on Experience through KfW’s long-standing presence on the ground and frequent contacts with beneficiaries also in periphery regions • Sound Preparation via international expertise for (Pre-)Feasibility Studies and own assessments with focus on technical, environmental, socio-economic and institutional needs and capabilities on project and sector level • Focus on medium-sized Municipalities to maximize development impact • Flexible Financing Solutions for tailor-made funding conditions fitting to economic and social situation

  15. Municipal Infrastructure - KfW’s Approach (2) Responsible Finance: • Graduation Principle 1: • Phased investments based on technical, institutional and financial performance criteria (incl. ability and willingness to reforms) • Graduation Principle 2: • Direct lending to municipalities • Lending via financial intermediaries • Intensive Monitoring in order to ensure efficient implementation on high quality standards • Investments linked with TA to improve management capacities and ensure sustainable operation also after the end of external support • Independent Evaluation with focus on sustainable impact

  16. Municipal Infrastructure SectorExample of performance-based Programme Phase 1 Urgent measures Phase 2 Larger scale investments Criteria 1 met? Criteria 2 met? yes yes no no TA directed towards criteria set 1 TA directed towards criteria set 2 Further TA Exclusion of Municipality

  17. Examples of performance criteria: municipalities

  18. Examples of performance criteria: utilities

  19. More Information • www.kfw-entwicklungsbank.de • www.deginvest.de • Newsletter published by KfW Entwicklungsbank(http://www.kfw-entwicklungsbank.de/DE_Home/Service_und_Dokumentation/Newsletter/index.jsp) • Annual Report on Cooperation with Developing Countries(http://www.kfw-entwicklungsbank.de/DE_Home/Service_und_Dokumentation/Online_Bibliothek/Jahresberi.jsp) • Evaluation report on the effectiveness of cooperation with developing countries(http://www.kfw-entwicklungsbank.de/DE_Home/Evaluierung/Ergebnisse_und_Veroeffentlichungen/Auswertung.jsp) • Specialist publications / Online Library in the Internet(http://www.kfw-entwicklungsbank.de/DE_Home/Service_und_Dokumentation/Online_Bibliothek/index.jsp)

  20. Do you have any Questions?

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