German Financial Cooperation with MENA Focal Areas, Approaches and Examples

Practitioners’ Network for European Development Cooperation

Workshop on Cooperation in the MENA Region

Christoph Krieger, Principal Country Manager

Brussels, 25 October 2011

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60 Years of KfWFinancing with a Public Mission

● Promotional bank of the Federal Republic of Germany

● Founded in 1948 asKreditanstalt für Wiederaufbau

● Shareholders: 80% Federal Republic,20% federal states

● Headquarters: Frankfurt am MainBranches: Berlin and Bonn

● Balance sheet total at end-2010: EUR 504 billion

● 4,600 employees (2010)● Best rating: AAA/Aaa/AAA

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A Bank with a Wide Array of Functions

Domestic promotional activities

Promotion ofhousing, education,infrastructure and

social development

Promotion of SMEs, entrepreneurs,

environmental and climate protectionbusiness start-ups

Financing of municipal

infrastructure projects and promotion in

Europe

Promotion ofdeveloping and

transition countries

Internationalproject and

export finance

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Governmental Budget Funds

Development Loans

Composite financing

Reduced-interest loans

Promotional Loans

KfW Funds

100% Budget Funds

Grants

Loans IDA conditions

Loans standard FC conditions

Financing Instruments

LDCs = GDP p.c. < 900 USDIDA = GDP p.c. < 1.735

other Developing Countries

Leveraging limited budget funds

100% KfW-Riskclose to market conditions

Broader scope of action

for Cooperation with Developing Countries

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Team MENA at KfW Entwicklungsbank

Our Focal Areas

Board of Managing Directors

Latin AmericaEnvironment and Climate

Water Resources and Solid Waste

MENASub-Saharan

Africa

Education and Sustainable Economic Development

Climate - Environment - Energy

AfricaMENA

EuropeAsia

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German Development Cooperation with MENA Priority and Partner Countries

Palestinian Territories

Syria

Yemen

Tunisia

Morocco

Egypt

Priority Countries Partner Countries KfW-OfficesLebanon

Jordan

Iraq

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Focal Areas and Approaches

Water – Sanitation – Solid Waste

Challenges in MENA

water stress, overexploitation of water resources and climate change

insufficient urban water supply in parallel with strong urban growth

water resources and health conditions endangered due to unsufficient sanitation and waste disposal

Our Approaches:

strengthen water supply efficiency through water loss reduction programmes

improve access to adequate water supply and sanitation – urban and rural

promote resource efficient irrigation in agriculture

Perspectives for Financial Cooperation:

promoting Integrated Water Resource Management (IWRM) in MENA

adaptation measures to tackle the consequences of climate change (sanitation, water resource management)

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Focal Areas and Approaches

Environment – Climate Protection - Energy

Challenges in MENA: region is strongly affected by consequences of climate change heavy burden on urban areas by pollution of growing industries and thermic power plants high dependency on import of fossil fuels (Morocco, Tunisia) energy intensity higher-than-average

Our Approaches: utilise the enormous potential of Renewables in MENA (wind and solar power) promote energy efficiency – strongly neglected in the region promote industrial enviromental protection via national enviromental funds promote appropriate waste collection – important contribution to climate protection support public transport systems

Perspectives for Financial Cooperation: partnering the implementation of Mediterranean Solar Plan and the vision Desertec (Dii) – first

solar power plants under preparation in Morocco and Egypt exploring the scope of action for energy efficiency and how to kick-off investments initiate Recycling Management Systems - waste-to-energy

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Focal Area and Approaches

Education and Sustainable Economic Development

Challenges:

high population growth, a young population two-thirds younger than 30) high illiteracy rates (in particular: Morocco, Yemen, Egypt)

low GDP-growth per capita; many jobs in low productivity areas, unsufficient qualification, high unemployment in particular young adults (one of main reasons for Arab Spring)

conflictive region, high frequency of crisis, unsufficient rule of law, fragile states, missing economic and social opportunities lead to pressure on migration and lack of perspectives

Approaches:

promote education on all four levels

on the supply side: access and quality - on the demand side: Financing Eduation

promote strong and diverse national financial systems to enable development oriented capital flows

promote Municipal Financing Systems – establishing systems of financial equalisation between municipalities

Perspectives for Financial Cooperation:

creation of SANAD: the MENA Fund for Micro-, Small and Medium Enterprises

developing approaches for Financing Education in MENA

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Portfolio

Commitments per Country (Million Euro)

Total: 3.238 Million Euro

Egypt 1.228

Yemen 277

Jordan 281

Morocco 439

Palestinian Territories 436

Regional 20

Syria 133

Tunisia 375

Iraq 3

Lebanon 46

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PortfolioCommitments per Sector (Million EUR)

Democracy and Peacebuilding

114

Other88

Energy and Enviroment

765

Sustainable Economic

Development173

Education254

Water and Sewerage1.844

Gesamt: 3.238 Mio. Euro

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Wind Energy Morocco

Tapping Own Resources

Approach

utilise the first-class wind power potential

finance new wind power plants

generate more than 500 GWh/annually

Problem

fast growing energy demand

very limited proper energy resources

Morocco‘s high dependency on imported fossil fuels

Contribution

Wind Park Tanger (140MW): 50 m EUR (FC-Loan)

Wind Park Essaouira (60MW): 50 m EUR (FC-Loan)

Impact

provision of environmental friendly energy and sustainable utilisation of natural resources

electricity generation for 2 million inhabitants – private households

saving around 340.000 t CO2

reducing Morrocco‘s expenditures on fossil fuel imports

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Education Programme Palestinian Territories

Combined Forces for Better Education

Problem

high illiteracy rates, high unemployment rates

insufficient quality in education

the multitude of active donors in the field of education is a challenge for budgetary planning

Approach

joint donor mechanism to coordinate the implementation of the national education strategy

learner-friendly enviromments in schools, innovative and adapted infrastructure build with labour-intensive measures to generate incomes

Impact

higher level of quality in education

reduction of administrative costs

strengthening the Ministry for Education

Costs and Contribution

total costs: 419 m EUR

FC-Contribution: 77 m EUR (grant)

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Improved Water and Wastewater Services Programme (IWSP)

Protecting Health and Environment in Egypt

Impact

sustainable improvement of the water supply and waster water systems in the Niledelta

improvement of the utilities‘ performance and its staff capacities

support for sector reforms programme management

Contribution

61 m EUR (loan) for investments and 8,3 m EUR (grant) to support the water utilities

Problem

health and environmental risks due to insufficient water supply and waste water systems

high necessity for investments in infrastructure

water utilities lack capacity

Approach

investments to rehabilitate, expand and construct water and waster water treatment plants

accompanying measures to support water utilities

NIF – joint financing mechanism (EU, AFD, EIB, FC), KfW as the lead financier

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Water Resource Management in Jordan

Recycling Water Resources with Multiple Use

Problem

extreme and increasing water shortages

overexploitation of water resources

high population growth

Approach

Re-use of treated waste water for irrigation in agriculture

Re-use of irrigation water for drinking water

electricity generation from gravity pipes

Impact

20 liter drinking water daily extra for each inhabitant of Amman

electricity for 10.000-15.000 households

Irrigation in the Jordan Valley to be ensured

Contribution

investment costs for Re-use components: 22,5 m EUR (FC development loan)

Re-use components are part of a broader Water Resource Management Programm

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Problem

commercial banks avoid financing for micro, small and medium enterprises (MSME)

despite liquidity in the market, finance for MSMEs hard to obtain

MSME account for around 70% of employment in MENA

Approach: establishing a Fund…

to combine public and private investors

to disburse loans, guarantees and equity

open to (micro-) finance institutes of all MENA countries

managed by a private consultant

Impact

mobilisation of private liquidity

improving access to finance for local enterprises

Regional Fund SANAD

Access to Finance for Small and Medium Enterprises

Contribution

expected: 20 m EUR (grants) + 10 m EUR equity share; assumed fund volume in 5 years 75-100 m EUR

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Thank You for Your Attention…

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L2c2KC Water Near East

Stefan Zeeb (2584)

Manuel Schiffler (4325)Dr. Stefan Gramel (4845) Alexander Grieb (4732)Wolfgang Pfaff-Simoneit (4145)Sebastian Jacobi (1672)Theodor Dickmann (2068)Olaf Goerke (9356)Dr. Konar Motafoglu (9942)Gerald Scholz (2969)

L2c3Education and Sustainable

Economic Development

Babette Stein v. Kamienski (3705)

Mandana Bahrinipour (9028)Frank Determann (3583)Eberhard Knapp, ext. (2659)Cornelia Penzel (3952)Bettina Zoch (9003)Matthias Zilbauer (4727)Jan Wiegelmann (9556)

L2c4Water North Africa

Dr. Jörg Dux (1926)

Ditlinde von Davidson(2418)

Bruno Schoen (2310)Thomas Linsenbold(2787)Reinhard Schmidt (2131)Gert Strübing, ext. (4635)Thorsten Waibel (3934)Gunter Walter (3143)Dr. Bernd Wiebusch(2633)Claudia Bürkin (Cairo Office) (*7511)Tatjana Bruns (3474)

L2c5Climate and Environment

Kurt Hildebrand (2890)

Bernd Hasel (2593)Wolf Muth (4788)Thomas Prien (9807) Christoph Twerenbold (Rabat Office) (1701)Bernhard Schenk, ext. (4108) Verena Willand (4442)Helmut Asam (9110)Katharina Brinkmann (3350)

L2c1Country Team

André Ahlert (2155)Egypt

Sylvia Paschke (4077)Jordan, Palestinian Territories, IsraelnChristoph Krieger (2405)Tunisia, Morocco, Algeria

Alexander v. Kap-herr (9355)Syria, Yemen

Moritz Remé (4189)Lebanon, Iraq

Susanne Schröder (3751)

Contracts: Julien LeChuiton (8456)

L II cWolfgang Reuß

(3593)

First Vice PresidentDirector MENA

Offíce: Susanne Reinhardt (2119) / Fax (3279)Office L2c3/4/5: Michaela Lessmann (8903)

September 2011

Contact in Frankfurt

E-mail: Firstname.Surname@kfw.de

Tel/Fax: +49-69-7431-xxxx

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Palestinian Territories

Yemen

Tunisia

Morocco

Egypt

Iraq

Contact in MENA

JordanDirector:

Bettina TewinkelMohammed Baseem Al-

Khammasch Street No 13P.O. Box 926 238Sweifieh, Amman

11190 JordanE-mail: kfw.amman@kfw.de

YemenDirector:

Bernd SchönewaldHadda Area, Street No. 21,

Villa No. 19Sana´a, Jemen

Tel.: 00967-1426-352Fax: 00967-1426-350

E-mail: kfw.sanaa@kfw.de

Egypt Director:

Dr. Jens Mackensen4 D, Al Gezira Streed

(3rd Floor)Zamalek 11211, Kairo

Tel.: 00202-2736-9525 Fax: 00202-2736-3702

E-mail: kfw.cairo@kfw.de

MoroccoDirector:

Silke Stadtmann2, Avenue Tour Hassan10020 Rabat/MarokkoTel. 00212-3770-9893Fax: 00212-3770-9315

E-mail : kfw.rabat@kfw.de

Palestinian TerritoriesDirector:

Marc EngelhardtGerman House

Abdullah Joudah StreetBldg. 35,

Al Bireh, PalästinaTel. 00972-2240-0730Fax: 00972-2240-0731

E-mail: kfw.albireh@kfw.de

SyriaDirector:

N.N. German House

Al Mehdi Ben Barakeh Street 26

Damskus, SyrienTel. 00963-11-3318-124Fax: 00963-11-3318-126

E-mail: kfw.damaskus@kfw.de

LebanonDaniel Neuwirth

Programme CoordinatorHamra Gefinor CentreBlock D, Office 401/3,

Clemenceau Street, Beirut, Libanon

Tel. 00961-1740-304Fax: 00961-1740-304

E-mail: Daniel.Neuwirth_extern@kfw.de

TunisiaMarkus Schlömann

Local RepresentativeTunis

Tel.: 00216-28 770 128E-mail:

markus.schloemann@kfw.de