KfW - Kreditanstalt für Wiederaufbau

Bi-lateral government organization providing funding throughout the major regions of the world.
Brief Overview

Kreditanstalt für Wiederaufbau ( KfW) is a corporation under public law domiciled in Frankfurt am Main / Germany. Its functions are those of a promotional bank for the domestic economy and a development bank for the developing countries. Its capital is DM 1 billion. With a balance sheet total of DM 278 billion it counts among Germany's large banks.

Under the official Financial Cooperation (FC) of the German Federal Government with developing countries KfW finances investments and project-related consulting services. FC- funds are given mainly in the form of low-interest loans, but also as grants. In addition KfW raises funds for development cooperation on the capital market. They are combined with funds from the budget of the Federal Government into so-called composite loans to finance projects in more advanced and creditworthy countries. The poorest countries, in turn, receive financial contributions that do not have to be repaid.

Support consists in a wide range of activities. Total commitments of KfW in the urban sector (community infrastructure and housing schemes) amount to about DM 1.4 billion. Among these about DM 700 million is committed for urban development projects prepared and implemented with the direct participation of the local authorities. Projects and programs of this category quite regularly follow a multi-sectoral approach. Interventions for rehabilitation or construction of housing and market facilities, including sanitation and solid waste disposal, may be combined with support in the improvement of the local road network.

Although statistically classified differently, a major portion of commitments made for projects to support improvement and expansion of the social and economic infrastructure equally serve the purpose of urban development. This, in particular, holds true for KfW's sizable investments into projects in the area of water supply, sanitation and solid waste management.

Furthermore, a large number of interventions in the energy and the transport sector help improve urban infrastructure.

Contact Information

web site: http://www.kfw.de

KfW (Kreditanstalt für Wiederaufbau)
Palmengartenstrasse 5-9
D - 60325 Frankfurt/ Main
Phone: +49-69-74310
Telefax: +49-69-74312944
e-mail: Nassir.Djafari@KfW.de

Stated Goals
To expand economic and social infrastructure and to protect the environment and natural resources.
Regions of Work
Africa, SE Asia, Latin America and Middle East
Areas of Work
Water, sewage, energy, transport, finance, health / population policy, agriculture and forestry, education, other social infrastructure and trans-sectoral projects.
KfW appraises the eligibility of projects for financing along the lines of the support policy of the German Ministry for Economic Cooperation. After approval of projects KfW makes periodic on-site inspections. These progress reviews form part of the project monitoring process and are designed to ensure that funds are used properly. Several years after the active project support from outside has ended projects are again evaluated with regard to their developmental effectiveness.
Examples of Upgrading Project
Urban Development Medellmn / Colombia

In Medellmn around 250.000 people, or roughly 14% of all registered inhabitants, live in marginal quarters (barrios) marked by high unemployment, unstable family conditions, low school education and the involvement particularly of young people in drug-related and violent crime. The barrios have a much poorer infrastructure than the "normal" quarters. Especially sewage disposal facilities, footpaths and roads, playgrounds, community centers and sports facilities are in poor condition. Besides, the inhabitants of the barrios do not have adequate access to health care and other community services. Housing is precarious, without proper sanitation and sufficient living space for the families. The steep slopes are prone to erosion, and heavy rainfall regularly causes mudslides that endanger the lives of the dwellers. Waste disposal works only in areas that are accessible to the trucks of the urban waste disposal service. In many places refuse is dumped in open spaces or into streams!

The ultimate objective of the program is to improve the living conditions of the population in the underprivileged barrios. Indirectly this is to contribute towards reducing drug-related and violent crime. The program objective is to improve the conditions of the housing environment in the barrios covered by the program. The program has been under implementation since 1993. The first program of Financial Cooperation (FC) between Germany and Columbia (grant of DM 13 million) is already largely completed. The follow-up program (loan of DM 8.8 million) was appraised in 1998.

Funds from KfW have been allocated to finance the expansion or rehabilitation of:

  • transport infrastructure (construction of roads, footpaths, public squares),
  • social infrastructure (schools, health-care and sports facilities, playgrounds and community centers),
  • erosion control and protection of embankments (stabilization of slopes exposed to the danger of erosion and mudslides), and
  • minor measures implemented by the people of the barrios themselves (small stairways and paths, landscaping of housing areas, equipment for playgrounds).

The program is integrated into a more extensive program of the city administration under which additional investment and social measures are being conducted with national funds (projects in drinking water supplies and sewage disposal, housing improvement, resettlement of occupants of endangered slopes) as well as the legalization of land ownership and the strengthening of the self-help organizations in the barrio.

The population is directly involved in designing and carrying out the measures, and in the case of minor measures frequently takes responsibility for the operation of the facilities financed.

The program contributes towards improving the preconditions for the economic development in the project area, particularly with regard to small businesses and the service sector. The economic and social infrastructure is being used by a target group which in its vast majority disposes of very low income.

The program is being executed by a project management unit which reports to the lord mayor of Medellmn. A consultant financed from KfW funds performs intermittent assignments to improve the technical standards and to supervise the use of the funds. The experiences with the project management unit helped to improve the coordination between the various offices of the city administration. Thus, the program has had a positive structural impact in this regard as well.

The program has reached around 26 of the 104 "barrios", which represents 85,000 out of around 250,000 inhabitants. The program contributes towards stabilizing the social environment in the marginal quarters of the city. Violent conflicts between gangs of youths far have at least temporarily been resolved through the targeted mediation of the city authorities (program "Paz y Convivencia"). A further improvement of the social climate in the barrios is being expected.

Other projects with upgrading components:

Albania: Labor Intensive Municipal Infrastructure
Albania: Labor Intensive Municipal Infrastructure
Benin: Labor Intensive Municipal Infrastructure
Benin: City Development Abomey-Bohicon
Bolivia: Social Investment Fund
Burkina Faso: Municipal Development Fund
Chile: Low Cost Urban Housing
Columbia: Social Investment Program Medellmn
Columbia: Social Investment Program Bogota
Egypt: Participatory Urban Up-Grading Telal Zeinhum
Egypt: Particip. Urban Up-Grading Manshiet Nasser
El Salvador: Municipal Low Cost Housing El Sauce
El Salvador: Slum Up-Grading Las Palmas
Ghana: Priority Works Project for Urban Poor
Ghana: Development of Secondary Towns
Ghana: Infrastructure in District Centers
Honduras: Improvement of Low -Cost Urban Housing
India: Housing Development Finance
Jordan: Labor Intensive Infrastructure for Urban Poor
Kenya: Slum Rehabilitation Mathare Valley
Malawi: Secondary Centers Development Program
Mali: Labor Intensive Urban Infrastr. (AGETIPE)
Mauritania: Labor Intensive Urban Infrastr. (AMEXTIPE)
Macedonia: Labor Intensive Urban Infrastructure
Morocco: Municipal Finance Program
Namibia: Low Cost Housing
Nepal: Township Development Fund
Niger: Labor Intensive Urban Infr. (NIGETIPE)
Senegal: Urban Up-Grading Pikine
Senegal: Labor Intensive Urban Infrastr. (AGETIPE)
South Africa: Municipal Finance Program
Uruguay: Low Cost Urban Housing

Project Selection Process
Information contributed by KfW
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