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Contributions from
the Column
Monitor
USA undermining generic pharma production
Germa-Russian President’s Programme extended
KfW Bank Group promotes good governance
Oil: World Bank and Chad reach agreement
Dispute over World Bank malaria programme
United Nations: Stalled reforms
International peacebuilding efforts inadequate
Liberia: UN negotiates timber embargo
Aid for more trade
06/2006
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KfW Bank Group promotes good governance
In the past year, the KfW Entwicklungsbank made new commitments amounting to ¤1.9 billion for measures in poor countries, and in doing so, just retained the 2004 level. 36% of the new commitments were allocated to Asia/ Oceania (2004: 40%) and 24% to sub-Saharan Africa (2004: 16%). According to the current annual report, key areas of work included social infrastructure activities in the fields of water, sanitation, education and health. The DEG (German Investment and Development Company), the KfW banking group’s subsidiary which finances investments in the private sector of poor countries, made new commitments to the amount of ¤670 million in 2005. This was almost 20% more than in 2004.
The commitments of both KfW branches combined therefore amounted to around ¤2.6 billion. This corresponds to a three percent increase. Approximately half of the funds came from the Federal Government’s budget and the other half was raised by KfW Bank Group from capital markets.
The joint annual report is titled “Good governance means fair play.” According to Winfried Polte, spokesman of the Board of Management of DEG, companies in a “well-governed state” usually abide by the rules. On the other hand, “tax authorities taking arbitrary decisions, lack of legal security and deficits in the enforcement of official regulations make work difficult for honest enterprises.”
The DEG makes sure that the companies they deal with adhere to the principles of good governance. Investors in the target countries are also well aware of this. At times, the stock market value of a company increases once DEG involvement becomes known because that step can boost the reputation of companies concerned.
Wolfgang Kroh, a KfW board member, says the “aim is to enable the partner countries to perform their tasks well and efficiently.” Good governance is therefore an important objective of many current KfW projects. The KfW Entwicklungsbank finances government projects in poor countries. (dem)
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