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RELIABLE PARTNERS FOR THE GREEN AGENDA
CORPORATE
One of the world’s leading promotional banks, KfW, has provided funds totalling EUR 107 billion in 2021 worldwide, and a third of this amount was used for climate and environmental protection. In the near future, this means more clean energy for Serbia, as well as sustainable urban development
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RÜDIGER HARTMANN
Director of KfW Office in Belgrade
The leading German promotional bank, KfW, is represented at around 69 locations worldwide, as well as in Belgrade. As it is focused on the future and improving life, the bank supports people, countries, and institutions who think ahead. Rüdiger Hartmann, Director of Belgrade Office, shares with us some plans for the future.
KfW is one of the leading promotional banks in the world. What is your mission?
— KfW was founded in 1948, to support the economic reconstruction of West Germany. In the 1960s, we went international by implementing German Financial Cooperation with Developing Countries on behalf of the German government. As a bank committed to responsibility, KfW´s mission is to support sustainable economic, social, and environmental development in Germany and worldwide. We are not profit-oriented and we always act on a mandate by the German Government and KfW´s General Assembly, which is composed of representatives of all relevant stakeholder groups, ranging from the German government, the parliament, and the federal states to the churches, trade unions, and the private sector. This is what sets KfW apart from commercial banks.
How large is KfW, in comparison with commercial banks?
— As of today, our balance sheet is around 550 bln EUR and our annual commitments worldwide exceed 100 bln EUR, thereof roughly 10 bln EUR in Development Cooperation. In total, we have 7,600 employees. Our overarching goals are improving people’s economic and social living conditions, alleviating poverty, and protecting the climate and environment. As an institution that is governed by public law, the German
Federal Government owns 80% of our capital, with the remaining 20% owned by the German federal states.
What are your focus areas in Serbia?
— Based on the political priorities and development policy guidelines of the German government, the German Ministry for Economic Cooperation and Development (BMZ) specifies sectoral, regional, and country strategies. In bilateral government-to-government negotiations, held every two years, both governments discuss the overarching cooperation goals and strategies, define the specific focus areas and the projects to be financed. Of course, we consult and support both governments in the definition of these focal areas and the selection of projects. Serbia is of particular importance for German development cooperation with the Western Balkans. We are firmly committed to supporting Serbia´s economic development and its path to EU accession. KfW supports Serbia in achieving the targets and commitments related to the EU accession process with a special focus on climate and energy as well as sustainable urban infrastructure development.
Can you name some concrete examples?
— In the energy sector, we have financed the rehabilitation of the Mali Zvornik hydropower plant in cooperation with EPS. We support a programme that introduces renewable biomass energy in local district heating systems, together with the Ministry of Mining and Energy. The first two-biomass plants in Priboj and Mali Zvornik became operational last year. When it comes to energy efficiency, we are cooperating with the Public Investment Management Office (PIMO) in the energetic refurbishment of public buildings like schools and hospitals. In Belgrade, we are supporting the energetic refurbishment of the VMA hospital. We also promote national and regional electricity connectivity with the Trans Balkan Corridor in cooperation with EMS. In regard to sustainable urban development, we have invested more than 120 million EUR so far in countrywide projects to improve urban water supply systems and wastewater management. In cooperation with Ministry of Construction Transport and Infrastructure, in Kruševac and Vranje, two state-of-the-art wastewater treatment plants were opened last year. In these two regions, we are also financing regional waste management systems. Moreover, under the auspices of our cooperation in Serbia, we support sustainable economic development, secure jobs, and technical and vocational education. We provide small and medium-sized enterprises with favourable loans and technical assistance through commercial local banks. In cooperation with the Chamber of Commerce and Industry of Serbia (PKS), we established last year the Serbian Entrepreneurship Foundation which offers loan guaran-
tees schemes for start-ups and beginners in the business. We have recently started to promote dual education in Serbia and the Western Balkan region through a programme called the Regional Challenge Fund, in cooperation with the WB Chamber Investment Forum. Last year, we successfully launched the first call for vocational training and education consortia of interested companies and educational institutes. More than 40 applications in Serbia alone have been submitted and further calls for applications are planned this year.
Tell us about KfW´s instruments and main services.
— As a development bank, you may expect that we mainly offer loans – and that is true. The majority of our projects here in Serbia, worth more than 2 bln EUR, so far have been financed from low-interest soft loans. Besides soft loans, we also offer grants for project preparation, technical assistance, and specific projects aiming at poverty alleviation or innovation. Given the overarching relevance of EU accession for our engagement in Serbia, we intensively cooperate with the EU and implement grant funding by the Western Balkan Investment Facility (WBIF), as well as national IPA. At present, we have 18 co-financing projects worth a total of 42 million EUR from EU funding. However, I wish to underline that our offer is not limited to financial support. We do have co-responsibility for the sustainable impact of all projects we are supporting. Our KfW project managers, technical and local experts closely monitor project progress and support our partners in day-to-day project management. They know the details of the projects and constantly visit them to follow up and discuss bottlenecks with the partners. I would say that it is this combination of favourable financial instruments, technical assistance, and personal commitment to support our partners at any time, which makes KfW an outstanding development bank.
What are your future priorities?
— The German Development Cooperation will certainly continue to support Serbia in the same focal areas: clean energy, sustainable urban development, and promoting economic development through supporting SMEs and vocational training. The German government has offered to Serbia a special climate partnership and signed a corresponding declaration. To implement it, a team of climate experts from GIZ and KfW will be formed in Serbia. So, besides investment projects, we are willing to explicitly support the Serbian government in its climate policy agenda and the EU accession negotiations with a special focus on energy and the environment. At present, and in close cooperation with the World Bank and AFD, we are also preparing a policy-based programme to support the government´s reform agenda in these areas. All three development partners bring in their expertise, provide technical and financial support. I would expect that this type of joint support of the government´s reform agenda related to EU accession would become increasingly important for our cooperation, without reducing or neglecting project-based support of urgently needed investments.
