News from 2024-06-13 / KfW Development Bank
A KfW for Ukraine
Successful reconstruction conference in Berlin
KfW signs new contracts with Ukraine
The third Ukraine Reconstruction Conference on 11 and 12 June in Berlin sent out a clear signal of solidarity with Ukraine. At the same time, a whole package of pledges and declarations were signed in favour of Ukraine. KfW Development Bank alone concluded contracts worth a total of around EUR 185 million in the areas of energy, vocational training and municipal infrastructure on behalf of the German Federal Government and the EU.
The most important results from KfW's point of view also include the greater involvement of the private sector in reconstruction and the political commitment to further expand the Business Development Fund (BDF). KfW, which once co-founded the BDF, will support this process and contribute its experience and institutional expertise in addition to financial resources.
Chancellor Scholz pledges further support
More than 3,400 representatives from governments, international organisations, Ukrainian municipalities, civil society and the private sector took part in the reconstruction conference. Chancellor Olaf Scholz gave the opening speech, followed by President Volodymyr Selenskyi. KfW was also present with a delegation, including Christiane Laibach, member of the Executive Board responsible for international financing.
Chancellor Scholz promised to support Ukraine in a reconstruction process that would make it "stronger, freer and more prosperous than before". "Together with partners such as the World Bank, the European Union and the Japanese International Cooperation Agency, we are supporting the Ukrainian Business Development Fund, for example. The German Kreditanstalt für Wiederaufbau is the role model here," said the Chancellor. In the medium to long term, the BDF is to be developed into a fully-fledged national development institution modelled on the KfW, which can play a significant role in reconstruction. The topics of strengthening and rebuilding the energy infrastructure and small and medium-sized enterprises are at the top of the agenda. In his speech, President Selenskyi thanked for the help already provided and asked for further support. In addition to the military component in the form of air defence, Ukraine continues to need assistance in the civilian sector. In the energy sector alone, half of the power generation capacities have been destroyed by Russian attacks since last winter.
Commission President Ursula von der Leyen provided information on the first contracts from the EU's Ukraine Facility totalling EUR 1.4 billion, which were signed during the conference. The funds will enable banks to mobilise private sector investment.
Development Minister Svenja Schulze emphasised the energy infrastructure, which needs to be permanently rebuilt. "Every power line that we repair is also a connection to Europe". KfW Executive Board member Christiane Laibach said during the conference that KfW has been a "strong supporter" of Ukraine for years and will remain a "close partner".
Specific results
Networking took centre stage at the "Recovery Forum" integrated into the conference, where stakeholders from the private sector, municipalities and civil society presented themselves. Numerous agreements and declarations of intent were also signed. Some of these were of a financial nature, while others involved new alliances, the strengthening of existing instruments or declarations of political support.
On behalf of BMZ and EU, KfW signed new contracts with the grid operator Ukrenergo (and in some cases also with the Ukrainian Ministry of Finance) totalling around EUR 45 million to repair, modernise and protect the energy infrastructure. A contract totalling EUR 20.5 million was concluded between the Ministry of Education of Ukraine and KfW. The money will be used to expand and better equip vocational schools in order to offer more needs-orientated vocational training, including war veterans and internally displaced persons.
Energy, companies, health, skilled labour, women
KfW signed agreements with the EU for a further EUR 100 million for energy infrastructure and just under EUR 20 million for the expansion of municipal infrastructure, particularly for the modernisation of water supply and wastewater disposal in Chernivtsi. Letters of intent were also signed for EUR 55 million for the regional fund EFSE (European Fund for Southeast Europe) to promote small and medium-sized enterprises in Ukraine and for the regional fund GGF (Green for Growth Fund).
The establishment of the "SME Resilience Alliance" will further strengthen support and coordination for the promotion of SMEs. One of the alliance's goals is to transform the BDF into a national development institution. KfW has also joined the "Gender-Responsive and Inclusive Recovery of Ukraine" alliance. Its members are committed to taking greater account of the gender perspective in their programmes and decision-making processes and to actively promoting gender equality in reconstruction measures. KfW signed a Memorandum of Understanding with the Ministry of Health of Ukraine and the Ukrainian Social Investment Fund (USIF) on future cooperation in the area of women's health.
KfW makes a substantial contribution
The contracts, alliances and declarations of intent at the reconstruction conference confirm the substantial contribution that KfW has been making to support Ukraine, and not just since the start of the Russian war of aggression. Even before that, KfW's corresponding portfolio totalled more than EUR 1.4 billion.
However, it is also clear that reconstruction, which the World Bank estimates will require almost EUR 500 billion in funding, cannot be accomplished without the private sector. "In view of the dimensions we are talking about here, private capital must be added," said Chancellor Scholz. KfW Executive Board member Christiane Laibach expressed a similar sentiment when she said before the conference: "Reconstruction will only succeed if the international community and private investors work together." The conference also made an important contribution to this.
