OREANDA-NEWS. November 29, 2012. KfW Bankengruppe and TAB, the promotional bank of the Free State of Thuringia, on 20 November 2012 signed an agreement for a EUR 15 million global loan from KfW to TAB. TAB will use the global loan to provide low-interest loans for the energy-efficient refurbishment of rental housing in Thuringia, with a particular focus on housing enterprises. The global loan will be refinanced from KfW's "Energy-efficient Refurbishment Programme - Loans" under the CO2 Building Rehabilitation Programme of the Federal Republic.

Due to the funds made available by the Federal Ministry of Transport, Building and Urban Development, the promotional loans provide not only attractive interest rates but also repayment bonuses. The Free State of Thuringia and TAB will reduce the interest rates even further using funds of their own. Thuringia will also provide default guarantees to secure the loans. Clients will thus benefit from the cooperation in two ways. The promotional benefits provided by the Federal Republic, KfW and Thuringia will be pooled in an effective manner. The programme terms and conditions, particularly the energy requirements, will apply in the same way as in the KfW programmes.

"The objectives of the energy turnaround are ambitious but can be achieved if we join forces. Existing rental housing in particular still provides considerable untapped energy saving potential. The new cooperation with TAB will help tap this potential", said Dr Axel Nawrath, member of the Executive Board of KfW Bankengruppe.

Michael Schneider, Chief Executive of TAB, added: "The issue of energy conservation is of great importance for housing, and this is illustrated by the high demand for promotional loans for energy efficient refurbishment of buildings. Our cooperation with KfW now provides us with a further effective instrument with which to push the topic forward in Thuringia even faster."

With the signing of the agreement KfW and TAB continue their long-standing cooperation. The two banks have concluded 13 global loan agreements for close to EUR 1.3 billion since 2004.

Successful development through the private sector: report by International Finance Institutions documents benefits for developing and emerging-market countries

• Development finance institutions play a key role, particularly in times of crisis

• Financing volume has multiplied fourfold in ten years, reaching 40 billion US-dollars in 2011

In Sub-Saharan Africa, investments to the amount of approximately 90 billion US-dollars are needed per year for infrastructure, with somewhat less than half the amount currently being invested. In developing and emerging-market countries, the lack of access to finance is an everyday problem. According to Bruno Wenn, Chairman of the Management Board of DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH, this lack is one of the greatest obstacles to growth in these countries: "Especially small and medium-sized businesses in developing and emerging-market countries lack investment capital. This is where we as development finance institutions come into play by providing the private sector with long-term financing".

On 19 November 2012, DEG, in cooperation with the International Finance Corporation (IFC), hosted an event in Berlin to present the main conclusions of the report "International Finance Institutions and Development Through the Private Sector", a joint effort by 31 international development finance institutions. To this end, representatives from politics, industry and society were invited to discuss the findings of the report. According to the report, the private sector supports job creation and provides tax revenues as well as important basic goods and services. In this manner, it plays a significant role in helping developing countries achieve sustainable growth while reducing poverty and improving living standards. The private sector in developing and emerging-market countries, however, faces many constraints such as a poor investment climate, insufficient infrastructure or a lack of financing.

At the same time the challenges in developing and emerging-market countries are set to further intensify because of an increasing investment demand: In the opinion of the development finance institutions, investment to the amount of some hundreds of billions of dollars will be needed over the next decade, with a special focus on infrastructure, agriculture, medical care and environmental protection. "Our commitment is more important than ever," said Christian Grossmann, Director of Corporate Strategy Department at IFC: "Since the beginning of the financial crisis in 2008, global financial flows to the private sector in developing countries have declined by about half from originally 8 per cent, whereas financial commitments by development finance institutions reached a peak with 40 billion US-dollars. We are demonstrating that even in difficult markets investments will pay off".

The private sector plays an important role for development, but it is not a universal remedy. Achieving successful development cooperation therefore requires stronger cooperation between the state, economy and civil society.