DEG in demand as a provider of development financing in the pandemic

Around EUR 1.4 billion from own funds committed in 2020

In 2020, DEG - Deutsche Investitions- und Entwicklungsgesellschaft mbH, made commitments from its own funds totalling approximately EUR 1.4 billion for financing private investment in developing and emerging countries (2019: EUR 1.8 billion). DEG mobilised a further EUR 378 million from private lenders, a significant increase on the previous year (2019: EUR 277 million). An additional EUR 63 million (2019: EUR 28 million) came from promotional funds for co-financing of entrepreneurial activities. Given the very challenging environment resulting from the Covid-19 pandemic and the associated economic downturn in many developing and emerging countries, DEG’s main focus was on supporting its existing customers.

Strong demand for Covid-19 Response services

“Many of our partner countries have been hit hard by the pandemic. We therefore quickly developed new services to support our customers and to help protect jobs and livelihoods. Our promotional funds in areas such as healthcare and continued payment of wages were in high demand,” said Christiane Laibach, CEO of DEG. In total, over EUR 50 million went into co-financing of Covid-19 Response measures.

German businesses remain an important customer group for DEG, and it made a total of EUR 369 million in financing available to them from own funds in 2020 (2019: EUR 429 million). As well as loans and equity investments for German companies, this figure includes financing for local companies purchasing German components, for example. Funds were also raised through third parties such as German institutional investors. DEG made commitments of a further EUR 40 million last year through the AfricaConnect programme, which was launched in 2019, for investment activities of European companies in Africa, for example for production of organic macadamia nuts in Kenya.

DEG provided a total of EUR 508 million in 2020 for investments that promote climate and environmental protection. This included financing for solar farms in Kenya, Jordan and Cambodia.

New business in Africa up by 12%

In regional terms, financing commitments for Africa developed particularly positively, growing by around 12% year on year to EUR 386 million. The largest share of new business in 2020 related to Asia, where DEG invested EUR 440 million. Broken down by sector, the main focus in 2020 was once again on the financial sector, followed by manufacturing.

In addition to financing from its own resources, DEG offers advisory services and promotional programmes. Through its “Business Support Services”, it facilitates measures that further enhance the impact on development of co-financed investments, as well as pilot projects, innovative business models and feasibility studies. In 2020 it added a range of specially developed services in response to Covid-19, such as health advice to help businesses set up their own health stations or to provide support with choosing suitable PCR testing devices.

DEG expects the Covid-19 pandemic and associated challenges to continue to have a massive impact in 2021. There will also be a further acceleration of developments such as digitalisation and climate change. DEG therefore wants to do more to promote innovative business models and help companies to evolve. “As an adviser on transformation to private-sector enterprises, we want to play a specific part in helping our customers in developing markets prepare for forthcoming challenges,” said DEG CEO Christiane Laibach.