Measurable impact: DEG presents development impacts for 2020

Many developing countries have been hit hard by the COVID-19 pandemic and often lack government assistance programmes. This makes it all the more important for them to receive continued support for their sustainable economic development. Development financing providers like DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH, which offer financing and advice to private-sector companies, have a crucial role to play in this context and are in high demand.

DEG customers generate local income of EUR 120 billion

Last year, the companies co-financed by DEG employed some 2.3 million people and generated local income of EUR 120 billion. “To ensure this impact of our investments is protected for the future, we are helping our existing customers by providing short-term liquidity support and specific COVID-19 response services,” says Christiane Laibach, CEO of DEG. By way of example, EUR 50 million went into the co-financing of COVID-19-related measures via DEG’s advisory and promotional programmes alone in 2020, including for promotional measures in the healthcare sector and for continued salary payments.

DEG regards the development impacts of its investments as a key management tool. Since 2017, it has measured the effectiveness of its involvement by applying the Development Effectiveness Rating (DERa). Each year, the DERa uses qualitative and quantitative indicators to measure the development impact for every customer. An analysis of the DEG portfolio for 2020 shows that 70% of companies co-financed by DEG invest in innovative technologies, products or processes. Some 86% of DEG’s customers also engage in community development activities with their local communities and invest in areas such as education and local infrastructure.

Contributions to the global Sustainable Development Goals

DEG also uses DERa to record and evaluate its customers’ contributions to the global Sustainable Development Goals (SDGs). The energy providers co-financed by DEG, for example, produce around 44 TWh of electricity a year from renewable energy sources and can currently supply more than 36 million people.

The latest DERa analyses show that, even amid the coronavirus pandemic, many of the companies receiving financing from DEG have proven resilient in the face of major challenges and are adapting with innovative strategies to safeguard their success. A fashion business in Zambia, for instance, propped up its earnings by switching to producing face masks early in the pandemic. It has not only retained its entire workforce but even created new jobs during the crisis.

Companies seek DEG’s advice on transforming their business

In addition to the current pandemic, the challenges of climate change, digitalisation and globalisation will also require private companies to constantly prove their adaptability in order to remain successful. “As a development finance institution, DEG has a special role to play here,” says Laibach. “We aim to put even greater focus on our role as an adviser on transformation to private-sector companies. This also includes supporting our customers as they move towards climate neutrality.”

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