Germany

Inclusive Business in Development Cooperation of EU Member States

Institutional Setup

The Federal Ministry for Economic Cooperation and Development (BMZ) is responsible for devising the strategies for Germany’s development policy and, beginning in 2008, started to take up a wide range of initiatives specific to inclusive business models. Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ), a government-owned public-benefit enterprise, and KfW, Germany’s Development Bank, are the main implementing partners for Germany’s technical and financial assistance projects respectively. GIZ provides support to intermediary organisations, engages in development partnerships with inclusive businesses, and provides policy advice to partner governments. KfW’s key areas include microfinance, agricultural finance, housing finance, and micro-insurance. Further, KfW provides equity finance and grants for technical assistance to social venture funds for small and medium size social enterprises. With developmental inclusion at its core, Germany’s Development Finance Institution DEG offers development finance; environmental and social due diligence and monitoring, technical assistance and services to private sector enterprises operating in developing and emerging-market countries.

Inclusive Business in Private Sector Promotion

The German government recognises the private sector as an important lever for attaining self-supporting economic development, reduced dependency and poverty reduction. To further increase impact, private sector promotion measures are linked with complementary programmes in the fields of economic policy, financial systems development, (vocational) education, infrastructure, and good governance. German development cooperation aims to strengthen the private sector in cooperation countries, with a focus on micro, small and medium enterprises (MSMEs) that account for the majority of private businesses and offer employment and income opportunities to poor segments of society. At the core of this strategy are measures to create an enabling regulatory environment for private investments, build competitive and sustainable economic structures, and promote sustainable corporate governance. Within the framework of the latter pillar, Germany provides long-term finance and advisory services for environmentally and socially sustainable private investment projects and promotes inclusive, broad-impact business models. The rationale is to boost development and reduce poverty in a financially sustainable way by integrating poor populations in value chains as consumers, employees, producers and entrepreneurs.

Regional Focus

Under the Marshall Plan with Africa and the G20 presidency, Germany reaffirms the focus of its development cooperation on Africa. Germany is committed to, inter alia, incentivise private investments in Africa, support the private sector in establishing fair and sustainable supply chains, and foster digitalisation of African business.

Publications

Inclusive Business

Private Sector Promotion and Cooperation

Tech-Entrepreneurship Initiative Make-IT Africa

Budget (mio €)
4.00
Programme description

Objective:

Strengthen tech entrepreneurship in sub-Saharan Africa for sustainable, inclusive growth in the digital economy.

Activities:

Strengthen innovative IT start-ups in sub-Saharan Africa through cooperation with the digital sector.

ProEcon

Budget (mio €)
10.00
Programme description

Objective:

Better framework conditions for inclusive MSME growth, increasing employment and incomes while reducing poverty.

Activities:

Development partnerships with both national and international companies to integrate SMEs into agricultural value chains, the tourism sector as well as upstream and downstream commodities industries. Advise and support the MIC, as well as the Central Bank of Mozambique, and selected municipalities in the creation and implementation of the national strategy to improve the business climate through training, workshops and organisational advice. Development of financial services with innovative sales models for SMEs in rural areas, advise the central bank on improvements in consumer protection and financial literacy

SANAD Fund for MSME

Budget (mio €)
10.00
Region
Middle East and North Africa
Programme description

Objective:

Maintain and create employment, especially for the youth; Reduce poverty; Build inclusive financial systems.

Activities:

Support SMEs by providing partners with financial instruments adapted to their respective refinancing needs; facilitate self-employment through microfinance; cooperate with banks, microfinance institutions and other institutions to facilitate access to financial services. Beneficiaries of the Fund may qualify for support from SANAD’s Technical Assistance Facility (TAF)

Regional investment Funds for micro, small and medium-sized enterprises in Africa (REGMIFA)

Region
Sub-Saharan Africa
Programme description

Objective:

To foster economic development and prosperity as well as employment creation, income generation and poverty alleviation in Sub-Saharan Africa (SSA).

Activities:

Providing innovative financial products and, to the extent necessary, technical assistance support to eligible Partner Lending Institutions (PLIs) which serve micro-entrepreneurs and small and medium sized businesses (MSMEs).

Lending for African Farming Company (LAFCo)

Budget (mio €)
14.00
Region
Sub-Saharan Africa
Programme description

Objective:

To generate positive social and economic impacts on the agricultural sectors in sub-Sahara Africa, for both SMEs and smallholder farmers.

  • higher and more stable incomes
  • improved farm productivity
  • reliable markets
  • increased food security

Activities:

LAFCo provides loans to agricultural businesses that work directly with smallholder farmers in sub-Saharan Africa.

European Fund for Southeast Europe (EFSE)

Budget (mio €)
10.00
Programme description

Objective:

To provide micro and small enterprises with sustainable funding, helping them to grow and generate additional income; to create employment; to assist low-income families in improving their housing conditions.

Activities:

EFSE operates through partner lending institutions (commercial banks, micro finance institutions (MFI), non-bank financial institutions, and leasing companies) in Southeast Europe & European Neighbourhood Region. These partners on-lend the funds to micro and small enterprises and to low-income households in a sustainable manner. The EFSE works cross-sectorally to transform and improve the financial infrastructure.

Microfinance Enhancement Facility (MEF)

Region
Global
Programme description

Objective:

To support global economic development and prosperity through the provision of additional development finance for micro-enterprises, via qualified financial institutions.

Activities:

Providing microfinance institutions with much needed financing when investments are in high demand but in low supply.

More Income and Employment in Rural Areas in Malawi (MIERA)

Budget (mio €)
10.00
Programme description

Objective:

 “Promoting inclusive business models and strengthening the business capacity of smallholder farmers and MSMEs to increase income and employment”.

Activities:

Improve cooperation amongst value chain actors; provide better business services and information for MSME owners; strengthen MSMEs and their functioning within the supply chain.

Employment for Sustainable Development in Africa (E4D/ SOGA)

Budget (mio €)
65.00
Programme description

Objective:

To improve the employment situation in the seven target countries in terms of quantity and quality through cooperation with the private and public sector partners. To contribute to economic growth. To reduce obstacles to the integration of women and girls into the world of work.

Activities:

E4D designs vocational training measures in transferable job profiles and qualification standards, which can be used across all sectors of the economy, such that mainly women benefit from the employment potential. E4D works with businesses in public-private partnerships, as firms are pivotal in achieving employment objectives.

Aavishkaar India II Company Ltd.

Budget (mio €)
80.00
Programme description

Objective:

To promote social entrepreneurs in India.

Activities:

The fund invests its equity capital in selected socially responsible companies from the beginning through to the growth phase, in addition to offering advisory services

GIZ Sector project Innovative approaches in financial systems development

Budget (mio €)
5.00
Region
Global
Programme description

Objective:

To promote financial inclusion, focussing on (green & inclusive) SME in developing countries.

Activities:

Market building activities such as market definition, data availability in impact investing market; promoting networks of impact investors; promoting joint learning for impact investing & community development; the mapping and development of impact investing policies.

Aavishkaar Frontier Fund (AFF)

Budget (mio €)
38.00
Region
East Asia and Pacific
Programme description

Objective:

To promote social entrepreneurs in Asia.

Activities:

The fund invests its equity capital in selected socially responsible companies from the beginning through to the growth phase, in addition to offering advisory services.

Sector project Economic Policies and Private Sector Development

Budget (mio €)
6.00
Region
Global
Programme description

Objective:

Mainstreaming IB in the GIZ portfolio, develop new tools for GIZ projects, research.

Activities:

Provide policy advice, author the IB toolbox and handbook for implementing accelerator programmes, study on making supermarket value chain more inclusive.

Promoting sustainable rural economic development (PRODES) Colombia

Budget (mio €)
6.00
Programme description

Objective:

To provide livelihoods for victims of conflict and ex combatants in rural areas for a more inclusive economic development.

Activities:

Working on the policy level – supporting the national strategy for IB and advising local governments; building partnerships between public and private institutions to increase opportunities for IB Models; organising trainings to enable the target population to participate in IB models.

Promotion of Small and Medium Size Enterprises in Egypt (PSME)

Budget (mio €)
8.00
Programme description

Objective:

To foster the growth of Egyptian MSMEs and to create favourable framework conditions for employment-oriented innovation.

Activities:

Support the MTI in developing and implementing its innovation strategy and enhancing employment; build capacities of start-up support centres for MSMEs in local manufacturing; improve the business establishment procedure; develop the existing focal point for MSMEs to access Business Development Services (BDS).

Responsible Enterprise Finance (REF)

Budget (mio €)
3.00
Programme description

Objective:

To increase the supply of risk capital and loans for sustainability-oriented investments in MSMEs.

Activities:

Supporting banks and investors in making environmental and social standards a central part of financing decisions; introducing tools to factor environmental and social risks into investment and lending decisions; introducing new lending  products and services; facilitating start-ups’ and social enterprises’ access to risk capital; supporting the development of national voluntary guidelines for responsible financing.

Innovation and Investment for Sustainable Economic Development (ISED)

Budget (mio €)
4.00
Programme description

Objective:

To promote sustainable and inclusive economic development and employment by strengthening the capacities of public and private sector actors.

Activities:

Enabling public actors to implement the TVET reform agenda; strengthening the supply side of the labour market at a sectoral and regional level; expanding the adoption of sustainable and inclusive business models through BDS; improving cooperation between the public and private sectors to support the development of sustainable and inclusive business models.

Inclusive Business Action Network (iBAN)

Funding
The Federal Ministry for Economic Cooperation and Development (BMZ)
Implementation
Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH
Budget (mio €)
8.50
Region
Global
Programme description

Objective:

To unlock the power of inclusive business for sustainable development. To act as an entry point and facilitator to the global IB community.

Activities:

Capacity development for inclusive businesses, fostering the private-public dialogue, curated knowledge and information sharing.

develoPPP.de

Budget (mio €)
130.00
Region
Global
Programme description

Objective:

To “foster the involvement of the private sector at the point where business opportunities and development policy initiatives intersect”.

Activities:

Development partnerships with private sector companies, which can last up to a maximum of 3 years. DEG, GIZ and sequa assist in planning, financing, and implementing projects in the partner countries. BMZ contributes up to a maximum of EUR 200.000 to a project (the partner must contribute at least half of all costs). There are also the options of strategic projects/ alliances with GIZ/DEG