Michael Andres has been involved in the international Finance sector for over 20 years. He is currently the chair of the Oversight Comittee of the NEPAD-IPPF Special Trust Fund.
NEPAD-IPPF : Achieving the SDGs is a huge challenge. How does KfW Development Bank envisage meeting the challenge, especially since the emergence of the pandemic?
Michael Andres : Achieving the goals and targets defined in the Agenda 2030 is a global challenge that requires resolute actions from actors all over the world. KfW Banking Group – which KfW Development Bank is part of – considers the promotion of sustainable development in Germany, Europe and worldwide as its very core mission and regularly scores top positions in renowned sustainability ratings.
Since 2019, we have been closely monitoring our contributions to each of the 17 SGDs and results are being published on our website.
The Covid-19 pandemic with its enormous economic and social impacts poses a severe threat to some of the positive developments that had been observed over the past two decades. Just to give one example: While the number of people living in extreme poverty has dropped by more than one billion since 1999, this trend was reversed in 2020 for the first time.
International development organizations must step up their contribution to mitigate the impacts of the ongoing crisis, ensure that progress is not lost in the long run and support governmental, private and civil actors in their efforts to foster socially, ecologically and economically sustainable progress. Therefore, we as KfW Development Bank have increased our financial commitments towards our partner countries in 2020 by about 25%, reaching with 11 billion another record high. An considerable part of the funds was allocated for coronavirus-related emergency measures, especially in the healthcare sector, to ensure food and social security and in order to maintain liquidity for governments and states.
These priorities mirror the globally growing awareness concerning the urgency of counteracting climate change and mitigating its impacts, which translates into increasing demand for financial assistance to implement projects in this area.
NEPAD-IPPF: In terms of infrastructure and urban development. Which sector do you consider to be the top priority in Africa?
Michael Andres: From my point of view, there is no general answer to this question for two reasons: First, priorities should be defined primarily by the governments of the individual states as they carry the major responsibility for the development of their country. Our mission as KfW Development Bank is to provide financial assistance to facilitate the chosen pathways. Second, each country is facing specific challenges, e.g. where electrification rate is low or where a considerable share of the population does not have access to clean water, it may seem adequate to channel efforts towards the fulfillment of basic needs. Where capitals or other metropolis struggle to manage high population growth due to migration from rural areas, it may appear suitable to prioritize urban development.
By uniting complementary approaches such as the ones pursued by PIDA Service Delivery Mechanism and NEPAD-IPPF Special Fund in joint activities synergy effects will be unlocked and consequently, impacts more substantial.
These conclusions are drawn from a mid-term review conducted in 2019, in which IPPF was evaluated regarding its relevance, impact and efficiency. Even though the results were overall positive, it also provided a valuable informative basis for further improvement. The findings were translated into an action plan in early 2020 which is currently being implemented. From this exercise I would like to highlight two take aways: Firstly, a public fund like the IPPF has to provide a maximum of transparency and public outreach to ensure high credibility and support among its stakeholders. Secondly, while the high expectations exceed its own resources manyfold the IPPF needs to refocus continuously and to concentrate on those activities providing maximum added value for African infrastructure. To illustrate, PIDA PAP II: assuming 5% of capex for project development leads to USD 8 bln. preparation cost. But IPPF has a balance of just slightly above USD 100m.
Over the course of the past 15 years, the Fund has facilitated a high number of impressive projects in the areas of transport, energy, ICT and water supply and thereby, spurred economic and social development in different parts of the African continent. For me personally and as representative of KfW Development Bank, it has been a pleasure to witness and accompany this process and I am looking forward to another 15 years of fruitful cooperation!
NEPAD-IPPF: According to your expertise, on which key projects should the NEPAD-IPPF Special Fund continue to focus in the future
Michael Andres: Looking back at the 15 years that have passed since the establishment of NEPAD-IPPF Special Fund, the fund’s story is first and foremost a story of success. Currently, 32 of the 55 completed investment related projects have reached financial close, all of which will potentially lead to the implementation of large-scale infrastructure projects with a major impact on regional development. An example illustrates best added vuleillustr
A general criterion for the selection of projects which is being applied and which I also fully support is the probability of successful project implementation. The Fund promotes feasibility studies and other preparation measures for projects which are likely to be finally implemented and operative during a long period of time. However, this requires a sufficient “Quality of Entry” of each project, meaning the basic economical and political arrangements have to been made prior the IPPF supports a project. As resources are scarce and demand is high, this represents an important mechanism to ensure a maximum of efficiency. In a nutshell: A well develop project without being implemented is worth nothing for Africa and its population.
A goal that has been set by the Fund and which I highly encourage to pursue is to increase the focus on projects listed in the PIDA Priority Action Plan II. These projects have been defined by the Members of the African Union as priorities and therefore, enjoy strong political support – a key driver of success
Furthermore, climate change continues to be one of the major challenges of our times, so projects should be adapted to changing environments and contribute to internationally defined goals such as the Paris Agreement and the Sustainable Development Goals.
To summarize: NEPAD-IPPF Special Fund should focus on projects providing the highest added value for African countries.
NEPAD-IPPF: To conclude, KfW supported last year NEPAD-IPPF with a commitment of 14 million Euros. What our your hope for the Fund?
Michael Andres: Currently, the number of applications submitted to NEPAD-IPPF Special Fund clearly exceeds the financial means available for allocations and the lack of financing opportunities severely restricts or delays the implementation of numerous promising projects. In order to fully unfold the development potential inherent to large-scale infrastructure projects, advertising activities have been amplified but so far, with limited success. Until this day, only seven donors have leveraged funds in addition to AfDB, all of which are located in North America and Europe. I hope for this number to increase in the future and that especially Member States of the African Union – who are the target group of the Fund’s activities – will be able to provide financial means as this will increase ownership among the beneficiaries.
On a strategic level, I would also like to encourage efforts to intensify cooperation with other institutions and programs dedicated to supporting preparation measures for infrastructure projects.
