Measurable impact: DEG presents Development Report 2023

Despite political uncertainties and market volatility, the 2023 investments of KfW subsidiary DEG – Deutsche Investitions- und Entwicklungsgesellschaft mbH were not only financially successful, but also had a significant positive impact. The Development Report 2023, which has now been presented, shows that the businesses funded by DEG generated local income of EUR 235 billion in 2023, which included wages and salaries, taxes, and revenue from local procurement. This represents a year-on-year increase of 12 % (2022: EUR 209 billion). The number of people employed by the companies in developing countries has also risen and now stands at 3.3 million (2022: 3 million).

“The fact that the development impact remains very good and stable is all the more gratifying given that the challenging political and economic environment persisted last year. The contributions of private sector companies are key to economic development in developing and emerging market countries. They drive productivity and sustainable economic growth, create jobs and support development at local level,” said DEG CEO Roland Siller during presentation of the report.

Contributions from private sector companies to the global Sustainable Development Goals (SDGs)

The contributions of DEG's customers to the global Sustainable Development Goals (SDGs) also remain high. A total of 85 % of customers have shown successful financial development and are helping to fight poverty through higher local incomes (SDG 1). And 76 % of businesses are promoting continuing education for their employees, and therefore lifelong learning in line with SDG 4. The energy suppliers co-financed by DEG produce around 32 TWh of electricity from renewable sources (SDG 7) every year and currently supply about 32 million people, thereby preventing 22 million tonnes of CO2 emissions.

The development impacts of their investments are a key control instrument for DEG, and have been measured using its own Development Effectiveness Rating (DERa) tool since 2017. The DERa uses qualitative and quantitative indicators to measure development outcomes for every DEG customer on an annual basis. An analysis of the DEG portfolio for 2023 shows that 76 % of DEG customers are contributing to innovation by introducing new technologies, developing new products or implementing new processes. Almost 85 % contribute to community development including education and health, with expenditure of more than EUR 412 million in this area. More than 80 % of businesses have introduced a complaints management system.

Methodological development of DERa impact measurement tool

DEG has further developed its DERa impact measurement tool in the context of its new strategy. The aims of DERa 2.0, which will be applied for the first time for the Development Report 2024, include a greater focus on customers' transformations with DEG's support, in areas such as resource protection, gender equality and digitalisation.

“We are working with our subsidiary DEG Impulse to closely support our customers on their transformation journeys and provide comprehensive advice on improving their climate resilience and generating even more development impact. This is a long-term process that will determine our strategic objective for the next few years,” said Roland Siller.