Ministry opposes GTZ and KfW proposal

The debate on the future of Germany’s official development agencies has picked up momentum. In late January, German Technical Cooperation (GTZ) in Eschborn and the development KfW Entwicklungsbank in Frankfurt sent a joint letter to the Federal Ministry for Economic Cooperation and Development (BMZ), proposing a model of cooperation. Last month, the Ministry responded. In its view the new suggestions are “unsatisfying” and deviate form the expressed goal of an integrated German approach to development. The Ministry blames GTZ and KfW of “backwards” attitudes, because they emphasise the distinction between technical and financial cooperation.

Last fall, experts from PricewaterhouseCoopers (PwC) had, on the Ministry’s behalf, drafted seven alternative models for the two agencies’ merger or closer cooperation, three of which were recommended as “preferred options”. Each provided for a takeover or partial takeover of the GTZ by KfW, which the Eschborn-based institution opposed. An expert opinion by the Federal Audit Office assessing the different models in terms of efficiency was expected for late February.

The GTZ-KfW consensus paper proposes creating a common brand “German development cooperation”. Moreover, they are prepared to design joint strategies for various sectors of development cooperation. These strategies would then be implemented in the target countries with one of the two agencies assuming either total or at least lead responsibilty. As a result, projects should be strategically better finetuned, according to the paper. PwC had outlined a similar concept as “model number seven”, which, however, stressed linkages at all levels. GTZ and KfW only propose regular meetings of a planning committee.
As the Ministry argues, the GTZ-KfW paper is basically about clearly distinguishing one agency from the other in order to reduce frictions. That line, however, goes against the grain of integrating German development agencies, a goal the Ministry has been striving for since the mid 1990s. At the time, merging both agencies was already on the agenda, but not carried out as options of them cooperating more closely seemed promising. Today, the Ministry accuses KfW and GTZ of not coming up with cost-efficient options of streamlining German development efforts that way. Moreover, it argues that introdruction of another brand would not lessen but exacerbate confusion in partner countries. (Roland Bunzenthal/dem)