The main objectives of the KfW are to alleviate poverty, to promote education, to protect the environment and increase the partner countries' ecnomic strength. The improvement of the social infrastructure has become more and more important. This for instance includes the extension of education and health-care facilities, drinking water supplies and sewage and waste disposal. To improve the economic infrastructure the KfW assists projects in the transport and telecommunication sector. Additionally projects who contribute to the protection of the environment and natural resources become important the last years.

Who is eligible to apply

Terms and Conditions for the granting of Financial Cooperation funds are fixed by the German Federal Government. Countries are selected as follows:

• The countries classified by the United Nations as "Least Developed" countries (LDCs) receive grants
• Other developing countries receive grants to combat poverty, for credit guarantee funds for small and medium-sized enterprises, and for projects in social infrastructure and environmental protection.
• Developing countries eligible for IDA loans at favourable conditions receive loans at 0.75 % interest for 40 years, including 10 grace years.
• Other developing countries receive loans at 2% interest for a period of 30 years

There are strict guidelines approved by the Federal Government the KfW has to follow when appraising the project. The appraisal report is sent to the Federal Government as a basis for its decision. The appraisal includes a problem analysis, objective, target group and justification of the project.

The project fulfill the following criteria:

• contribute towards improving the living conditions of the people in the developing country

• contribute to the creation of an efficient economy

• objectives should be in line with the priorities of the developing country and development policy concepts of the German Federal Government

1. Preparation (KfW can support the executing agency in the preparation of the project

2. Selection by the Federal Government and the Government of the developing country with assistance of KfW

3. Documentation of the project including all attached documents which give information on the objective, extent of the inteded investment, its effects and economic feasibility of the project.

4. Initial Assessment, KfW prepares a preliminary report on the project, which identifies critical points and any information gaps. Projects that are of lesser developmental priority are eliminated like this.

5. Supplementary Documentation, KfW can provide grants for turther technical, economic, instutional, socioeconomic, sociocultural and ecological studies if the appraisal is not advanced enough

6. Intergovernmental Agreement, Financial Cooperation funds are granted of the basis of an agreement between the Federal Government and the government of the developing country.

In the overall conception of the apprailsal it is investigated whether

To examine the profitability of the investment in the project certain mircoeconomic factors are dtermined such as the net present value, the dynamic prodctuion costs, expected profits and losses etc.