34th ADFIAP Annual Meeting

April 20 to 23, 2011, North Cyprus “Responding to Global Issues & Trends:The Strategic Role, Resources and Relationships of National Development Finance Institutions”

DFIs and SME Finance:Building Capacity for SME Development and Innovative Financing Mechanisms

“Advisory Support for SMEs during their Life Cycle”

Barbara Schnell, Division Chief

Financial and Private Sector Asia

2

Agenda

KfW’s Advisory Support for SMEs4

Finance and Advisory Support during the Life Cycle of SMEs3

Conclusions5

KfW Bankengruppe: Overview1

Global Challenges2

3333

60 Years of KfWFinancing with a Public Mission

● Promotional bank of the Federal Republic of Germany

● Founded in 1948 as Kreditanstalt für Wiederaufbau

● Shareholders: 80% Federal Republic,20% federal states

● Headquarters: Frankfurt am MainBranches: Berlin and Bonn

● Representative offices: around 70 offices and representations worldwide

● Balance sheet total at end 2010: EUR 441,8 billion

● Financing Volume 2010: EUR 81.4 billion

● Around 4,530 employees (2010)

● Best rating: AAA/Aaa/AAA

4

A Bank with a Wide Array of Functions

Promotion of developing and

transition countries

International business

Promotion of construction

of new housing and modernisation

as well as education

Promotion of SMEs, business founders,

start-ups

Municipal infrastructure projects and

global loans in Germany/Europe

Domestic promotion

We promote the German economy

International project and

export finance

We ensure internationalisation

We promote development

Promotion of environmental and climate protection: 25.3 bn

Business AreaSME Bank

Business AreaPrivate Client Bank

Business Area Municipal Bank Business Area

Export and Project Finance

Business Area Promotion of

Developing and Transition Countries

Funding 2010: 64.3 bn EUR Funding 2010: 5.7 bn EUR

Funding 2010: 9.3 bn EUR

5

Agenda

KfW’s Advisory Support for SMEs4

Finance and Advisory Support during the Life Cycle of SMEs3

Conclusions5

KfW Bankengruppe: Overview1

Global Challenges2

6

Sustainable Economic Growth /Pro-Poor Growth

Global Division of Labour

Shortage of Resources

Population Growth

Global Challenges

Competitiveness

Climate Change

Job creation

Structural Changes

FrameworkConditions

GoodGovernance

Peace

Income Distribution

Gender Issues

Poverty Reduction

Demographic Change

77

Role of DFIs

The framework in which promotional banks/ development

banks operate is subject to continuous change due to

● New global challenges/ structural changes to be addressed

● The appearance of new areas of market failures

● The evolution of financial markets

● Changes in governmental economic policy

Therefore development banks have to engage in a continuous

process of re-defining their roles, tasks and products.

8

Agenda

KfW’s Advisory Support for SMEs4

Finance and Advisory Support during the Life Cycle of SMEs3

Conclusions5

KfW Bankengruppe: Overview1

Global Challenges2

9

Advisory Support for SMEsConsultancy Services Guaranteeing the Success of SME Promotion

Advisory Support

● supplements KfW’s financing offers for SMEs.

● helps companies to enhance their performance.

● supports KfW’s strategy of sustainable promotional activities (e.g. economic sustainability of SMEs, job creation, climate protection).

KfW offers grants in the crucial stages of companies’ life cycle (start-up phase and crisis) and when

companies face special challenges which require detailed know-how.

10

Phases of the Organizational Life Cycle:Need of Special Advisory Support

Combination of capital and advisory support (e.g. Venture Capital)

Separate advisory support

Start up-Companies

Business Founders

Mature Companies/

Declining Companies

Turn aroundadvisory services

t

Growing Companies/

Established Companies

Advisory support for special promotional purposes

Start-upFinance

GrowthCapital

Finance for Special Promotional

Purposes

Pro

fit/

Gro

wth

11

Agenda

KfW’s Advisory Support for SMEs4

Finance and Advisory Support during the Life Cycle of SMEs3

Conclusions5

KfW Bankengruppe: Overview1

Global Challenges2

12

Loan Financing

Global Loans, SecuritizationAdvisory Services

Financing of Start-ups

Support of young, growing and of established companies

Promotional Instruments focussing on SME financing

Start-up Loan(“KfW Gründerkredit”)StartGeld / Universal

KfW Entrepreneur Loan (Part “A”)

ERP Regional Promotion Programme

Mezzanine Financing

ERP Capital for Start-ups

ERP Innovation Programme

Equity

ERP Start-up Fund

ERP Participation Programme

KfW

Participation in “High-Tech Founder

Fund” (PPP)

ERP Environmental and Energy Efficiency

Programme

KfW Entrepreneur Loan(Part “B”)

13

KfW’s Promotional Approach:Companies with a Need of Special Advisory Support

Start up-Companies

Business Founders

Mature Companies/

Declining Companies

t

Growing Companies/

Established Companies

High-Tech Founder Fund (PPP)- Companies up to 1 year -

Equity in combination withstrong advisory support

ERP Start-up Fundfor technology-based companies Equity and advisory support through Lead-Investor-Model

„Start-up Coaching in Germany“for business founders/

business start-ups

Special promotional purposes:Energy efficiency advice for SMEs

Initial advice and/or detailed consulting

Round Tablefor companies experiencing economic difficulties (in cooperation with chambers/ external advisors)

“Turn around” advisory servicesAdvice on a company’s economic,

financial and organizational questions

Pro

fit/

Gro

wth

14

Early Stage (1)High-Tech Start-ups:Combination of Financing and Advisory Support

High-Tech Founder FundGovernment, KfW, BASF, Zeiss,

Daimler, Siemens, Deutsche Telekom

Technology Start-up

- Risk Capital

Founder

- Management Support

Investor Coach

15

Early Stage (2)Broad-based Initial Advisory Services for SMEs:“Start-up Coaching in Germany”

max. for 12 monthsmax. for 12 monthsSpecial Conditions for

starting a business out of unemployment

Special Conditions for starting a business

out of unemployment

Grant: 50%, 75% or 90%

of total costs

Grant: 50%, 75% or 90%

of total costs

Consulting Servicesand Coaching

Consulting Servicesand Coaching

Total costs: up to 4.000 EUR

or 6.000 EUR

Total costs: up to 4.000 EUR

or 6.000 EUR

up to 5 years after foundationup to 5 years

after foundation

Application via KfW‘s regional partnersApplication via KfW‘s regional partners

2010: ca. 29.000 commitments2010: ca. 29.000 commitments

16

Special Promotional Purposes:Energy Efficiency Advice for SMEs

Detailed consultingDetailed consultingInitial Advice Initial Advice

Grant: 60 % of costsGrant: 60 % of costs

1 – 2 days of consulting1 – 2 days of consulting

In-depth energy analysis of energy saving measures and investments, savings potential

and cost effectiveness

In-depth energy analysis of energy saving measures and investments, savings potential

and cost effectiveness

Grant: 80% of costsGrant: 80% of costs

Total consulting costs:up to 8.000 EUR

Total consulting costs:up to 8.000 EUR

Reducing information deficits about

energy saving options

Reducing information deficits about

energy saving options

Application via KfW‘s regional partnersApplication via KfW‘s regional partners

2010: ca. 4.800 commitments2010: ca. 4.800 commitments

17

Established SMEs with Need for Improvement:“Round Table” and “Turn Around“ Advisory Services

Round Table „Turn Around“ Advisory Services

Target Group Advisory services for SMEs experiencing economic difficulties owing to unexpected economic developments.

Advisory services for SMEs in economic difficulties, but with a positive business forecast.

Analysis of weak points already completed.

Procedure External advisors analyses the weak points and offers proposals for their solution.

“Round table” with participation of all lenders.

Implementation of measures:

External advisor coaches the company to cope with the identified weak points and to improve and restore the capacity and competitiveness of the company.

Grant EUR 160 per day of work for advisor/ project monitor (max. 10 days)

50% or 75% of the costs

Max. EUR 8,000

Partners Regional partners

Chambers of Commerce/Trade/ Crafts

Regional partners

Chambers of Commerce/ Trade/ Crafts; Local business development institutions

Commitments in 2010

Ca. 2.500 Ca. 1.700

18

Agenda

KfW’s Advisory Support for SMEs4

Finance and Advisory Support during the Life Cycle of SMEs3

Conclusions5

KfW Bankengruppe: Overview1

Global Challenges2

19

Conclusions

KfW offers advisory support in order

● to increase the prospects of success and growth of start-ups

● to support the efficient implementation of KfW financing programmes

● to encourage SMEs to improve their energy savings capacity

● to support SMEs during a (temporary) time of crisis

In addition to pure financing KfW offers a package of advisory services accompanying SMEs through their life cycle.

202020

Thank you for your attention!

Barbara Schnell KfW Bankengruppe

Division Chief Palmengartenstrasse 5–9

Financial and Private Sector Asia 60325 Frankfurt am Main

Fon +49 69 7431 – 2205

Fax +49 69 7431 – 2944barbara.schnell@kfw.de