Friday, January 18, 2008

Merger plans within German Development Cooperation buried

According to the news portal Spiegel online, plans circulating within Germany's Development Cooperation to merge the German Development Bank, Kreditanstalt für Wiederaufbau (KfW) and the Gesellschaft für Technische Zusammenarbeit (GTZ) are about to fail.

According to the article, no other country has such a large number of different development assistance institutions, leading to a loss of efficiency and aid effectiveness.

Especially the double structure of the afore mentioned aid institutions with dual planning structures and administrative staffs uses a high portion of Germany's annual aid budget.
Furthermore, both organisations work in almost the same sectors and often operate in parallel.

Even the OECD calls the German government to reform its aid administration and to keep to the tasks of the Paris Declaration, which demands better coordination and abolition of red tape in order to avoid an inefficient spending of aid money.

The Spiegel article mentions the strong resistance of the GTZ and KfW staff, which is worsened by different political associations of the directors of both organisations as possible reasons for the delay. Furthermore the leading ministry, the Federal Ministry for Economic Cooperation and Development (BMZ), experiences opposition from the Federal Ministry of Finance which would, according to the merger plans, lose power over the development bank, which would be under new jurisdiction of the development ministry.

Currently it looks as if the BMZ will not be able to take the pressure. Instead of implementing the original plans, it is looking for ways to incorporate smaller organisations such as the German Development Service (DED) and InWEnt into GTZ.

According the German expert for development assistance Franz Nuscheler this will not help to change to current situation and is only pushed by the BMZ so as to save face.

by Martin Behrens

See also Euforic’s dossier on Germany; also our news in German