In May 2018, the German Federal Ministry for Economic Cooperation and Development (BMZ) launched a new “Training and Employment” special initiative aimed at improving economic conditions in selected countries and in selected economic sectors with the goals of encouraging investment and promoting more formal employment. German agencies GIZ and KfW were identified to implement this BMZ special initiative, with Ethiopia, Morocco, and Tunisia identified as the first countries to receive support.

To achieve the objectives of this special initiative, KfW plans to establish a regional financing facility—a grant or challenge fund—covering each of the three target countries and potentially seven more. The intended purpose of the financing facility is to provide partial grant funding to projects promoting employment and better jobs in the given country.

In order to better understand the market context in each of these countries and to best design the proposed financing facilities, KfW contracted IPC and its partner Planco Consulting to engage in country studies and provide recommendations for facility design.

The IPC team identified needs and opportunities in the private sector in each of the three countries, identified key challenges for private sector development and export growth, and explored how the financing facility might best address identified challenges and promote investment.

The work of the IPC team included interviewing public stakeholders, German enterprises/trade associations, and in-country enterprises; conducting desktop research; analysing current gaps and needs; assessing previous/ongoing in-country interventions to enhance the private sector; preparing a list of pipeline projects; and designing a financing facility framework in each country. The IPC team proposal included a proposed structure for the financing facility, suggested financing criteria, and a recommended tax/legal framework in each of the three countries.

The work of the IPC team provided important background knowledge and information for KfW to establish effective and impactful financing facilities promoting investment and development in Ethopia, Morocco and Tunisia.