Describes how major projects are secured and financed. Explains activities of the multilateral development banks in and other aid-funded projects.
Selling to the Government
Selling to German government entities is not an easy process. German government procurement is formally non-discriminatory and compliant with the WTO Government Procurement Agreement (GPA) and EU-wide legislation under the EU Public Procurement Directives. That said, it is a major challenge to compete head-to-head with major German or other EU suppliers who have established long-term ties with purchasing entities. For information on EU procurement, please refer to the article on in the Country Commercial Guide for the European Union – Selling to the Public Sector.
U.S. companies bidding on Government tenders may qualify for U.S. Government advocacy. A unit of the U.S. Commerce Department’s International Trade Administration, the Advocacy Center coordinates U.S. Government interagency advocacy efforts on behalf of U.S. exporters bidding on public sector contracts with international governments and government agencies. The Advocacy Center works closely with our network of the U.S. Commercial Service worldwide and inter-agency partners to ensure that exporters of U.S. products and services have the best possible chance of winning government contracts. Advocacy assistance can take many forms but often involves the U.S. Embassy or other U.S. Government agencies expressing support for the U.S. bidders directly to the foreign government. Consult Advocacy for Foreign Government Contracts for additional information.
Financing of Projects
Germany possesses the financial framework and institutions to support the development of large infrastructure projects. However, the volume of project finance operations has been relatively modest in Germany in comparison to that of other EU countries, particularly the U.K. and France. Although the relatively high debt levels of the German federal government and local authorities would seem to favor this type of financing, difficult economic conditions have also limited anticipated rates of return for potential project finance developers. Other inhibiting factors are Germany’s complex juridical and federal frameworks, which make project-financed works harder to structure than in other countries. Low interest rates and returns on savings have contributed to an improved investment climate. One area that has attracted project finance, including that involving a few U.S. developers and investors, is alternative energy production. Clean and renewable energy projects have gained prominence in Germany, particularly since the decision in 2011 to accelerate the phase-out of nuclear energy by 2022, the decision in June 2020 to end coal power generation in Germany by 2038 at the latest, and pressure to reduce reliance on Russian energy following the invasion of Ukraine.
The principal German institutions active in facilitating project finance deals are the state-owned KfW Bank Group (which plays a major role in most industries), commercial banks such as Commerzbank, and several of the publicly-owned savings banks controlled by state and local governments and state development banks (“Förderbanken”, in German), such as WIBank in Hesse, NRW Bank in North Rhine-Westphalia, LFA Förderbank Bayern, Investitionsbank Berlin (IBB), among others. The KfW Group includes KfW IPEX-Bank, which supports a consortium with German members to design and finance infrastructure projects in Germany and overseas, and KfW Capital, launched in October 2018 to develop the VC and VD funding landscape in Germany and Europe. Another group member, KfW Development Bank, helps municipalities finance infrastructure. German insurers are pressing for regulatory changes to enable them to finance infrastructure projects.
Key Link: European Bank for Reconstruction and Development (EBRD)
Key Link: U.S. Commercial Service Liaison Office to the EBRD