Impact Investing: At the Heart of Germany's New Development Policy

Geopolitical realignments, climate volatility, supply chain fragmentation, and shifting development priorities are fundamentally redefining how capital is deployed, risk is priced, and long-term value is created. Catalytic and commercial capital are converging around shared objectives: resilience, stability, economic security, and sustainable growth.

The Federal Ministry for Economic Cooperation & Development of Germany (BMZ)’s new reform strategy sets a strategic direction for Germany’s development cooperation. The strategy places impact and partnerships at the center by prioritizing stability, mobilization of private capital, and well-defined thematic and regional priorities. It also sharpens emphasis on building strategic alliances and economic partnerships based on shared interests. This includes the promotion of peace and stability, a sustainable growth in partner countries via private sector solutions and improved market access with business opportunities for German businesses abroad.

The reform strategy is organized around four goals – (1) poverty & inequality; (2) peace & stability; (3) economic cooperation for sustainable growth; and (4) strategic alliances and a stronger multilateral system with a focus on going “Beyond ODA” (Official Development Assistance) via innovative financing models.

Finance in Motion has partnered with Germany’s key development policy actors, the BMZ and KfW Development Bank, for almost two decades and stands ready to deepen that collaboration by offering high-impact investing solutions.

As a leading impact asset manager, we manage around €4 billion in public and private assets and have deployed approximately €9.5 billion across emerging markets and developing countries to date. Our work centers on expanding access to finance while strengthening local financial markets, supporting jobs, offering climate and nature solutions and stabilizing economies in times of crisis. Through strategic use of the concessional catalytic capital to crowd in private capital and by delivering the measurable development outcomes, we reflect precisely the direction that the German development policy is now formalizing.

Blended Finance as a powerful investment in Capital Mobilization
Amid shrinking public budgets for development cooperation, blended finance is a state-of-the-art approach to mobilizing private capital for sustainable development. By managing risk through instruments like first loss, guarantees or risk sharing facilities, it adjusts the risk-return profile and channels funding to underserved markets.

In the evergreen funds that we at Finance in Motion manage, public capital is used as a catalytic anchor. It delivers essential additionality, efficient leverage, and measurable outcomes. Across blended funds, multiple euros of private capital are mobilized for every euro of public funding. This speaks directly to BMZ’s Goal 4: innovative financing, “Beyond ODA” and leveraging public funds to mobilize private capital at scale. To date, the blended funds we manage have mobilized over EUR 2.6 billion in private capital.

A Long-standing Partnership
Germany’s role as a pioneer in blended finance dates back to the creation of the European Fund for Southeast Europe (EFSE) in 2005. Established with funding from BMZ, the European Commission, and KfW, EFSE became one of the world’s first large-scale blended finance funds. The fund, laying the foundation as the blueprint, uses first-loss public capital as a catalytic instrument to mobilize private investment at scale and expand access to finance for microentrepreneurs and SMEs.

EFSE was then followed by the Green for Growth Fund (GGF) in 2009, initiated by EIB and KfW, with first-loss funding from the BMZ and EU with a clear mandate to accelerate the green transition, strengthen energy security, and support sustainable development in Southeast Europe. Today, GGF is active in 19 countries, including Eastern Europe with Ukraine and the Caucasus, Türkiye, Middle East & Northern Africa.

As portfolio manager and asset manager of both funds respectively, we at Finance in Motion evolved this blended finance concept, which has since grown to over EUR 1billion of assets under management in each fund. Since then, our company’s product offering has evolved around a clear structural logic: public capital as a catalytic anchor and private capital as the engine for scaling investment. This approach is supported by evergreen investment structures with strong impact mechanisms, enabling swift deployment through well-established vehicles and long-term partnerships in the markets.

Our work, supported by development policy actors such as BMZ and KfW, strengthens local economies and financial markets. By improving access to finance and supporting sustainable businesses, we help create the foundation for long-term, inclusive growth and stronger trade relationships (Goal 3). Our separately funded advisory and capacity building facilities enhance these results and strengthen the effectiveness and sustainability of our investments.

Green for Growth Fund Driving Energy Transition
Operating as a long-term infrastructure for climate resilience and natural resource security, the green funds we manage on behalf of its public shareholders mirror BMZ’s priorities in climate mitigation and adaptation that foster sustainable growth. Furthermore, investments in renewable energy and energy efficiency help to build competitive economies. Within this scope, the Green for Growth Fund (GGF) is well positioned to provide targeted support for the energy transition and energy security across its regions of operation, advancing BMZ Goals 2–4. These priorities, focused on a just energy transition, as well as greater regional energy independence and resilience, align closely with GGF’s mandate and investment pipeline.

GGF, with a portfolio exceeding €1.1 billion, has cumulatively financed EUR 2.1 billion of renewable energy, energy efficiency and resource efficiency projects, and contributes to 1.4 million of tons of CO₂ emissions reductions annually across Southeast and Eastern Europe, the Caucasus, MENA and Turkey.

This regional footprint aligns BMZ’s EU Neighborhood and MENA priorities; bolstering energy security, resilience and stability and creating concrete engagement opportunities for German and European companies in future oriented sectors.

Germany plays a catalytic role – not only through financing but also through providing technology transfer and operational expertise with German corporates benefiting directly via technology provision and project development that bring high standards and know-how to markets.

In the regional context, Ukraine is a priority. BMZ will play a key role in the country’s reconstruction on behalf of the German government, providing economic opportunities for the local economy in partnership with German companies that will help to build the country back stronger. GGF investments in Ukraine are at the heart of this objective. With support from the German government, GGF is poised to continue investing in Ukraine’s resilience, energy security, and green reconstruction, and has cumulatively invested EUR 171.8M* since 2012, throughout the war. This is evident in recent steps taken in a GGF investment agreement with GOLDBECK SOLAR, a leading German solar engineering, and NOTUS Energy, a German renewable energy developer to help strengthen Ukraine’s energy resilience with renewable energy projects.

Mutual Benefit, Shared Stability
The BMZ reform agenda calls for impact that advances stability, resilience, and energy security and for financing models that go “Beyond ODA” by mobilizing private sector. Investments in climate action and energy systems resilience, sustainable agriculture, and financial inclusion in emerging markets underpin European competitiveness, German economic security, and long-term growth. The evergreen debt funds that Finance in Motion manages embody this logic. They combine impact with financial performance, development outcomes with institutional investor requirements, and public purpose with market discipline.

For catalytic investors, these vehicles are strategic tools to tackle systematic barriers: advancing the energy transition and security, expanding inclusive finance, enabling local currency lending, and delivering market growth through advisory and capacity building services.

As BMZ increases a more impact-driven and investment-focused development approach, blended finance funds with strong track records can play an important role in delivering on these targets. Platforms developed in close cooperation with BMZ and KfW have already demonstrated how public capital—particularly first-loss funding—can mobilize private investment and support sustainable development at scale. Continued access to these catalytic instruments will be key to sustaining momentum and attracting institutional investments.

Impact Investing: At the Heart of Germany's New Development Policy

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