Improving Niger’s health
When the Republic of Niger needed guidance and support for its export credit agency-supported financing to build a crucial new hospital in the city of Maradi, it turned to ING Wholesale Banking. As a result, millions of additional people will gain access to healthcare, boosting their living standards and economic prospects.
The Republic of Niger is a vast landlocked, sub-Saharan developing nation, which while having large uranium deposits and other resources is one of the poorest countries in the world, according to the UN’s Human Development Index, and faces many poverty-related challenges. One of Niger’s most critical needs is to improve healthcare. Its population is growing faster than any other country in the world at 3.9% a year, according to the World Bank, but is poorly served by medical facilities: thousands of children die every year because of malnutrition.
Maradi is the third largest city in Niger and a regional administrative and commercial capital that is known as ‘Niger’s economic capital’, according to Ousmane Dante, special advisor to the president, in charge of the economy, finance and tax for the presidency of the Niger Republic.
“The World Health Organization (WHO) recommends a ratio of one physician to every 10,000 inhabitants,” says Dante. “Despite considerable efforts made by the country in the last five years, Maradi had just one doctor for every 63,000 people according to the National Statistics Institute of Niger. The gap in coverage was enormous and there was a significant need for new advanced facilities, such as CAT scans and ultrasound scans for pregnant women, which were unavailable or available to only a few people.” The government of Niger wanted to address the problem by building a 500-bed hospital and associated support services, including a sewage treatment plant and an incinerator near Maradi.
To finance part of the approximately $100 million cost of the hospital project, the Ministry of Finance (MoF) turned to export credit agency (ECA) finance. “The government completed a transaction supported by the Dutch ECA Atradius in June 2015 with ING, which raised funds to enable Abu Dhabi-based construction company Commodore Contracting to build a multi-functional market place in Zinder, which is the second largest city in Niger,” says Thibaut Morel, senior project and export finance manager at ING Wholesale Banking Belgium.
The Maradi hospital project involved the same construction company and the government saw the advantages of using a similar financing structure and the same bank, according to special advisor Dante. “We needed a bank with experience and, as a former central banker with 30 years’ experience, I recognised the quality and professionalism of the ING team,” he notes. “They made it clear that the various procedures and processes required for ECA funding would be straightforward to manage; their confidence was reassuring.”
ECA-supporting financing provides access to relatively long-term debt at much lower costs than would usually be available (assuming finance would be available at all) by providing guarantees and insurance to cover commercial banks’ credit and political risks. Typically, in order to obtain ECA support, a significant part of the export value of the project must be sourced from exporters based in the ECA’s country. In this instance, Commodore Contracting owns a Belgian steel company and sourced other elements of the project from Belgian exporters, including window and door supplier Deceunick, roof, façade and wall firm Eternit, Tata Steel Belgium, logistics company Zuidnatie and tool firm Hilti Belgium. As a result, the transaction was eligible for support from Belgium’s ECA Delcredere | Ducroire.
In line with the IMF and World Bank requirements relating to the sustainable use of public debt for projects in emerging market countries like Niger, 35% of the total cost of the project was provided by a development aid grant.
The structure of the €58.5 million five-year export credit facility was similar to that of the Atradius-backed financing for Zinder’s multi-functional market place and therefore ING knew that the documentation would be acceptable to the Ministry of Finance. As a result, the transaction made swift progress: ING was mandated in December 2015 and completed credit work, structuring, documentation and other processes by the end of March, helped by support from ING’s risk management and legal teams. ING acted as coordinator, facility agent and co-lender (alongside two other banks).
The loan is being released in accordance with a drawdown calendar that is aligned with the progress of the work. The Maradi hospital project is due to be completed by November 30, 2017. “The financing qualifies as a sustainable deal given its contribution to fulfilling the Millennium Development Goals set by the United Nations and therefore reflects ING’s commitment to sustainability,” says Kristof Luycx, vice president, structured export finance at ING Wholesale Banking Belgium.
According to special advisor Dante, the legacy of the Maradi hospital will be profound. “In supporting us with this transaction, ING has made a major contribution to Niger’s future success,” he notes. “This hospital is not only vital to the future health of the region’s population but to its continued economic development. Moreover, Niger is affected by terrorism and it is our belief that by improving living standards through better healthcare, the incentives for people to turn to terrorism are reduced. ING has been the perfect partner for the project and I am convinced we will work together again: whenever I see a lion or some bright orange, it makes me think of ING.”
ING and the Sustainable Development Goals
Through the clients and specific projects we finance, ING indirectly contributes to various UN Sustainable Development Goals (SDGs). In this case helping to ensure healthy lives by access to healthcare (SDG 3). We can have the most impact on the goals that are most aligned with our portfolio and strategic priorities. Read more about ING and the Sustainable Development Goals on ing.com.