Building healthcare

September 2020

Well before the advent of Covid-19, plans were under way for better healthcare infrastructure in Côte d’Ivoire to support GDP growth momentum. flow reports on a project to build hospitals and additional facilities in the towns of Aboisso and Adzopé

Six years ago, on 8 September 2014, the African Development Bank (ADB) moved back to its headquarters in Abidjan, the economic capital of Côte d’Ivoire. The homecoming followed an 11year relocation to Tunis in 2003, shortly after the outbreak of the First Ivorian Civil War.1

The pan-African ADB’s return marked the beginning of a period of rapid economic growth for Côte d’Ivoire and a boom in infrastructure; current and recent projects have mainly involved investment in water/ sanitation, electricity, roads and agriculture. ADB’s report on the country notes GDP growth at 7.4% for 2018 and 2019, with cocoa farming accounting for 15% of GDP and 38% of exports – a dependence the country is trying to wean itself off.2

“Only the first of those links [in the value chain] occurs here: the hard labour that nurtures cocoa trees and removes the beans from their pods, then shells and dries them and sells them at a fixed price through traders into a global market. The far more lucrative links, those that create processed products and branded chocolate bars for our supermarket shelves, are practically all in Europe, cornered by half a dozen or so vast corporations,” noted The Guardian on 24 February 2019.3

However, the establishment of several processing units in the coffee, cocoa and cashew sectors is testament to more value addition taking place in-country rather than being carried out by importers in the developed world. For example, Swiss chocolate producer Barry Callebaut announced a new processing unit on 29 March 2019. “The expansion fits with the Ivorian government’s desire to increase local cocoa processing capacity in its country and is in line with Barry Callebaut’s objective to supply the growing market for cocoa in West Africa with domestic supply,” commented the company in a press release at the time.4

Road to emergence

Poverty level of Côte d’Ivoire
(The World Bank)

Implementation of the first-stage National Development Plan (PND 2012–2015) with the support of development partners has helped Côte d’Ivoire relaunch as an emerging market economy with a strong industrial base. However, in his introduction to its sequel, PND 2016–2020,5 President Alassane Ouattara observed: “Despite the progress made, much remains to be done to consolidate our path to emergence.” This task includes, he added, “poverty reduction and better distribution of the fruits of growth, above all for the least privileged and most vulnerable”.

National poverty levels are high, at 46%, and not enough of the country’s ca. 26 million population has access to health service facilities. More needs to be done to tackle malaria, low average life expectancy (57 according to the World Bank), high infant mortality rates (59 per 1,000 live births according to Unicef) and maternal mortality rates (617 deaths per 100,000 according to World Health Organization data), and to reduce teenage pregnancies. “Teenage pregnancy renders girls more likely to fail at school and have only a limited part in working life, compared to boys of the same age,” says the International Monetary Fund (IMF) report (see endnote 5).

According to the World Bank, 56% of Côte d’Ivoire’s citizens currently live in urban areas and urban growth continues apace at an annual rate of 5%. “The urban population will account for two-thirds of the national population by 2050,” it predicts.6

Alarik d’Ornhjelm, Head of STEF, Middle East and Africa at Deutsche Bank"Deutsche Bank has committed to generate at least €200bn of ESG business volume within the next five years"
Alarik d’Ornhjelm, Head of STEF, Middle East and Africa at Deutsche Bank


The pandemic has erased the prospects for a further year of economic growth in 2020 and, as in other countries, the spread of the virus is being tackled through containment and mitigation measures.

At the time of writing (19 August 2020), confirmed cases (17,150) have been rising rapidly,7 with 110 deaths recorded.8 Furthermore, infrastructure deficiencies in the health sector after a long period of underinvestment have made the government’s job harder. A 2019 World Bank report on the country noted: “The socio-political instabilities of 2002–2007 and 2010–2011 exacerbated health system challenges in terms of equity, access and quality, leading to poor outcomes including low life expectancy and high infant and maternal mortality.”

It continues: “Historically, the Ivorian health system has concentrated services in urban areas with a focus on curative care, with especially the Northern region lagging. During the conflict, funding for the health sector from external funding sources was predominantly for vertical programmes and short-term activities, with little health system strengthening activities, and the Ministry of Health and Public Hygiene continued to suffer from a lack of financial and political empowerment. Furthermore, the supply chain was seriously disrupted, almost all hospitals were closed due to looting or occupation, and 800,000 people were internally displaced with more than 70% of the population lacking access to health services.”9

As part of PND 2016–2020, supported by the IMF and the World Health Organization, the Ivorian government agreed funding of 833bn CFA francs – about US$1.27bn – over the two-year period from 2018–2020 to improve access to healthcare facilities. The programme covers the construction of various regional hospitals, teaching hospitals and other health facilities across the country, and re-equipment and provision of new equipment.

This article provides insights into a hospital and medical centre programme financed by Deutsche Bank with guarantees from the Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC).

Islamic Corporation for the Insurance of Investment and Export Credit (ICIEC)

ICIEC was established in 1994 as a multilateral institution and member of the Islamic Development Bank Group. It currently has 47 member countries, which are all members of the Organisation of Islamic Cooperation.

ICIEC’s mandate is to support its member countries in facilitating cross-border trade and investment through the provision of credit and political risk insurance instruments.

In 2019, ICIEC enabled US$10.86bn of trade and investment for its member countries through its risk mitigation instruments, which helped in de-risking trade and investment and mobilising capital for highly developmental projects for tenors that are otherwise difficult to support without appropriate credit enhancement.

ICIEC has maintained a Moody’s Aa3 rating with stable outlook for 12 consecutive years, one of the strongest ratings in the export credit and political risk insurance industry. It continues to play a leading role in the credit and political risk insurance industry through the Aman Union, which was co-founded by ICIEC to support ECAs in Arab and Islamic countries.

ICIEC operates from its headquarters in Jeddah in Saudi Arabia, as well as from seven regional offices in Africa, Asia and Europe.

New regional hospitals and units

Against this backdrop of the most severe health crisis of modern times, the healthcare provision project, with a total financing value of €142m, supports Côte d’Ivoire’s efforts to contain the Covid-19 pandemic. Two new hospitals, one located in Adzopé, 105km north of Abidjan, and the other in Aboisso, 120km east of Abidjan, will collectively have a capacity of around 400 beds. They will significantly improve the availability of healthcare services in each region, and will benefit from modern equipment.

The hospitals will have surgeries, paediatric services and obstetrics, X-ray rooms, dialysis centres and emergency services. At the time of writing, they were expected to be completed in October 2020. Until then, people have to undergo long journeys into Abidjan to get the care they need. In addition, the project finances new medical units in five hospitals across the country: a radiotherapy centre in Abengourou, an emergency unit each in Daoukro and Séguéla, a traumatology centre in Toumodi, and a surgery and emergency unit in Bouna.

In December 2017, when the government confirmed its US$1.27bn ‘envelope’ to modernise and rehabilitate the health sector, the Moroccan company Agentis expressed an interest to the Ministry of Health and Public Hygiene in bidding for the construction of hospitals on a turnkey basis (construction, design and maintenance of hospitals and new medical units). Four other bidders were also listed. The bid included a technical offer related to various hospitals to be built or equipped with additional new medical units. Agentis specialises in the healthcare sector, and its Ivorian subsidiary has already completed various projects in the country, including the first radiotherapy centre in the University Hospital of Cocody, which was opened in December 2017.

Having won the tender, Agentis then signed an agreement (the ‘protocole d’accord’) with the Ministry of Health and Public Hygiene, Ministry of Economy and Finance and the Prime Minister’s Office in charge of Budget and Public Debt. The agreement sets the terms and conditions of this preselection and the specifications required before the signature of the commercial contract. The contractor agrees to finance pre-feasibility studies, detailed soil investigation and topographic studies, and environment and impact assessment studies. Once these have been completed, a final project cost is agreed.

Oussama Kaissi, Chief Executive, ICIEC"In these times, cooperation is more important than ever"
Oussama Kaissi, Chief Executive, ICIEC

Deutsche Bank’s role

Upon this preselection, Deutsche Bank was asked to provide an indicative term sheet to finance the total project cost. The request came in 2018 during the €577m loan restructuring discussions on Côte d’Ivoire’s Société Ivoirienne de Raffinage, West Africa’s largest oil refinery.10 That refinery deal was announced in January 2019. Myriam Ouazzani, Director, Africa Coverage at Deutsche Bank explains: “This is a very important relationship to us and we have led Côte d’Ivoire bond issuances for years. After we had successfully closed the refinery deal, the Ivorian government asked us if we were interested in hospitals as well. The government had confirmed the locations and the impending tender process and said all the hospitals in the overall ‘envelope’ had to be built between 2018 and 2020.”

As the bank had not previously dealt with the contractor, it conducted background checks and was satisfied. “We told the contractor we would be happy to support them and issued our first term sheet to the government in March 2018,” says Ouazzani. Having demonstrated to the Ivorian government that financing was in place with the term sheet, the next stage was to kick-start the feasibility studies over the next year so that the pricing for the project was tied down and the financing arranged accordingly. “We got our mandate by June 2019,” Ouazzani adds.

Fast forward to January 2020 and it became clear that additional finance partners were needed for the loan. The usual route would be to syndicate the loan out to other banks. However, says Ouazzani, “instead of bringing the transaction to the market externally, we decided to team up with our own Structured Trade and Export Finance (STEF) team.”

This approach brought with it access to export credit agency (ECA) relationships and expertise. As explained in flow’s ‘From the rubble’,11 ECAs came into their own during the 2007–2008 global financial crisis, stepping in with increased trade finance support when commercial bank liquidity was at a standstill. ECA activity has continued to build and the political perspectives that shape the mandates and activities of a national ECA, together with the supply and demand of machinery, equipment and materials for infrastructure projects (power in Africa being a huge proportion of 2016 activity), mean that banks financing these deals have highly specialist experts. These individuals are well versed in international relations, project management and logistics, in addition to the normal risk management sense checks in completing such deals.

Alarik d’Ornhjelm, Head of STEF, Middle East and Africa at Deutsche Bank, says: “This is a great example of collaboration between the Investment Bank (Global Emerging Markets) and the Corporate Bank (STEF), where the two divisions have joined forces to support this closing for an important client of the franchise.” According to d’Ornhjelm, this transaction is a shining example of Deutsche Bank’s commitment to financing healthcare and other socially sustainable infrastructure projects in Africa. “The bank has committed to generate at least €200bn of environmental, social and corporate governance business volume within the next five years,” he reveals.

Insurance cover – whether this is from a government ECA or a private provider – makes it possible for a lender to get comfortable with the risk when the required amount exceeds its threshold for a particular geography or loan type. For this transaction, ICIEC provided the insurance. “Given ICIEC is rated Aa3, this helps us to improve the underlying credit appetite,” explains Ibrahim Qasim, Head of MENA Structured Solutions at Deutsche Bank. He continues: “Their mandate is to provide sustainable economic development through financial products supporting foreign direct investment and financing essential infrastructure to support their economy. From both perspectives, the risk appetite would have been harder without ICIEC cover.”

The senior term loan facility for €141.6m was signed in March 2020 and was fully disbursed by May. Arranged into two tranches, the proceeds are to be used as follows:

  • Tranche A: A 10-year €124m facility to finance the construction and rehabilitation works due under the project. This tranche is 95% insured by ICIEC (being an Islamic institution, ICIEC can only provide cover on the principal and not the interest).
  • Tranche B: A five-year facility of around €17.6m to finance the ICIEC premium.

This tranche is 95% insured by private risk insurance.

At the time the deal was signed, ICIEC CEO Oussama Kaissi said: “The unprecedented health impact of the pandemic is a human tragedy. Of course, this is compounded by the deep economic effects just beginning to be felt as a result of heightened uncertainty, risk, and the rapid deterioration in business confidence and activities. In these times, cooperation is more important than ever and ICIEC is very pleased to be partnering with Deutsche Bank for the first time on such an impactful project in Africa.”

The deal underlined the importance of building relationships – the original approach for the project being borne out of a capital markets relationship between Deutsche Bank and the government of Côte d’Ivoire.

Islamic trade finance principles

The key difference between conventional and Islamic financing is that, while the time value of money is not permissible in a pure ‘cash now for more cash later’ transaction, it is allowed if the financing is an integral part of a real trade in goods.

So, while an organisation is not allowed to lend US$100,000 in cash now in return for US$110,000 payable in a year, it is permitted to sell an asset with a market price of US$100,000 for US$110,000 in a year. For this reason, Islamic finance is often described as an asset-based financing system.

While this particular transaction did not have an Islamic finance structure, the principles of Islamic finance determined the tranche involvement of ICIEC.

Source: A Guide to Trade Finance, Deutsche Bank


1 See https://bit.ly/2XckPg5 at afdb.org
2 See https://bit.ly/39FBdut at afdb.org
3 See https://bit.ly/2CXuy3b at theguardian.com
4 See https://bit.ly/2BICjJB at barry-callebaut.com
5 See https://bit.ly/349Cnxzhttps://bit.ly/349Cnxz at imf.org
6 See https://bit.ly/3120YBf at worldbank.org
7 See https://bit.ly/2X6SveT at reliefweb.int
8 See https://bit.ly/2LcnP9u at coronavirus.jhu.edu
9 See https://bit.ly/3hMcqb9 at documents1.worldbank.org
10 See https://bit.ly/3hNpr4b at gtreview.com
11 See From the rubble at corporates.db.com

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