Notice

Category B project supported: Douala Road, Cameroon

Published 24 May 2022

1. Project description

UK Export Finance has agreed to provide support to Ministry of Economy, Planning and Regional Development in respect of the supply of goods and services by Magil Construction Corporation to Ministry of Public Works, Cameroon for the construction and rehabilitation of the National Road in Douala (the Project).

A key aim of the Project is to upgrade and rehabilitate approximately 9 km of the Eastern Entrance of Douala, the NR3 road. Douala is one of the most populated cities in Cameroon and is an important commercial hub, with more than half of Cameroon’s economic activity and industrial production occurring here. The NR3 runs between Yaounde and Douala, and is a critical transportation corridor for Douala, Cameroon, and the wider West African region.

The Project includes:

• Roadway expansion (~9 km)

• Construction of five roundabouts

• Construction of one overpass and one underpass

• Construction of nine improved storm water management features

• Construction of urban development features (e.g. pedestrian crossings, bus stops, parking areas)

• Roadway lighting

• Landscaping

2. Project sector

The Project is in the civil construction sector.

3. Project sponsors

The Project is being developed by Ministry of Public Works, Cameroon.

4. UK exporters

Magil Construction Corporation

5. Export credit agent bank

Standard Chartered Bank

6. Amount of UK Export Finance support

The principal value of the support is approximately EUR€135 million.

7. OECD Common Approaches and Equator Principles

UK Export Finance categorised the Project as Category B i.e. having environmental, social and human rights (ESHR) impacts that are few in number, site-specific, few (if any) of which are irreversible, and for which mitigation measures are more readily available in accordance with the definition in the 2012 (Revised 2016) OECD Common Approaches for Officially Supported Export Credits and Environmental and Social Due Diligence (the “OECD Common Approaches”) and the Equator Principles (2020).

8. Environmental, Social and Human Rights standards

Project related ESHR documentation was reviewed for their alignment against the 2012 International Finance Corporation (IFC) Performance Standards (PS) on Environmental and Social Sustainability and the World Bank Group Environmental, Health and Safety (EHS) Guidelines.

The applicable IFC PS were:

• PS1: Assessment and Management of Environmental and Social Risks and Impacts

• PS2: Labour and Working Conditions

• PS3: Resource Efficiency and Pollution Prevention

• PS4: Community Health, Safety and Security

• PS5: Land Acquisition and Involuntary Resettlement

• PS6: Biodiversity Conservation and Sustainable Management of Living Natural Resources

• PS8: Cultural Heritage.

The applicable World Bank Group EHS Guidelines were:

• General EHS Guidelines (2007)

• EHS Guidelines for Construction Materials Extraction

• EHS Guidelines for Toll Roads.

9. Nature of ESHR impacts

The review of potential ESHR risks and impacts took into account the following impacts, receptors and issues during the construction and operational phases of the Project:

• health and safety

• economic displacement

• traffic management and road safety

• emissions to the atmosphere (including land, air and water)

• wastewater treatment

• waste and hazardous material management

• emergency planning and response

• grievance mechanisms

• community engagement.

10. Assessment of ESHR impacts

A review was undertaken in line with the requirements of the OECD Common Approaches and Equator Principles to identify potential ESHR risks and impacts of the Project and how these would be effectively managed.

A review of project-related documentation by an Independent Environmental and Social Consultant (IESC), was also undertaken.

The review included:

• Photos and videos of the road taken by Magil owing to COVID-19 restrictions on international travel

• Desk-based review of project-related documentation: Environmental and Social Impact Assessment, Environmental and Social Management Plans, and Stakeholder Engagement Plan, Livelihood Restoration Plan, Climate Change Risk Assessment

• Follow-up meetings and interviews with relevant Project representatives.

The results of this review formed the basis for the evaluation of the Project’s alignment with relevant international standards, and recommendations for future compliance and monitoring.

Taking account of the review, the Project was deemed to have potential to cause a number of adverse environmental and social impacts both during construction and operation. However, a proposed suite of controls as part of the Project’s environmental and social management systems should facilitate the management of these impacts.

11. Climate change considerations

UKEF considered the potential direct and indirect green house gas (GHG) emissions of the Project and effects of climate change factors on the Project as part of its ESHR review.

A climate change risk assessment including consideration of physical risks and a quantification of Scope 1, 2 and 3 emissions during construction and operation of the Project was undertaken. The assessment included identification of relevant climate change trends, their potential impacts and existing design and mitigation measures.

Since the Project is expected to emit below 25,000tCO2e per annum, annual reporting of emissions and a dedicated assessment of transition risks were not considered to be warranted

The review revealed that the Project design has considered potential physical impacts of climate change such as changes to rainfall and weather patterns.

12. Decision

Various actions have been agreed between the Project developer, operator, and parties involved in the financing, which are necessary to ensure the Project’s on-going alignment with international standards. Following agreement of these commitments, it was concluded that the Project should meet the relevant international standards over the Project cycle. UKEF has therefore decided to provide its support in respect of the supply of goods and services by UK exporters to the Project.

A condition of support is that Project will be subject to monitoring and reporting in order to provide satisfaction that the Project is aligned with the relevant international standards throughout the duration of support.

UK Export Finance

22 March 2022