ING involved in $1.5 billion loan that proved disastrous to African country Chad: report
Dutch bank ING was involved in a 1.5 billion dollar loan to Chad in 2014 that proved disastrous to the African country. Struggling to repay the controversial loan, Chad resorted to making drastic cuts to healthcare and education that are still impacting the country to this day, the Volkskrant reports.
In 2014, former dictator Idriss Déby of Chad made a deal with the Swiss commodities company Glencore for a 1.5 billion dollar loan. The country had a hard time obtaining financial resources due to its poor reputation in the field of human rights. Glencore offered an opportunity. The commodities company even offered to accept repayment in oil instead of cash. The deal was a massive gamble for Chad. The loan represents one-tenth of the country’s gross domestic product.
Glencore then went looking for financers for the mega-loan. It finally got 21 institutions involved, including ING. In contrast to Chad, the financial institutions ran little risk. The repayment in oil guaranteed income, even if the African country got into financial trouble.
The deal stated that Chad would repay the borrowed money within four years, but things almost immediately went wrong for the country. The oil price plummeted, meaning that Chad was forced to transfer almost all of its oil production to Glencore in order to meet its obligations. It also forced the country to make drastic cuts.
Between 2014 and 2018, Chad halved its healthcare budget and cut the education budget by 21 percent. According to an Amnesty International report in 2018, a medical procedure like childbirth had become unaffordable for the local population.
Idriss Déby was killed in battle in 2021. His son, Mahamat Déby, now leads Chad. But the Glencore loan still weighs heavily on the budget. In 2023, the Organization of Economic Cooperation and Development labeled the loan a textbook example of bad loans that “may be harmful to the long-term development potential of borrowing countries.”
ING’s involvement in this loan was unknown until the Volkskrant found the Dutch bank in company documents from the subsidiary Glencore Energy UK Limited. ING is on the list of 21 lenders, listed between the American investment fund GMO and the Mauritius Commercial Bank. The Dutch bank is also listed in the 2023 document extending Chad’s repayment term to 2030.
ING refused to comment to the Volkskrant about its share in the massive loan. For years, the African country paid over 7.5 percent in interest on the loan. If all 21 lenders had provided an equal amount, ING would have earned millions in interest income from this loan.
An ING spokesperson gave the Volkskrant a general statement saying that “we actively manage social risks related to our activities.”
