Norfund is entering the African textile industry for the first time, launching two investments in Kenya.

“The textile industry can create a large number of jobs that give the fast-growing young population the opportunity to work their way out of poverty. Norfund also aims to contribute to handling some of the challenges in the industry”, says William Nyaoke, Norfund’s regional director for East Africa.

The covid pandemic and increased perception of political risk have increased the pressure on differentiation and developing alternatives to Asian textile production.

Two investments in Kenya’s textile industry

Norfund is investing in two textile manufacturers in Kenya, in line with our aim to create jobs and improve lives through investing in sustainable businesses:

• The Balaji Group is one of the leading manufacturers of clothing in Sub-Saharan Africa, with 12 000 employees and production both for the local Kenyan market and for export, for brands such as Wrangler, Lee and H&M. Norfund and Ethos Mezzanine partners, one of Africa’s most renowned investment companies, together invest USD 25 million (12,5 million each) in Balaji. The goal is to create at least 6,000 new direct jobs and a further 6,000 indirect jobs in the company.

• Hela Apparel Holdings PLC is a Sri Lankan apparel supply chain solution provider with a global manufacturing footprint, which has established itself in Kenya, Ethiopia and Egypt, with over 10,000 employees across Africa. Hela works with some of the world’s leading apparel brands in the Intimate, Kids wear and Active wear product categories. Norfund’s investment of USD 14 million will support additional investment in the Kenyan manufacturing facility which will enhance productivity and create new employment opportunities. The company will also use the capital to build a sustainable local supply chain in East Africa.

Contributing to more sustainable production and good working conditions

The textile industry has been in the spotlight over both working conditions and challenges related to pollution, water consumption and climate emissions.

“We are aware that the industry faces a number of challenges and dilemmas. Our ambition is that Norfund as a responsible investor can contribute to strengthening the companies on sustainability and working conditions”

William Nyaoke, Regional Director, East Africa

The investment in Balaji will finance new modern washing machines that will triple production capacity, while reducing electricity use by 20-30%, water consumption by 70% and chemical use by 60%. The company has installed East-Africa’s largest rooftop solar plant of 1.8 MW to cover large parts of its energy needs, cutting 30% of its energy bills.

Norfund’s investment in Hela will contribute to a more sustainable value chain by producing larger parts of the value chain locally. The company has brought in two companies that will produce packaging materials and elastics in Kenya.

Opportunities for women

Most of the employees in the clothing industry are women who otherwise struggle to find work. Research has shown several positive effects for women as a result of the textile and apparel industry, such as increased school attendance and delayed marriage.

Hela has been conducting training sessions for its team members to educate them on topics such as; family planning, sexual health, and other life skills. The company also offers creche facilities for all female team members in Kenya with children between the ages of 4 months to 3 years during work hours, facilitating an easier return to work for mothers. Employees in Kenya are also given access to 20 Liters of clean drinking water that they can take home daily.

Abler Nordic is the new name of Nordic Microfinance Initiative, established in Oslo in 2008 as a public-private partnership investing in companies in Africa and Asia supporting low-income households with financial services.

At Abler Nordic, public investment capital between the respective Norwegian and Danish governmental funds for developing countries, Norfund and IFU, is blended with commercial capital from private investors, including Ferd, DNB, KLP and PBU Since 2008, public investment has been used catalytically to mobilize USD 140 million from private Nordic investors who see finance as a tool to enable positive and sustainable change in society.

As the financial inclusion field has developed over the past 15 years, Abler Nordic has evolved along with it. A focus on traditional microfinance matured into a broader approach of holistically including low-income households in the financial system through a range of services that enable people to strengthen their overall financial health and build resilience.

“Poverty has risen for the first time in 20 years and low-income people in developing countries are hardest hit by climate threats that they have contributed very little to. Well-designed financial services such as savings, leasing, agricultural financing, and affordable housing finance help people adapt and strengthen their ability to manage economic and climate shocks,” says Arthur Sletteberg, Managing Director of Abler Nordic.

“Our diverse investments in recent years and active engagement in the companies we are invested in is in line with the wider concept of financial inclusion, and it was time for our name to reflect this. Abler Nordic plays on the terms enable and sustainable and emphasizes our Nordic roots and values.”

Abler Nordic targets both strong social and sustainable financial results, and is a committed, responsible owner playing an active role in the development of 19 companies it is currently directly invested in.

As the same time as the new name is introduced, Anders Misund, partner in EQT, has been announced as the new Chair of Abler Nordic. He succeeds Bjarne Kveim Lie, Co-Founder and Managing Partner of Verdane, who has stepped down after 10 years of service.

“The UN says 5-7 trillion USD invested annually is needed to reach the SDGs, and mobilising private capital is critical to achieving this. Abler Nordic’s public-private partnership is more relevant than ever, and it is an honour to take the baton from Bjarne and support the company’s continued growth,” said Anders Misund, commenting on his appointment.

Norfund and a consortium of private investors managed by 54 Capital announce $21 million growth capital investment into Ethiopia’s largest FMCG platform SAMANU. Increased local production of edible oil will create jobs and increase food security.

SAMANU is a platform company with well-established brands operating in Ethiopia’s main FMCG sub-sectors (Tena Edible Oils, 555 and Aura Soap & Detergents, and Chef Luca wheat products).  

The investment by Norfund will fund the construction of a new solvent extraction plant to produce edible oils based on locally sourced sesame, sunflower and soya beans in its refineries. By reducing the dependency on imported raw materials, the investment aims to create jobs in value-addition and increase Ethiopia’s food security. The completion of a vertical integration project will also allow for increased export opportunities within the sectors the company already operates.  

Norfund, through our Business Support Facility, plans to use grant funding to assist contracted smallholder farmers with inputs like high quality seeds, fertilizers, training and capacity building, as well as agricultural technology to boost productivity. 

Andreas Davidsen, Norfund’s VP of Scalable Enterprises – Agribusiness & Manufacturing, said: “We are excited to partner with SAMANU and support the execution of their vertical integration strategy, creating jobs and increasing food security. We strongly believe in the opportunities of local food production in Ethiopia and Norfund looks forward to working closely with the SAMANU management team and 54 Capital to help implement best in class practises and solutions”. 

SAMANU is already home to some of Ethiopia’s leading FMCG brands and has ambitious plans to expand its product offering to meet rising demand for high quality locally produced brands. The investment, Norfund’s first in manufacturing in Ethiopia, signals strong institutional backing for the platform.  

Saad Aouad, 54 Capital PE Advisors’ Chief Investment Officer, said: “It is a fantastic achievement for our investments in Ethiopia and our local management team to receive further institutional backing. It stands as testament to what we have been able to achieve in terms of nurturing high-quality popular brands and achieving scale through capacity expansion and how we intend to develop the next stage of the business. This investment demonstrates the robustness of this strategy for further enhancing the value chain within Ethiopia which will undoubtedly benefit from Norfund’s extensive experience across the continent”.

About 54 Capital

54 Capital is a leading Africa focused Asset Manager, regulated by the FSC in Mauritius, with officers in Dubai, Morocco, and Addis Abeba, with a strong focus on Ethiopia. 54 Capital has built a portfolio of fast-growing assets in the pharmaceutical sector and the FMCG sectors in Ethiopia, making it the largest private equity investor in Ethiopia, with a total invested amount in excess of 200 million dollars. Its market leading investee companies are involved in the manufacturing and distribution of essential medicines, beverages, food products, as well as home care and personal care products.

40 million EUR has been secured from shareholders and lenders for the next phase of expansion for WeLight, providing access to electricity for hundreds of thousands of people and many businesses and communities in Madagascar.

Most of this funding will be invested in Madagascar and enable the company to connect 120 new villages (up from 50 WeLight-connected villages in Madagascar) over the next couple of years, providing electricity to rural households, businesses and communities across the country.

Madagascar has one of the world’s highest poverty rates as 81% of the population of Madagascar lives on less than $2.15 per day. 70% of the population of 30 million people live in rural areas with low incomes and negligible access to infrastructure. Only 15% of the rural population have access to electricity.  

It is estimated that more than 200,000 people living in the villages will experience access to electricity for the first time. Thousands of streetlights will light up the villages, which will improve safety and enable activities after dark. Entrepreneurs and businesses will be able to set up new endeavors which previously would not be possible, and secure new income streams. Schools, communities and medical centers will benefit from access to light and cooling facilities. The electricity will be generated in local solar based power plants installed in the villages by WeLight.

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WeLight Madagascar

WeLight not only brings electricity to villages, but creates an ecosystem for social and economic development of communities it serves. As an innovative, all-digital model created on and for the African continent, Welight contributes to financial, digital and energy inclusion. The company is working on initiatives such as entrepreneurship support in collaboration with German development agency GIZ and Axian Group. WeLight’s local sales agents have been trained to identify local entrepreneurs to participate in business training sessions and receive a subsidy for electrical appliances needed for their business activities. More than 50 entrepreneurs were supported in 2022.

This milestone funding round is a result of hard work, mostly from the team on the ground in Madagascar, which started in 2019 with two pilot sites and has grown to 40 sites in Madagascar and Mali. These two sites were established by Axian Group and Sagemcom, who at the time were active with telecom services in the two villages, and experienced high interest in the electricity from people in village. This led to the two minigrid pilots and subsequently the involvement of Norfund, which partnered with the group in 2019, and jointly embarked on a systematic approach setting up the company and providing funding to enable the first phase of the roll out of electricity services in Madagascar. 

Norfund welcomes European Investment Bank (EIB), EDFI ElectriFI -The Electrification Financing Initiative and Triodos Investment Management on board as partners, providing 19 million EUR in loans to the Madagascar activities.

Welight have also commenced activities in Mali with 5 pilot installations with further growth expected in the coming period.

“We at Norfund would like to extend great thanks to the CEO Romain De Villeneuve and the rest of the Welight team on the ground, Axian Group and Sagemcom for their dedication, excellent work and good cooperation! We look forward to the next chapter, in Madagascar, Mali and other countries which can benefit from WeLight’s services.”

Norfund Investment Director Pål Helgesen

Norfund continues its investment in Kinyeti Venture Capital (Kinyeti), alongside the Swedish development finance institution Swedfund, with a follow-on loan of up to 4 million USD.

Kinyeti is an investment company established in 2012 as a joint venture between Norfund and Swedfund, providing much-needed risk capital to local small and medium enterprises (SMEs) in the form of loans and is the only provider of USD-denominated risk capital in South Sudan. The company helps build the country’s private sector by offering capital to entrepreneurs and growing businesses which support job creation.

South Sudan is a country that has struggled to form a viable governing system and has been plagued by widespread corruption, political conflict, and civil war. More than eighty percent of the population lives below the poverty line and the economy has been negatively affected by climate change, violence and multiple global crises. The SME sector is still young and emerging from the effects of many years of civil war.  

In light of the difficult situation in South Sudan, Kinyeti is a strong and resilient partner for investing in a fragile state. Since being set up in 2012, the company has supported SMEs with financing and created jobs in South Sudan amidst the political and economic instability. 

“As a profitable investment company in South Sudan, Kinyeti is well-rooted in our strategy for fragile states. Our follow-on investment builds on a decade of experience and achievements since Kinyeti’s establishment and will put the company on a properly funded growth path,” says Vegard Halvorsen, Investment Director in Norfund. 

Kinyeti has invested almost 11 million USD in 21 companies to date, with plans to invest another 10 million USD over the next four years. Relevant sectors include food & agribusiness, services such as hospitality, infrastructure support to contractors through purchase of machinery, health through purchase of medical equipment, transport & logistics through warehouse construction, and renewable energy through replacement generators with solar power. 

“Kinyeti contributes to private sector development in a particularly vulnerable economy, thereby creating jobs and improving local livelihoods. Our hope is that its performance will attract more risk capital to South Sudan with time,” Halvorsen says. 

The new Climate Investment Fund, managed by Norfund, will make its first transmission investment in an Indian project being developed by ReNew Power, together with KLP, Norway’s largest pension company.

In partnership with the ReNew Power, one of the largest renewable energy independent power producers (IPPs) in India and globally (NASDAQ: RNW) (Nasdaq: RNWWW), Norfund and KLP will invest around 900 million INR (109 million NOK) for 49% ownership stake in ReNew’s transmission project in the Koppal district of southern India, with ambitions for further joint investments. 

To meet growth in electricity demand over the next twenty years, according to the IEA, India will need to add a power system the size of the EU. Scaling up solar and wind energy requires significant investments in transmission lines to stabilize the grid and transport energy from the areas most suitable for solar and wind parks. 

Connecting 2.5 GW renewable capacity 

“Through this investment we are contributing to the connection of 2.5 GW of planned renewable power in the south being connected to the national grid. We are pleased to make Norfund’s and the Climate Investment Fund’s first investment in the sector, and we look forward to strengthening our partnership with Renew,” says Bjørnar Baugerud, Vice President, Clean Energy in Norfund. 

The project will consist of a 5 x 500 MVA 400/220 kV sub-station at Koppal with 400 kV D/C quad moose transmission line from Koppal substation to Narendra New substation and 400 kV GIS Extn at Narendra New in Karnataka (Koppal Project). Its commercial operations are expected to start in the first quarter of FY24. 

“This investment will reduce bottlenecks in the Indian transmission system and open the way for new renewable power generation to produce electricity to meet rising Indian demand. We expect the project to both generate attractive returns and have a strong climate impact,” says Aage Schaanning, Chief Financial Officer at KLP. 

“Investment in the transmission sector provides synergies with our core RE portfolio and demonstrates our success in capital recycling. As a leader in India’s energy transition, we are excited to partner with Norfund and KLP to support India’s green energy transition and look forward to strengthening this partnership in the future”, says Sumant Sinha, Chairman, and CEO of ReNew Power. 

Third investment of the Climate Investment Fund in India 

Operational since May, Norway’s new Climate Investment Fund, managed by Norfund, will reduce and avoid emissions by investing in renewable energy in developing countries with significant emissions from coal power and other fossil fuels. The fund has already made two previous investments in India – in a large-scale solar park with Enel and in Fourth Partner Energy, India’s leading developer of distributed solar energy solutions. 

The new Norwegian Climate Investment Fund received 1 billion NOK in the state budget for 2022, matched by an equal sum from Norfund’s capital, and the Parliament has now approved another 1 billion for 2023. The plan is for the fund to reach 10 billion NOK within five years. 

ReNew is one of the largest renewable energy IPPs in India. ReNew develops, builds, owns, and operates utility-scale wind energy, solar energy, and hydro projects. As of Nov 01, 2022, ReNew has a gross total portfolio of ~13.4 GW of renewable energy projects across India, including commissioned and committed projects. 

According to IEA, yearly investments in renewable energy in developing countries needs to increase sevenfold from today’s 150 billion USD to over 1 trillion from 2026 to 2030, if we are to reach the 1.5-degree limit. At the same time a new report from Bloomberg NEF shows investments in renewable energy in these markets have fallen to the lowest level since 2016. India is the world’s second largest consumer of coal power.

Norfund investee Africado has been awarded the Tanzania Revenue Authority’s Certificate of Merit “in recognition of the company’s outstanding tax compliance in 2021/22 during the Taxpayers Appreciation Day 2022.”

The company has also received the Rainforest Alliance endorsement certificate in recognition of their conformance with the Rainforest Alliance Sustainable Agriculture Standard.

Africado was established in 2007 around the Kilimanjaro area in Tanzania, and has developed and grown as a business, producing and exporting Hass avocados.

Norfund congratulates Africado with these awards and recognition!

Baoma 1, Sierra Leone’s first Independent Power Project (IPP), has achieved commercialization. The 5MW solar power project is owned by Serengeti Energy Limited, a private company that is backed by shareholders KfW, Norfund, NDF, Proparco, Stoa and Swedfund.

The 5MW solar power plant is the first phase of a 25MW solar PV power project in Yamandu, near Bo town in Sierra Leone. The project will add approximately 15% to Sierra Leone’s total electricity generation capacity, providing a significant contribution to the need for more electricity in the country. The company expects to commence building the second phase of the project in 2023. This will complete a total investment of 35 million USD in the Sierra Leone power system.

Serengeti Energy owns and operates renewable power plants in the Republic of South Africa, Rwanda, Uganda, Malawi and Sierra Leone and is focused on building its business by delivering new supplies of clean, affordable energy.

Banco Múltiple BDI, S.A. was selected by Norfund as the recipient of its first direct capital investment in the Dominican Republic. 

With this investment, Norfund has subscribed and paid for new shares of Banco BDI, equivalent to 20% of the subscribed capital stock and paid-in capital of the Entity. With this, Banco BDI continues to expand and strengthen its capital base.

Banco BDI is a financial entity founded in 1974 under the name “Banco de Desarrollo Industrial, S.A.” In 2001, the Monetary Board approved the change of franchise to a commercial bank, authorized to provide multiple banking services, which was ratified by the Superintendency of Banks in 2002. 

In recent years, Banco BDI has focused its strategy on the innovation and digitization of products and services, on the constant improvement of service and customer relations, and on the sustainable growth of products and services to the public. 

The Superintendency of Banks of the Dominican Republic, through a Circular dated October 11, 2022, granted the corresponding no objection to the capital investment made by Norfund, thus complying with current regulations. 

The president of Banco BDI, Mr. Juan Carlos Rodríguez Copello, expressed pride and satisfaction that Banco BDI had been chosen by a sovereign fund with the prestige and track record of Norfund to be its partner in the Dominican Republic, while indicating that this investment constitutes an important recognition of the stability and soundness of the national financial system, as a result of the policies and measures of the Central Government and the monetary and financial authorities (Central Bank of the Dominican Republic and Superintendence of Banks) that encourage, promote and foster the domestic and foreign investment in the country. 

Norfund’s regional director for Latin America, Federico Fernández, said Norfund’s investment will support Banco BDI’s capital adequacy and prepare the bank for future growth opportunities.

“We look forward to partnering with Banco BDI to support economic growth and job creation in the Dominican Republic”

Federico Fernández, Regional Director for Latin America

With the investment made, Norfund will occupy a position on the Board of Directors of Banco BDI, thus becoming the first development financial institution, shareholder of the bank, with active participation in its Board, where it will contribute to the implementation of high international standards in environmental, social and corporate governance practices. 

With this strategic alliance between Banco BDI and Norfund, Banco BDI continues to consolidate its capital base, improve its market position, reduce funding costs, strengthen its risk profile and promote its digitalization and sustainability processes.  

State Secretary for International Development, Bjørg Sandkjær, visited Senegal on the occasion of the Global Nansen Forum late October. The Norwegian Embassy in Ghana, which also covers Senegal, planned a bilateral program for the state secretary in order for her to see successful initiatives and projects in the country. On the program was Baobab Plus, a Norfund investment that offers solar energy-based solutions for households that are not connected to the grid, so-called “off-grid” solar energy for households.

The team from Norway met with Baobab Plus’ management in Senegal, Magloire Ahouanmenou, Chief Commercial Officer and Saër Dial, Chief Customer Officer. After a comprehensive presentation about the developments for the company the past year, their SHSs as well as their innovative business model, the visitors spoke about the impact of the SHS with a Baobab Plus client.

Pastor Francois, who lived in the region Fatick in Senegal, showed his solar energy system that enabled him to have lighting in his house. The pastor spoke proudly of a strengthened marriage after he and his wife gained access to energy and lighting. The system has also made it possible for the couple to install a TV, which several people in the village are very happy with, as people come to watch football at the pastor’s house.