February 24, 2023
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.
Africa has a unique possibility to use this moment to develop more of the millions of jobs needed for the continent’s young and growing population, and this has to happen in a sustainable manner.william nyaoke, regional director East-Africa
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.