EPZ clothing firm bags Sh2.7bn IFC loan for expansion
MAS Intimates Kenya staff at work at the Export Processing Zone in Athi River on September 16, 2021.
Hela Investment Holding (HIH), a clothing manufacturing firm that operates within Kenya’s export processing zone (EPZ), has bagged a Sh5.38billion ($40million) investment deal, partly provided by the International Finance Corporation (IFC) to finance its operations.
The private sector lending arm of the World Bank Group said in a disclosure that it will finance HIH through a Sh2.69 billion ($20m) loan as part of the financing deal.
“HIH will use the IFC loan to finance the long-term working capital requirement of the Hela Group and support the growth of its manufacturing operations,” the IFC said.
It said the funding will provide long-term working capital finance to HIH to support the continued growth of its operations in Kenya, Egypt, and Sri Lanka.
The Hela Group’s Kenyan manufacturing facility is located within the EPZ in Athi-River, while its Egyptian operation is situated in the Alexandria Governorate, an area with a well-established skill base in apparel manufacturing that also hosts one of Egypt’s largest ports.
The Hela Group operates six manufacturing facilities in Sri Lanka and its facility located in the Mawathagama EPZ will be the primary beneficiary of the IFC loan.
The IFC funding comes barely two months after the Norwegian government’s investment fund, Norfund, signed a $14 million (Sh1.88 billion) financing agreement with Hela Apparel Holdings PLC to bolster the apparel firm’s manufacturing operations in East Africa.
Hela Kenya, established in 2016, is the largest manufacturing facility within the Hela Group and employs over 4,000 people.
A majority of EPZ firms in Kenya are in textiles and apparel and largely export to the US under the quota- and duty-free Growth and Opportunity Act, which expires in September 2025.
EPZs enjoy a range of attractive fiscal, physical, and procedural incentives including a 10-year corporate and withholding tax holiday as well as a 100 percent investment deduction on new investments.
The firms are also granted perpetual exemption from payment of stamp duty on legal instruments as well as payment of value-added tax and customs import duty on inputs.
Kenya closed June 2022 with 153 EPZ firms — up from the previous year’s 144 but below the targeted 153.
