Norfund (the Norwegian development finance institution) and Ethos Mezzanine Partners 3 (a closed-ended specialist credit fund), have joined hands to support the creation of 6,000 new direct jobs and 6,000 indirect jobs through investing in the Balaji Group, one of the leading textile manufacturers in Sub-Saharan Africa.
The two Companies have executed a USD 25 million mezzanine debt investment in the Balaji Group of USD 12.5million each.
Balaji Group is based in an Export Processing Zone in Nairobi, Kenya where it operates the largest apparel manufacturing business in Sub-Saharan Africa, producing garments for many global brands and retailers which are exported predominantly to the USA.
The textile and apparel sector is a key driver of economic growth in Kenya and therefore export-oriented industries like textile and apparel manufacturing play a critical and central role in improving its trade balance seeing how the country is a net importer.
“We believe that by contributing to the growth and development of the textile and apparel sector in Kenya, we can make a significant impact by delivering on our mandate of facilitating job creation at scale in order to combat poverty,” said William Nyaoke, Regional Director for East Africa in Norfund in a press statement.
He noted that the textile and apparel sector is relatively underdeveloped in Kenya compared to many Asian economies where it has played a key role in underpinning economic growth and creating new jobs on a large scale.
In Kenya, according to Nyaoke, there are already more than 50,000 workers (the majority of whom are women) who are employed in the sector, and there remains considerable potential for further growth.
At the same time, Phillip Myburgh, Managing Partner of Ethos Mezzanine Partners said the company provides growth and replacement capital to mid-market businesses across East Africa, the Horn, and Southern Africa.
“We are excited to partner with the Balaji Group and Norfund to fund the next phase in its growth trajectory that spans 21-years since it was founded by Pankaj and Amit Bedi,” stated Myburgh.
He added that this funding commitment also promotes the UN’s Sustainable Developments Goals 5 (gender equality), 6 (clean water & sanitation), 8 (decent work & economic growth) and 12 (responsible consumption and production).
Meanwhile, Balaji Group, according to the Chairperson Pankaj Bedi, already employs over 12,000 people, and with the capital support of Norfund and Ethos Mezzanine Partners it aims to hire 6,000 new direct workers and create opportunities for another 6,000 indirect jobs across the value chain.
“Our story is one of resilience and commitment to our vision to create a legacy institution in the sector. We are grateful for the opportunity to have worked with Norfund and Ethos Mezzanine Partners, whose core values are development and improving people’s lives, which is directly aligned with what Balaji’s endeavor is,” expressed Bedi.
He said, “Balaji Group has always been at the forefront of adding value to the entire community around our business including not only our team but their extended families & community at large, we are now more than ever committed to support the development of the local supply chain ecosystem around our sector by supporting & hand holding MSMEs to be part of the supply chain.”
According to the press statement, the investors bring much needed capital to fund the company’s further growth and by financing the replacement of Balaji’s old washing facility with new modern washing machines, its manufacturing capacity will increase by 300 percent, while reducing electricity use by 20-30 percent, water consumption by 70 percent and chemical use by 60 percent.
Also, the company has already installed a 1.8MW captive solar plant to advance its ambitions of running a more environmentally sustainable operation.
Over and above that, the new funding will also enable further investments in sewing machines that will expand production capacity and contribute to increasing the number of garments produced per hour.
In addition to the capital injected, the funders aim to support further improvements in the company’s management of environmental, social and governance standards.
By Michael Omondi