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Kenya and Tanzania, Safal Steel Roofing

Financing the expansion of Safal's steel roofing business to deliver quality, affordable roofing to domestic, agricultural and business customers in East Africa.

Despite strong growth in Africa's roofing sector, a gap in local supplies of coated steel roofing materials has emerged in Eastern and Southern Africa. Steel roofing is integral to the construction of lower-cost solid buildings - whether for residential housing or for business, manufacturing and agricultural buildings.

Safal

The Safal Group produces corrugated iron materials for supply throughout Africa. In order to expand its operations, the Group is developing a US$170 million package of projects in South Africa, Kenya and Tanzania. These projects will increase the Safal Group's existing coated steel production capacity by 225,000 tonnes per year.

GuarantCo, along with the International Finance Corporation (IFC), is participating in the projects for Kenya and Tanzania, providing guarantees of US$16 million each for a total local currency bond issue of US$32 million by the Safal Group. The projects include:

  • a 75% guarantee of a US$11 million equivalent bond issue for the funding of an extension to a cold rolling steel mill in Kenya; and
  • a 75% guarantee of a US$5 million equivalent bond issue with similar tenure to construct a new galvanizing plant in Tanzania.

In Kenya and Tanzania, both low-income countries, these investments will lead to improved quality and durability and will reduce the cost of thin-gauge roofing sheets. Both general consumers and agricultural users will benefit from improved quality roofing materials and greater affordability. Farm output will be enhanced as a result of better storage units.

The investment in the steel roofing sector will enhance the productivity of local manufacturing and will allow firms to compete in regional and international markets, facilitating exports of value-added products. By boosting Safal's operations, the project will provide employment to approximately 1,300 local people.

By facilitating transactions for innovative firms such as Safal's subsidiaries, ALAF and Mabati Rolling Mills, which pioneered steel roofing products in Africa, GuarantCo is boosting local business development and regional manufacturing and trade. Furthermore, the project dovetails with local strategies to provide better, lower cost housing.