The Safal Group proposed to partly fund its proposed plant capacity expansion in Kenya by local currency bonds, but needed credit enhancement to be able to access the local capital market. GuarantCo and IFC’s guarantee, covering 75% of the bond amount, was critical for Safal to begin the process of issuing the bonds.
The availability of the guarantee in 2007, while not eventually required, played an important role in catalysing the investment 18 months earlier than would have otherwise been possible. Safal’s access to Kenya’s domestic capital market without a guarantee, a significant and welcome sign of increased market sophistication, was facilitated by GuarantCo and IFC’s timely support. GuarantCo was then able to recycle its capacity for other projects in the region.
The Safal group is one of the biggest producers of steel roofing in Africa, widely used in affordable housing. MRM is their flagship operation in E Africa. Demand for steel roofing has been growing, in line with the rapid growth in housing activity in the region. The new capacity at Safal’s Kenya plant will enable them to meet the growing demand while continually improving product quality.