Emerging Africa Infrastructure Fund

Description:

The Safal Group is the largest manufacturer of metal roofing in sub-Saharan Africa. It currently manufactures in Kenya (Mabati Rolling Mills) and in Tanzania (Aluminium Africa). It is now expanding these plants and building a new greenfield rolling mill and galvanising plant near Durban in South Africa. The project will increase capacity by 150,000 metric tonnes.

EAIF is providing USD 15 million of senior and USD 14 million of subordinated debt to the parent company to facilitate the construction of the Durban plant and a broadening of Safal’s distribution and processing network in a number of East and Southern African countries.

The project supports EAIF’s mandate to fund manufacturing of components of infrastructure.

The roofing produced by Safal uses a state-of-the-art process that coats the steel material with both aluminium and zinc. This process produces a cheaper product because the steel is rolled to the thinnest gauges available in Africa whilst the coating is cheaper than using zinc alone to galvanise. The product also has a significantly longer life than zinc galvanised material. No other company on the continent uses this process.

Metal roofing is the product of choice for most African consumers. The provision of cheaper and longer lasting roofing has real pro-poor benefits as the biggest single customer group is small users, particularly in the agricultural sector.

             MCL Equiptment foundations - uncoiler Foundation - Final Lift

                Pickling line building retaining wall rebar fixing in progress.

                          CCL Building Foundations nearing completion

             HRC Storage Building foundations ready for concrete casting.

Description:

EAIF has agreed a loan of US$17 million to SPA Maghreb Tubes (SMT) to finance the construction and operation of a greenfield factory producing spiral weld and high frequency welded steel pipes and fittings in Algeria, near the city of Ain Defla. The pipes will be used for transmission and distribution of water, sewage and slurry. SMT’s promoters have over 30 years of successful pipe manufacturing experience in Thailand, China, Kenya and Tanzania where altogether 700,000 tons of steel pipes have been produced and supplied serving a variety of utility industries.

                     (Picture to show the steel piped manufacturing process)

Development Benefits

The project addresses the underserved demand for steel pipes mainly required for the planned water projects by the Algerian Government in the medium to long term. Algeria has a current population of 30 million people and will have an estimated population of 40 million by year 2020. Per capita water supply is estimated to be below 1000 m³ p.a. This is far below the universal benchmark of 1700 m³. In 2004, the water supply was 1.6 billion m³ water while the basic requirement of the population was 2.4 billion m³. The water distribution network consists of an estimated 60.000 km of pipes of which an estimated 30 % are leaking. Over the next 5 years, in an effort to match water supply and water needs, the Algerian Government has allocated US$12 billion for work on the water sector. Approximately US$3 billion of this will be for pipes of various sizes.

                (Picture to show the land near Ain Defla, where the plant will be built )

                      (Picture to show pipes at sister company in Nairobi)

                             (Picture to show raw materials at Nairobi factory)