EPZ Clothing Company Bags Sh2.7B IFC Investment Loan

A $40 million investment contract has been secured by Hela Investment Holding (HIH), a clothes manufacturing company operating in Kenya’s export processing zone (EPZ), with funding given in part by the International Finance Corporation (IFC).

In a declaration, the World Bank Group’s private sector lending arm stated that as part of the financing agreement, it will give HIH Sh2.69 billion ($20m).

“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.

The funds, according to the statement, will give HIH long-term working capital financing to support the expansion of its activities in Kenya, Egypt, and Sri Lanka.

While the Hela Group’s Egyptian operation is based in the Alexandria Governorate, a region with a well-established skill base in garment production and home to one of Egypt’s main ports, its Kenyan manufacturing site is situated within the EPZ in Athi-River.

The Mawathagama EPZ facility owned by the Hela Group, which runs six manufacturing facilities in Sri Lanka, would be the main recipient of the IFC loan.

Only two months have passed since Norfund, the investment arm of the Norwegian government, and Hela Garment Holdings PLC inked a finance arrangement worth $14 million (Sh1.88 billion) to support the garment company’s East African manufacturing operations.

The largest manufacturing facility in the Hela Group, Hela Kenya, opened in 2016 and currently employs over 4,000 people.

Under the quota- and duty-free Growth and Opportunity Act, which ends in September 2025, the majority of EPZ firms in Kenya are in the textile and clothing industry and mostly export to the US.

A 10-year corporate tax holiday, a 100 percent investment deduction on new investments, and other alluring financial, physical, and procedural advantages are available to EPZs.

Additionally, the businesses are given a permanent exemption from paying stamp duty on legal documents, VAT, and import duties on inputs.

Kenya had 153 EPZ enterprises at the end of June 2022, up from 144 the year before but less than the 153 expected.