Norfund, the Norwegian government’s investment fund which has a focus on supporting sustainably driven business operations in developing countries signed a US$14m financing agreement with Hela Apparel Holdings to bolster the development of its manufacturing operations in East Africa.

Hela Kenya, established in 2016, is the largest manufacturing facility within the Hela Group and employs over 4,000 people. The facility is also one of the largest of its kind in Kenya, and currently produces approximately 20% of the country’s total apparel exports. Hela was the first major Sri Lankan apparel manufacturer to establish operations in Kenya and has played a leading role in the rapid growth of the industry across Africa over recent years, with the subsequent establishment of manufacturing locations in Ethiopia and Egypt.

“Our expansion to Africa has been a rewarding venture, and we continue to see many opportunities within the region for further development,” said A.R Rasiah, chairman of Hela Apparel Holdings.

“Given the increasingly unpredictable global environment, establishing long-term financing relationships with strategic partners who share our vision for Africa as a global apparel sourcing hub plays a critical role in ensuring the envisioned plans for growth are realised. Hela’s African operations provide livelihoods to thousands of people, and our continued growth as a manufacturer will help us continue to strengthen and empower many communities across the globe. The intended investment in our Kenyan manufacturing facility, which will be supported by this lending from Norfund, is a key part of the group’s strategy to remain globally competitive.”

The proceeds from Norfund’s investment will also be utilised to strengthen Hela’s strategic supply chain partnerships in East Africa. This will enable Hela to leverage regional sourcing from Kenya and Tanzania to a larger extent, providing significant cost and lead time advantages for manufacturing in the region. A potential supply chain investment is also being considered by Hela for the proceeds. Proposed Capex investments within the Kenyan manufacturing facility on process automation will enhance productivity and place the facility in a more competitive position within the region.

“We see great opportunities in contributing to large-scale job creation in East Africa by investing in the apparel and textile industry, in line with our goal of building sustainable businesses to combat poverty. We have been impressed with what Hela has already delivered through its investments in East Africa and are confident that this partnership will go a long way in helping Hela create more employment opportunities primarily for low-skilled women and those vulnerable in society who struggle to find such opportunities. We look forward to a fruitful partnership in the years to come,” says William Nyaoke, Norfund’s regional director for East Africa.

Last year Hela Apparel Holdings completed the first phase of its global implementation of the SAP S/4HANA enterprise solution aimed at digitalisation for enhanced productivity, efficiency and sustainability.