AfDB mobilizes US $60-million loan to boost cement production in the DRC
Nyumba Ya Akiba Cement project in the Democratic Republic of Congo marked a significant milestone on November 27 with the loan signing of US $135 million, making it a strong step towards country’s industrialization through improvement of the cement market.
The project has attracted financial support from African Development Bank (AfDB), Eksport Kredit Fonden (EKF, as guarantor to AfDB), Emerging Africa Infrastructure Fund (EAIF), Habib Bank Limited (HBL, as lead arranger) and International Finance Corporation (IFC).
The signing of the financing agreements signifies the completion of the project’s financing subject to completing the remaining conditions precedent while the construction of the project will be starting with a view to add 1.18 million tons capacity to the national cement market.
Total project costs of US $270 million will be funded by the US $135-million loans. AfDB will contribute two tranches of up to US $30 million each, with one tranche being fully guaranteed by the Danish Export Credit Agency (EKF).
Nyumba Cement will address the rising cement demand fueled by infrastructure development and reconstruction needs, thereby contributing to overcome the country’s fragile situation. The project is expected to boost the efficiency of cement markets in the country and its nearby regions. Ultimately, the project will foster an inclusive and sustainable growth driven by the private sector.
Located in the Songololo, Bas Congo province of the DRC, the project will deploy a total capacity of 1.18 million tons per annum (MTPA). The limestone and clay quarries are located on the plant site, 250 kilometres from Kinshasa. The Matadi port, located 100 km from the plant, will allow easy access for importing raw materials and for exporting in the regional markets.
The project is sponsored by a 50/50 joint venture between Pakistan’s largest cement producer and exporter, Lucky Cement Limited, and the Groupe Rawji, one of the DRC’s largest conglomerates. Groupe Rawji has a diversified portfolio of activities in the DRC, ranging from banking to manufacturing, distribution, services and real estate. Lucky Cement has successfully set up seven production lines at two separate locations in Pakistan and is currently operating 7.75 MTPA production capacities. Lucky Cement has also put up a cement grinding unit of 871,000 tons per annum capacity in Basra, Iraq, which started commercial operations from February 2014. These sponsors have demonstrated efficient financial, industrial and marketing skills in the cement market, which will contribute to the sustainability of the Nyumba project.
Nyumba Cement will stimulate a local cement industry currently consisting only of few small functioning cement factories. It will also ease the country’s dependency on expensive imports that stand at over 50% of total cement consumption. The Nyumba cement output will target a vast area of the country and stimulate infrastructure development while supporting the local private sector, particularly small and medium enterprises, by promoting the reinforcement of the local supply value chain.
As a cost competitive import substitution project, Nyumba Cement will enhance the efficiency of the domestic markets, boost infrastructure, create jobs and transfer knowledge to the local workforce and is expected to have a significant demonstration effect to attract direct investments to the DRC.