Nigerian canning firm to open plant in June, IFC mulls Sh8bn injection

What you need to know:

The Sultan Hamud-based factory has the capacity to make some 2.4 billion cans annually.
GZ Industries, which started building the Sh1.3 billion factory last year, says it is in the final stages.
The firms says it is in talks with the East African Breweries Limited to be its supplier.

Nigerian firm GZ Industries is set to launch its canning factory in Sultan Hamud by June even as the International Finance Corporation (IFC) on Thursday announced it is considering making an $80 million (Sh8.2 billion) equity investment in the firm.

GZ, which started building the Sh1.3 billion factory last year, says it is in the final stages. The plant will be able to make 2.4 billion cans annually.

IFC, the World Bank’s private sector lending arm said the financing would enable the firm to undertake four separate projects, including the Kenyan plant.

“Significant construction works have been undertaken and we expect to begin operations towards the end of quarter one or early quarter two next year,” Gary Shatwell, GZ’s chief financial officer, told the Business Daily.

GZ has previously stated that the total investment in the factory could hit $100 million (Sh10.2 billion), a capital outlay which is on track to be partly funded by the IFC.

IFC’s funding is also expected to enable GZ to acquire the Nigerian and United Arab Emirates glass and plastic manufacturing operations of its Greece-based rival Frigoglass SAIC. These four undertakings are expected to cost $360 million (Sh36.7 billion).

“The (financing) project will replace imported beverage cans with locally produced products in Kenya, which currently imports all can requirements, saving foreign exchange,” IFC said in disclosure documents.

Beverage makers in Kenya are opting for cans over glass, especially for the export market, as a cost-cutting measure. East African Breweries Limited (EABL) has, for instance, said it will package beer for the export market in cans to save on losses incurred in transportation of empty bottles and breakages.

READ: EABL eyes savings in shift to canned beer for exports

By increasingly packaging in cans, EABL is targeting drinkers who prefer to buy their drinks for home consumption.

GZ say it is in talks with EABL to be its supplier. “Diageo, SABMiller and Heineken are already our customers in Nigeria. We have initiated talks with them about extending this relationship in Kenya,” said Mr Shatwell.

Coastal Bottlers, one of Coca-Cola’s franchises, opened a Sh450 million canning plant in 2012, illustrating the gravitation towards cans by leading local beverage manufactures.