IFC loans fertiliser maker Sh1bn to build new Nakuru factory

Kenya’s sole fertiliser manufacturer has secured a Sh1 billion loan from the World Bank’s private lending arm International Finance Corporation (IFC).

MEA Limited, a 36-year-old family-run company, says it will begin construction of the Nakuru plant in October.

It estimated that the new factory would cost Sh3 billion, with the balance being sourced from internal cash reserves.

“We had projected to begin construction six months ago but extra excavation work for the factory’s foundation caused a delay,” said executive director Titus Gitau in an interview.

The new plant will be for blending Nitrogen, Phosphorus and Potassium (NPK) fertiliser, with an annual production capacity of 100,000 tonnes.

“We anticipate that the first batch of product will roll out of the factory around November next year. Equipment from the India-based contractor has started arriving in the country,” said Mr Gitau.

MEA has a current production capacity of 300,000 tonnes. It sells its products mainly locally and also exports to Rwanda, Tanzania Uganda, Burundi and Malawi among other markets.

The fertiliser firm was founded by Mr Lee Ngugi, a former banker who used to work with Grindlays Bank, renamed the Kenya Commercial Bank after independence.

Mr Ngugi’s son, Mr Gitau, and his daughter Jane Mawenu, are part of MEA Limited’s team of directors.

The upcoming fertiliser factory has been designed by Mumbai-based Fertiplant Engineering, which has developed more than 100 fertiliser plants in South East Asia.

Actual construction will be done by N.K. Brothers Ltd, a Kenyan building and general contractor.

“Fertiplant India will provide operations and maintenance services during the first five years of operations, after which Fertiplant East Africa will take over the operations,” IFC states in its disclosure documents.

“Fertiplant will be run independently of MEA and will have its own management and operating staff. Fertiplant has been established as part of MEA’s expansion strategy into industrial production.”

MEA Limited has since inception been blending NPK using  value-added raw materials (urea, potash and phosphate) that are shipped in from Europe, Saudi Arabia, Russia, Canada and Morocco.

The new facility will, however, allow the fertiliser company to manufacture the agricultural input using constituent ingredients in their original form.

The two factories will be located adjacent to each other on the 23-hectare piece of land that MEA Limited owns in Nakuru.

“It currently costs us $510 to import a tonne of refined phosphate. The new factory will allow us to import the unrefined rock phosphate at just $120 per tonne,” said Mr Gitau.