Royal Apparel EPZ Limited (RAL), a garments manufacturer operating within the Export-Processing Zone (EPZ), is set for a $15 million (Sh1.94 billion) loan from the International Finance Corporation (IFC) to construct a new factory.
IFC, the private sector-focused lending arm of the World Bank, has disclosed that the corporate loan- which is subject to approval by its board- would add to the $5 million (Sh645 million) equity that RAL will provide for expansion of its operations.
The IFC loan will finance the acquisition of equipment and establishment of new sewing lines to scale up RAL’s production capacity and also construct a three-kilowatt hour (kWh) rooftop solar power plant to help lower the firm’s energy costs.
In addition, the IFC loan will finance the construction of a textile waste-water effluent treatment plant with a capacity of 230 cubic metres per day. IFC said the expanded facility would create 3,700 new formal manufacturing jobs and a larger number of indirect jobs.
“The project is expected to employ people primarily from underserved, low-income populations with limited education and skills, and no formal employment history. Beyond providing jobs, the IFC investment will help enhance employees’ technical and soft skills through various training programmes and policies,” said the IFC.
RAL is fully owned by Omprakash Shukla, a Kenyan businessman who has been in the textiles and apparel sector for 32 years.
The firm was founded in 2021 and produces woven pants, knit tops, high-end hospital scrubs, and undergarments to supply global apparel brands such as Dickies, Michael Kors, The Children’s Place and Walmart.
RAL has two sister firms; Royal Garment Industries EPZ Limited and Royal Clothing EPZ Limited, which together form the RAL Group. The group runs four facilities within EPZ.
IFC said the new factory project is expected to boost the group's productivity and improve its overall competitiveness in the apparel business.
“This improvement in a domestic apparel-producing company will be achieved through a multi-pronged approach including optimisation of sewing line staffing, automation of specific tasks, and integration of real-time data analytics,” said IFC.
The loan to RAL becomes IFC’s latest support to a clothing manufacturing firm. IFC last year announced it was going to give a $20 million (Sh2.58 billion) loan to Hela Investment Holding which manufactures clothes for export within the EPZ.
EPZ firms are under the Export Processing Zones Authority (EPZA) and enjoy a range of attractive fiscal and procedural incentives including a 10-year corporate and withholding tax holiday as well as a 100 percent investment deduction on new investments.
The firms are also granted perpetual exemption from payment of stamp duty on legal instruments as well as payment of value-added tax and customs import duty on inputs.
The authority also offers incentives to small and medium enterprises exporters with the majority of local Kenyan shareholding desiring to be set up under the EPZA programme.
SMEs from sectors such as horticulture, food processing, textile and apparel, leather, and commercial crafts are offered customized infrastructure with smaller warehouses and are excused from paying rent for four months.
