African Export-Import Bank (Afreximbank) is backing a $145mn expansion of Nigerian porcelain tile manufacturer Veenocks Limited, providing an $81.9mn loan to triple production capacity and support the company’s ambitions to expand across west and central Africa.
The Cairo-based lender said on Monday that the financing would support the expansion of Veenocks’ manufacturing facility in Sagamu, Ogun State, increasing annual production capacity from 3.3mn to 9.9mn square metres.
The investment is expected to create 300 additional direct jobs, adding to the company’s existing workforce of more than 200 employees, while generating further employment opportunities across raw material supply, transportation and distribution.
The project forms part of Afreximbank’s broader strategy to accelerate industrialisation, strengthen African manufacturing capacity and reduce dependence on imported finished products.
Veenocks, a subsidiary of R28 Holdings, plans to use the expanded facility to increase domestic production and develop export markets across Africa.
The company has identified Togo, Benin, Burkina Faso, Niger, Cameroon, Ghana, Mauritania and Senegal as potential markets for its medium-term regional expansion.
The financing follows an earlier $2mn project preparation agreement signed between Afreximbank and Veenocks in August 2024.
The funding, provided through the bank’s Project Preparation Facility (PPF), supported technical, commercial, financial, legal, environmental and social studies designed to assess the project’s viability and improve its prospects of securing long-term financing.
According to Afreximbank, the studies helped Veenocks broaden its original business strategy, which had been primarily focused on supplying Nigeria’s domestic construction market, to include opportunities in neighbouring countries and the wider African region.
The preparation facility has since been fully repaid using proceeds from the senior debt financing, allowing Afreximbank to recycle the funds into other industrial development projects.
Kanayo Awani, Afreximbank’s executive vice-president for intra-African trade and export development, said the investment demonstrated how early-stage project preparation and long-term financing could support the expansion of African manufacturing businesses.
“Veenocks demonstrates how project preparation, commercial expertise and senior debt financing can support African industrial investment,” Awani said.
“The studies financed through Afreximbank’s Project Preparation Facility have helped strengthen the project’s bankability and broaden the company’s regional growth ambitions.”
She added that the bank’s senior debt financing would provide the additional manufacturing capacity needed to translate those ambitions into increased production and stronger intra-African trade.
The project also illustrates Afreximbank’s approach to addressing financing constraints faced by African manufacturers, particularly those seeking to expand production capacity and enter regional export markets.
Industrial projects frequently require substantial upfront investment in machinery, infrastructure and technical studies before they can attract commercial financing.
By supporting project preparation and subsequently providing senior debt, Afreximbank aims to help bridge the financing gap between early-stage industrial development and full commercial operations.
Awani said the repayment of the preparation financing would enable the bank to support additional indigenous African businesses.
“Full repayment of the preparation financing ensures capital is available to support more indigenous African investors and projects,” she said.
“This is the PPF’s revolving model in practice: the funds that have been repaid are used to support initiatives that add value to local resources and expand manufacturing.”
For Veenocks, the expansion is intended to strengthen its position in Nigeria’s building materials industry while reducing the country’s reliance on imported porcelain tiles.
Nigeria’s construction and property development sectors provide a domestic market for locally manufactured building materials, although producers face challenges including infrastructure constraints, energy costs and competition from imports.
Adebisi Abidemi Adebutu, group president of R28 Holdings, said the investment would support the company’s ambition to establish a competitive manufacturing business capable of meeting international quality standards.
“This investment represents an important step towards our ambition of building a globally competitive manufacturing business in Nigeria, producing world-class tiles to European quality standards and reducing Nigeria’s dependence on imported tiles,” Adebutu said.
He said the project preparation facility had played an important role in shaping the company’s regional growth strategy and identifying opportunities beyond Nigeria.
“With Afreximbank’s financing, we can now deliver the expansion phase of this project,” he added.
“The facility will allow us to add value to Nigeria’s raw materials, create quality jobs and increase the supply of our porcelain tiles, manufactured here in Nigeria, to customers at home and across the region.”
The expansion will increase Veenocks’ annual manufacturing capacity by 6.6mn square metres, representing a threefold increase from its existing production level.
The additional capacity is expected to strengthen the company’s ability to serve domestic customers while developing distribution networks in other African markets.
Its regional ambitions also align with efforts to expand intra-African trade in manufactured goods, including through the African Continental Free Trade Area, which seeks to reduce barriers to trade between African economies.
However, Afreximbank did not disclose the project’s expected completion date, the source of the remaining financing beyond its $81.9mn loan or specific export volume targets.
The bank’s investment highlights the growing role of development finance institutions in supporting African industrial projects that combine domestic manufacturing, employment creation and regional market expansion.
For Veenocks, the immediate priority will be completing the capacity expansion and translating its regional growth plans into commercial sales, as it seeks to establish itself as a major African producer of porcelain tiles.
SUPPORT AFRICAN BUSINESS JOURNALISM
Help XOL Africa expand independent business reporting across Africa.
SUPPORT XOL AFRICA →
