The European Investment Bank (EIB) is lending EUR 12.5 million to Safal Steel to support the establishment of a Greenfield metal coating production facility in Cato Ridge, Kwa Zulu Natal, South Africa. The Safal Group is the leading manufacturer and distributor of steel used for residential roofing in Africa in Africa and a successful exporter to other continents. The project will impact positively on the economic and social conditions of South Africa and the other African countries in which the Group is active.
The loan to the private company is the first to be granted under the EIB’s new EUR 900 million lending mandate for South Africa which promotes investment in priority public sector infrastructure, private sector growth for economic development and the improvement of living conditions in the country.
Torsten Gersfelt, EIB Vice President responsible for lending activities in the African, Caribbean and Pacific countries, said, “The EIB’s mandate is to support South Africa’s developmental strategy which places significant emphasis on the role of private enterprise in economic growth. This loan to the Safal Group is an example of how private sector projects can lead to real public gains. The benefits of the new or expanded steel plants will resonate across entire communities in South Africa and beyond.”
Meeting market demand and social needs
The EIB promoted project will help to build commercial capacity in the South African steel industry. The metal coating sheets produced by the Safal Group are used extensively in the residential roofing market. A growing population, economic development and increased purchasing power have led to a consistent growth in demand for affordable roofing materials in the region. Safal’s expansion will help the private sector company to respond to this rising demand.
Improving living conditions is another key aspect of this EIB-financed project. Increased production will boost competition in the steel industry and expand the availability of cheaper and more reliable roofing material for housing.
Other social benefits of the project include the creation of up to 300 jobs in South Africa where the population faces high unemployment levels. Local employment will be complemented by the Group’s social engagement programme which offers job skills training and health services to employees and the surrounding communities as a whole.
The European Investment Bank (EIB) supports the European Union’s cooperation and development policies outside the Union. The EIB has been an active development partner in many African, Caribbean and Pacific (ACP) countries since 1963. The Bank’s operations in the ACPs contribute to sustainable social and economic development and poverty alleviation. The Bank provides loans in the ACP regions from its own resources raised on the international capital markets. In addition, the Bank manages the Investment Facility (IF), a revolving fund financed by the EU Member States.
South Africa is one of the ACP countries but receives EIB funding under a separate mandate. From 2007 to 2013, the EIB will lend up to EUR 900 million to South Africa. The EIB cooperates with the South African authorities, public agencies, private enterprises and the financial sector to focus investment on infrastructure projects of public interest and support for the private sector.
EIB loans to the ACP region in 2007 amounted to EUR 869 million, of which EUR 113 million to South Africa.