Afreximbank has provided an $81.9 million loan to Veenocks Limited to expand its porcelain tile manufacturing plant in Sagamu, Ogun State, in a project expected to increase annual production capacity threefold.

The African Export-Import Bank disclosed the financing in a statement on its website on Monday, November 2.

The expansion is estimated to cost $145 million and is expected to raise the factory’s annual output from 3.3 million to 9.9 million square metres.

It is also projected to create 300 additional direct jobs.

Afreximbank provides $81.9 million loan for tile factory

The financing follows an earlier agreement between the bank and Veenocks in August 2024, when Afreximbank provided a $2 million Project Preparation Facility (PPF) to fund studies required to assess the project’s viability.

The studies covered technical, commercial, financial, legal, environmental and social considerations. The bank said the findings helped establish the project’s bankability and informed its decision to provide the senior term loan.

• “African Export-Import Bank (Afreximbank) has supported the development and expansion of Veenocks Limited’s porcelain tile manufacturing plant in Sagamu, Ogun State, Nigeria, through its Project Preparation Facility (PPF) and a US$81.9 million senior term loan. The project has a total estimated cost of US$145 million,” the statement read in part.

Afreximbank’s Executive Vice President for Intra-African Trade and Export Development, Mrs. Kanayo Awani, said the preparation work helped Veenocks develop its plans beyond the Nigerian market.

• “The studies financed through Afreximbank’s Project Preparation Facility have helped strengthen the project’s bankability and broaden the company’s regional growth ambitions. Our senior debt financing supports the plant expansion needed to convert those ambitions into increased productive capacity, and stronger foundations for intra-African trade,” she said.

The bank said the $2 million preparation facility had been fully repaid from the senior debt financing, making the funds available for other projects.

The new loan is intended to finance the factory expansion and provide additional capacity to serve domestic demand and markets elsewhere in Africa.

Veenocks targets African markets with factory expansion

Veenocks plans to use the expanded production capacity to pursue sales in eight African countries: Togo, Benin, Burkina Faso, Niger, Cameroon, Ghana, Mauritania and Senegal. The proposed markets form part of the company’s medium-term growth plans beyond Nigeria, according to Afreximbank.

• Veenocks currently operates a porcelain tile manufacturing plant in Sagamu, Ogun State, producing wall and floor tiles for residential and commercial projects. The company is a member of R28 Holdings Limited, a diversified private investment holding company, and manufactures its products under the Veramis Porcelain Tiles brand.
• The factory’s products are tested in accordance with the ISO 10545 series of international standards, with reported water absorption of 0.3% or less, below the 0.5% threshold specified for porcelain tiles under ISO 13006.
• The existing facility employs more than 200 people directly, while the expansion is expected to create another 300 direct jobs. Afreximbank said the project would also generate indirect employment opportunities across raw material supply, logistics and distribution.

Adebisi Abidemi Adebutu, Group President of R28 Holdings, said the expansion would increase the company’s use of locally sourced raw materials and reduce Nigeria’s dependence on imported tiles.

Local tile makers gain ground in Nigeria

The expansion comes as Nigerian manufacturers seek to increase domestic production of building materials. In April 2023, Nairametrics reported that local tile manufacturers had gained ground following the Central Bank of Nigeria’s restriction on access to foreign exchange for importing 41 items, including vitrified and ceramic tiles.

• The report estimated Nigeria’s local tile market at more than N2 trillion, with locally manufactured products accounting for about 80% of the market at the time. Manufacturers, however, continued to face high energy costs, foreign exchange constraints for raw materials and equipment, and poor road infrastructure.
• In September 2024, Nairametrics reported that rising inflation and import costs were encouraging more buyers to consider locally produced tiles. A survey of tile prices showed that a carton of 30×60 cm tiles had increased from N4,000 in August 2023 to between N6,800 and N7,000 in August 2024.

The Federal Government has also announced plans to establish building materials manufacturing hubs across the country’s six geopolitical zones. The initiative, announced in August 2024, identified Sagamu as one of the proposed locations, with the hubs expected to produce tiles, roofing sheets, ceilings and doors.