African Logistics Properties (ALP), a specialist investment manager in the African logistics and industrial warehouse sector, will be getting an investment of $35m from IFC, a member of the World Bank Group, and CDC Group, the UK’s development finance institution. The IFC will be investing $10 million and CDC $25 million.
The investment is expected to ‘fill an important gap’ in logistics infrastructure within the Sub-Saharan African region and will be used for ALP’s developments in Nairobi, Kenya, the trading hub of East Africa, where the lack of quality, international-standard warehousing space has long been a constraint on business growth and economic development. Quality warehousing improves operational efficiencies by reducing waste from poor storage, increasing the speed of product delivery and improving product security.
According to the investors, the cost of moving goods in Africa is estimated to be on average two or three times higher than in developed countries and transport costs can count for as much as 50-75% of the retail price of goods. By investing in ALP, IFC and CDC indicate that they are supporting Africa’s growing trade, both within the continent and overseas.
Earlier this year, ALP completed their second Nairobi land acquisition of 22.3 acres in Tatu in Northern Nairobi where they planned on delivering Nairobi’s first international standard Grade-A logistics and distribution park for the occupier rental market.
ALP is also backed by Maris, a Nairobi based private investment business focused on sub-Saharan Africa which will invest US$8million. IFC and CDC are also joined in the project by Mbuyu Capital Partners, an Africa-focused UK-based asset manager with an investment of up to $5 million, among others.
Speaking on the development, Ilaria Benucci, CDC’s Investment Director, said:
“CDC is backing ALP because we know that logistics is a critical, yet often overlooked, part of economic development. Investment in agriculture is futile if there is no supply chain in place to get produce to market. Essential medication won’t work if it cannot be transported and stored in the right conditions. Our investment will support a company that’s making trade easier in Kenya and we hope that it can be the start of an expansion into other African cities.”