DBE approved 29.6 million Br loan to Bright Paints.
A local paint maker secured a 29.6 million Br loan from the Development Bank of Ethiopia (DBE), the state policy bank, to double production capacity.
Bright Paints Factory secured the loan in the middle of last month and has already started the construction of the expansion inside its plant located at Gelan, some 25Km Southeast of Addis Abeba.
The construction, which is expected to cost 20 million Br, began last month and is expected to be completed after six months. The company stated that the new plant will double its production capacity. The expansion involves adding an additional production line and the construction of two 1,200Sqm warehouses.
Bright Paints, which currently has a production capacity of 15,000lt of paint a day from the existing 2,000Sqm plant, applied for the loan last year. Out of the 29.6 million Br loan from DBE, the company will use 9.6 million Br as working capital.
Small contractors and Ethiopian Steel Plc are working on building the two warehouses and its roofing, respectively, under the supervision of Ashenafi Shiferaw Consult. The owners are also preparing to import the paint mixing machines from Spain, Denmark and India, which are expected to cost the company close to two million Birr.
The expansion aims to increase the company's production volume and increase the market share of the company, according to Abraham Berhane, technical manager of the plant, which makes 10 to 12 types of paint products.
Bright Paint is one of 24 paint manufacturers in the country and purports to have a 10pc market share.
Upon completion, the company will have a capacity of producing 35,000lt of paint a day and hire 20 new employees on top of the current 80 workers. The expansion will also enable the company to start making car paint and furniture paints on top of its wall and quartz paint.
Established in 2008 with a registered capital of 5.6 million Br, Bright's current capital has reached 25.6 million Br. It produces aluminium paint, anti-rust paint, traffic paint, blackboard paint and alkyd varnish in one, four and 25lt sizes.
For this fiscal year, the company planned to sell 100 million Br worth of products, but has achieved 40 million Br in sales during the last six months.
The management of the company attributed the forex crunch as a reason for the target shortfall.
"We're unable to import the raw materials from China and Dubai," Abraham told Fortune.
Ferezer Tilahun, head of the Department of Economics at Haramaya University, applauds the DBE's move in financing a local company.
"It'll help the country substitute the imported paint," said Ferezer, who added that the government should also grant a duty-free privilege to local companies that focus on import substitution.
Ferezer advised the company to jump into the export market after perfecting the quality and standard of its product.
Abraham confirms that the company plans to export its products to neighbouring countries including Kenya, Eritrea and Djibouti.
"We've got a plan to compete in the East Africa market," Abraham added.