ISLAMABAD: The International Finance Corporation (IFC) and a consortium of Pakistani banks will provide up to $50.2 million-equivalent in financing to support Pakistan’s Armstrong ZE Pvt. Ltd. and its UAE subsidiary Zafco Group Holding in developing a greenfield tire manufacturing facility in the Sindh province, IFC said on Monday. 

The number of registered vehicles in Pakistan has grown steadily over the last decade, reaching approximately 30 million vehicles in 2023, including 23 million two-wheelers. However, local tire manufacturing remains constrained due to a lack of technical expertise and technology and a substantial informal market, making the country heavily dependent on imports.

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector, working in more than 100 countries. It has invested approximately $13 billion in Pakistan since 1956, supporting diverse sectors such as renewable energy, financial inclusion, infrastructure development, agribusiness, manufacturing, housing, health care, and trade, among others.

“Armstrong ZE is deeply honored to have earned the trust and support of IFC and our partner banks, HBL, Meezan Bank, Bank Alfalah and Habib Metropolitan Bank. Their investment in this transformative project is not just a financial endorsement but also a strong vote of confidence in our vision, capabilities, and potential to shape the future of tire manufacturing,” Azim Yusufzai, the chairman of Armstrong ZE, said in a statement released by IFC. 

“Together, we aim to foster innovation, create employment opportunities, and contribute to sustainable development in our communities and beyond. This collaboration marks a monumental step forward in advancing our mission to deliver world-class, sustainable, and innovative tire solutions to the Pakistani market.”

The financing comprises a $25 million loan from IFC alongside an up to $25.2 million equivalent investment in Pakistani rupees from local banks. The project is expected to create over 1,800 direct and indirect jobs and help increase the competitiveness of the tire sector through technology and know-how transfers.

The project will utilize the company’s long-standing experience in the tire industry, through its UAE-based company, Zafco Group Holding, which operates as a global importer and exporter of tires, batteries, and lubricants, with a presence in over 85 countries, as well as Zafar Enterprises, a leading tire distributor in Pakistan.

IFC will also be supporting Armstrong through its Responsible Investing Support in Emerging Economies (RISE) advisory program, which will strengthen Armstrong’s climate risk management, resource efficiency, and environmental and social processes.

“IFC is committed to improving Pakistan’s value-added manufacturing capacity by partnering with strong companies that can scale up production,” said Khawaja Aftab Ahmed, IFC’s Regional Director for the Middle East, Pakistan, and Afghanistan. 

“This investment exemplifies this commitment and will help improve consumer access to tires while spurring the economy through job creation, increased productivity, and reduced reliance on imports.”

IFC said the project will introduce a locally manufactured international brand to Pakistan, which will improve consumer access to quality, affordable tires, while strengthening local supply chains, creating jobs and boosting private sector-led growth.

Armstrong ZE Pvt. Ltd. is a wholly owned company established by the Pakistan-origin Hussain and Yusufzai families who have over fifty years of experience in the tire business with operations in more than eighty-five countries. The families also own, Zafar Enterprises, a leading tire distribution company in Pakistan, and UAE based Zafco Group Holding, a global importer and exporter of tires, batteries, and lubricants, with a presence in over 85 countries.