IFC and Local Banks Invest $50.2 M in Pakistan’s Tyre Manufacturing Facility

The project, led by Armstrong ZE Pvt. Ltd., aims to transform the tyre manufacturing sector, reduce reliance on imports, and contribute to Pakistan’s economic growth.

The International Finance Corporation (IFC), in partnership with a consortium of local banks including HBL, Meezan Bank, Bank Alfalah, and Habib Metropolitan Bank, is spearheading a $50.2 million-equivalent financing initiative to establish Pakistan’s first greenfield tyre manufacturing facility in Gharo town, Sindh. The project, led by Armstrong ZE Pvt. Ltd., aims to transform the tyre manufacturing sector, reduce reliance on imports, and contribute to Pakistan’s economic growth.

The financing package includes:

$25 million loan from IFC.

Up to $25.2 million-equivalent investment in Pakistani rupees from local banks.

This investment underscores a commitment to sustainable development and will create over 1,800 direct and indirect jobs, bolstering local employment opportunities while strengthening Pakistan’s tyre manufacturing capabilities.

Addressing Industry Gaps

The number of registered vehicles in Pakistan has surged to 30 million in 2023, with 23 million two-wheelers leading the growth. Despite this demand, local tyre production has lagged due to:

Limited technical expertise.

Dependence on imports due to a substantial informal market.

By producing high-quality, locally manufactured tyres, the project aims to:

Enhance consumer access to affordable, reliable products.

Reduce imports, easing pressure on Pakistan’s foreign currency reserves.

Strengthen supply chains by fostering local innovation and skills development.

Industry Leaders’ Vision

Azim Yusufzai, Chairman of Armstrong ZE, expressed confidence in the project: “This collaboration with IFC and leading local banks marks a monumental step forward in advancing our mission to deliver world-class, sustainable, and innovative tyre solutions to the Pakistani market. Together, we aim to foster innovation, create employment opportunities, and contribute to sustainable development in our communities and beyond.”

The facility will draw on expertise from Armstrong’s parent company, Zafco Group Holding (based in the UAE), which operates globally in over 85 countries. Additionally, its local partner, Zafar Enterprises, brings decades of distribution experience in Pakistan.

Sustainability and Advisory Support

IFC is integrating its Responsible Investing Support in Emerging Economies (RISE) advisory program into the project, focusing on:

• Climate risk management.
• Resource efficiency improvements.
• Enhanced environmental and social processes.

Khawaja Aftab Ahmed, IFC's Regional Director for the Middle East, Pakistan, and Afghanistan, highlighted the broader impact: “This investment aligns with IFC’s commitment to improve Pakistan’s value-added manufacturing capacity, spurring economic growth, job creation, and reduced reliance on imports. It is an opportunity to enhance consumer access to high-quality products while driving sustainable development.”

Advancing Pakistan’s Economic Landscape

The project marks a pivotal moment for Pakistan’s manufacturing sector, addressing key bottlenecks and setting the stage for:

• Increased productivity through technology and expertise transfer.
• Greater competitiveness in the global tyre market.
• Sustainable industrial growth.

IFC’s Broader Role in Pakistan

Since 1956, IFC has invested nearly $13 billion in Pakistan, supporting diverse industries such as renewable energy, financial inclusion, agribusiness, manufacturing, healthcare, and infrastructure development.

By enabling projects like Armstrong ZE’s tyre manufacturing facility, IFC continues to demonstrate its commitment to fostering sustainable, private sector-led growth in Pakistan.