Driving local manufacturing: How AltBank empowered Nord Automobile to build future of affordable vehicles
Nord Automobile Limited, a rising star in Nigeria’s automobile manufacturing sector, has quickly become a symbol of local innovation. Founded in 2017, the company has designed, developed, and assembledt a diverse range of vehicles, from commercial buses to passenger cars. However, as with many ambitious businesses, the road to success has not been without its challenges.
For Nord, the major hurdle was financial constraints. As demand for locally assembled vehicles surged, Nord found itself struggling to meet the growing needs of the market. With high tariffs on imported vehicles and the costs associated with local manufacturing, the company faced significant working capital shortages. To expand their operations and compete with established players in the automotive industry, Nord needed a strategic financial partner that understood their unique needs and could provide the tailored support required for sustainable growth.
The answer came in the form of The Alternative Bank (AltBank), a progressive financial institution known for offering non-interest banking solutions that align with the values of its partners. AltBank didn’t simply provide conventional loans or grants; it understood the intricacies of the Nigerian market and designed a unique, flexible financial solution that would allow Nord to scale its operations. This support came at a critical time when Nord was ready to move from a startup to an established player in the Nigerian automobile industry.
AltBank’s support took the form of a Mezzanine Facility, which combined both debt and equity finance to provide Nord with the working capital necessary to expand its production. The mezzanine structure gave Nord the flexibility to access affordable funding, alleviating financial pressure and enabling the company to focus on production rather than worrying about cash flow. This facility was critical in helping Nord meet its immediate working capital requirements, allowing them to keep pace with rising demand while investing in additional vehicle models and expanding their manufacturing capabilities.
In addition to the Mezzanine Facility, AltBank also facilitated a Musharakah Facility (a joint venture partnership) that enabled Nord to fulfill a significant order for 50 Compressed Natural Gas (CNG) buses, requested by a federal government parastatal. This contract not only reinforced Nord’s position in the local manufacturing space but also helped the company diversify its product offerings by entering the commercial vehicle market.
What sets AltBank apart from conventional financial institutions is its commitment to offering more than just capital. In addition to funding, the bank provided strategic advisory services that helped Nord strengthen its corporate governance and broaden its capital base. This support was pivotal in building the company’s internal structures and ensuring long-term sustainability. By taking an equity stake in the company, AltBank not only supported Nord financially but also became a key partner in its growth journey.
The partnership between AltBank and Nord has led to a range of tangible results. First, the company has significantly increased its production capacity. This expansion has allowed the company to offer more affordable vehicles to Nigerian consumers, helping to reduce the country’s dependence on imported cars. Nord’s local assembly operations also benefit from the country’s reduced tariffs for CKD (Completely Knocked Down) and SKD (Semi-Knocked Down) vehicles, which means lower vehicle prices for Nigerian buyers.
The impact of AltBank’s support is not just financial. By scaling its operations and improving its vehicle offerings, Nord has created new job opportunities, boosting the local economy. The company now employs a significant number of people across various roles, from assembly line workers to engineers, administrative staff, and managers. This job creation is vital in a country like Nigeria, where unemployment remains a significant challenge.
In the broader context, Nord’s success also contributes to Nigeria’s economic diversification goals. As the country seeks to reduce its dependence on oil exports, the manufacturing sector, including the automobile industry, is becoming increasingly important. By focusing on local production and affordability, Nord is helping to create a more sustainable, self-reliant economy.
Looking ahead, Nord is excited about the future. With AltBank’s continued support, the company is planning to expand its product line and explore new markets within Nigeria and beyond. Through its innovative approach to financing, AltBank has empowered Nord to become a leader in Nigeria’s automobile industry. The partnership has not only contributed to the company’s growth but has also played a pivotal role in reshaping the country’s manufacturing landscape.
