The logistics firm taking high-speed Internet, lobster dinners to North Eastern

NAIROBI: It is mid-morning as we drive down one of the bumpy, dusty roads that leads down into the Rift Valley’s Menengai.

After 20 minutes of being thrown around, we stop outside a steel gate and are asked to step outside the car for a security check. We are immediately enveloped by hot air.

But inside the gate is what can only be described as an oasis. More than a dozen white containerised units stand in a neat square about 100 metres wide, with a manicured lawn in the middle.

These are the sleeping quarters for workers at the Great Rift Drilling Company, one of the firms sinking geothermal wells in Menengai.

The containerised housing units are insulated against extreme weather conditions, are en-suite, and are kitted with hot showers, high-speed Internet and a small study area.

This is just one of the camps that logistics firm Atlas Development and Support Services has set up across the country.

The company recently concluded its dual-listing on the Growth Enterprise Market Segment (GEMS) at the Nairobi Securities Exchange (NSE) and London Stock Exchange (LSE).

It is now in plans to expand its business into the region and across sectors, including oil and gas, mining, construction, NGO and government.

Growth strategy

According to Nick Arnold, the company’s Regional Director EA, the listing was just part of the company’s growth strategy, which began with the acquisition of Kenyan logistics firm, Ardan Risk and Support Services.

“Ardan was in the space of supporting exploration activities, and we are continuing with this model even as we add on more service offerings as per the demands of the market,” he said.

“To be sustainable, profitable and grow, you can’t just focus on exploration activities, because their nature is that funding comes and goes, commodity prices rise and fall.”

The drop in global oil prices by as much as 50 per cent in the six months since July last year has seen a reduction in exploration activities, which has had a domino effect on logistics companies that provide support for the oil and gas sector. This has forced most firms to re-evaluate their strategies, at least for the short term.

But the East African region is a sure bet as far as the discovery of oil and gas deposits goes, so the logistics industry’s growth in this sector remains strong, with local and international service providers racing to capitalise on emerging opportunities.

 

Going public

Data from international think tank Analitiqua, which tracks the logistics industry in emerging markets, shows that Kenya, Morocco, Nigeria and Uganda are set to record the greatest growth in Africa’s logistics industry.

The report states that spending on logistics services in the continent will hit Sh15 trillion by next year, up from Sh11 trillion recorded in 2012.

It added that even as South Africa leads the continent with the most developed contract logistics market, valued at around Sh274 billion, Kenya, Nigeria and Egypt will post double-digit growth figures into the next year.

This presents huge opportunities for companies like Atlas, which was one of the reasons it decided to go public last year.

“You have to continue tracking opportunities, and when you land a big one, you need to be in a position where you have enough funds to deliver. This also gives you much better bargaining power,” said Mr Arnold.

“Most of the exploration companies want to focus on their core business, which is to find a viable area, set up equipment and drill. So we tell them that we can provide everything else they need to make their stay in that area as comfortable as possible.”

Arnold added that Atlas can set up and wire a camp in North Eastern in a matter of days and have the residents settled in complete with entertainment units, Internet and even lobster dinners on weekends.

Having a company that is listed at the NSE has been another arrow in Atlas’ quiver, and this come in handy when it is bidding for projects in Kenya and the larger East African region.

Massive opportunities

“Infrastructure development throughout Africa is a big deal right now and there are massive opportunities. When doing business with the Government, it helps if you are a Kenyan company, not just by virtue of having an address here, but by the fact that you have shareholders who are Kenyan,” Arnold said.

He added that infusing local DNA into the firm goes beyond the shareholder level to the contract workers.

“I am a fourth-generation African, and have worked in quite a few countries in Africa and I know that it is very important to try and be a local company if you are to do good business in the continent.

“That is why whenever we set up a camp, we always hire locals from the community to provide some of the semi-skilled and unskilled jobs. This helps integrate the camp into the local community and reduces the risk of having hostile relationships between the two parties.”

[email protected]