Spencon dreams big for construction sector

What is Spencon? Spencon is a regional construction company that has been in operation for the last 28 years. We have over the years spread in the region with the latest entrance into the Southern Sudan Market.
How was the Spencon idea conceived?

Spencon was conceived by two men of Asian origin who had previously worked with the Kenyan ministry of public works. The two then opted three other junior partners into the business that was initially run like a family business affair. The three were also Indians.

In the year 2004, the firm was in nee of increasing its capacity in the business. The idea of strategic investors cropped up. This is the time multinationals like EMP/FMO of Holland and DG of Germany came in and pumped equity into the company.
So who owns the company currently?

The Company is currently owned by the five partners alongside these multi-nationals. The partners however still have a controlling stake in the firm. They still have executive powers up to the end of 2007.
With this growth, the firm concentrated on changing the management to be run more like a corporate company that a family outfit and therefore professionals were assigned official roles.
Where are the headquarters of Spencon?

The Company has its headquarters in Nairobi. We also have the Kenyan regional office on Westlands Nairobi and subsidiary offices in all the countries of operation except Southern Sudan which is coordinated from the Kenya office. The company is also affiliated to the Spencon Holdings International which is based in Mauritius.
What is the scope of your operations?

Water and sanitation controls most of our activities with a 51 per cent allocation, roads account for 20 per cent, buildings 20 per cent while 15 per cent of our operations have to do with electricals.
Would you cite any notable project undertaken by Spencon in the region?
Most of the water and sewerage works you see in east Africa today are courtesy of Spencon.
We handle water collection, treatment, distribution and supply in our areas of operation.
Any notable ongoing projects in the region?

Though there are several small projects ongoing, we have tendered for close to 10 huge projects within the region. Our main concentration of late has been Southern Sudan which has a lot of activity currently.
We already have three running water treatment and supply project in Juba in conjunction with the government and development partners. We are also handling the northern by pass in Uganda.
Any other?

We have just completed a $30million Daressalam Water Services Agency (DAWASA) project in Tanzania that aimed at increasing water distribution in the area. The funding for this huge project was undertaken by the World Bank, Germany and multi lateral companies.

What make you win the trust and confidence of serious donors like the World bank and multinationals?
The construction industry has more to do with name building. Spencon is a company with very high credibility. These clients judge as by the quality of our finished projects and we have been having a good working relationship for quite a long time now.

We currently have no default record and insist of good workmanship. These are traits lacking in most of our competitors and therefore it has earned as the credibility we have today.
How are you rated globally?
I must point out that our performance in global rating has been one of the most marketing areas. We recently attained a BBB score in the Global Company Rating Organization (GCRO).

With such assignments and projects, you must be having a heavy workforce.
Of course we have an over 5000 workers out of which, 1500 are permanent. We also have a lot of seasonal employees.
What would you say about the regional construction industry?
The industry is now full of activity. I attribute the construction boom to steadily growing economies in the region. There is a lot going on in infrastructure construction and buildings. Governments are investing heavily in infrastructure after entrenching good governance and a check on corruption.

What are some of your key challenges?
Our main challenge currently is the influx of Chinese construction companies into the region. These companies have literally grabbed the sector at the expense of local firms.

It is our hope as an industry that the relevant government recognises the need to establish strong local capacity in the sector. Unfair competition is so prevalent with the coming of the Chinese companies.

Another challenge is the case of cowboy contractors. They have to a large extend brought a bad name to the industry leading to a situation where convincing potential clients of your worth has become a real challenge.
What are you doing to address these challenges?
We are pushing through the Kenya Association of Building and Civil Engineering Contractors (KABCEC) to lobby the government to recognize the importance of building a strong local capacity. We are also doing this in conjunction with players in other countries.

It is also our appeal to the relevant governments in the region to review their tendering laws which have for a long time been very weak posing loopholes to cowboy contractors. We are also lobbying for the involvement of locals in projects near them.
What are your stakes as a sector towards a successful EAC?
A strong EAC will bring about a large market and we are ready for the challenge.
Most economies in the region are poised to register double digit growth soon and this directly translates into growth in infrastructure.

EAC will also come with the harmonisation of construction standards which will see various countries working on competing projects and this will be a key opportunity for us.
This will ensure high standards and new technology. The EAC will susely be pulling one another in matters of development.

Are you positioning yourselves to cope with fast changing technology in the sector?
We are moving with the fast changing modalities in doing business. Most projects are currently being funded by foreigners who require strong capacity both in human resource and technology.
We have invested in up to date technology. We are prepared for private public partnerships and business out sourcing opportunities.

Tell us something about your community social responsibility.
There is still low participation in CSR, but we are preparing a long term CSR plan. All in all we are still ahead of our competitors in this cause. We have included it in our core value systems with keen emphasis on the environment. This is because our work involves a lot of destruction of the environment. We want to come up with local budgets sensible to the needs of various communities.

Where do see Spencon in the next ten year?
We are currently working on a five year strategic plan where we foresee a 20 per cent growth of the company.
We had a S36 million turnover in 2005. It rose to Sh47 million in 2006 and Sh70 million in this year. We project some Sh100milion turnover next year. We have what it takes to sustain the growth in the next ten years. We are market leaders in the region and want to maintain this position.

We will build on the strong heritage to maintain high investor confidence through the strategic plan.

Source: East African Business Week Ltd.
Monday, 15 October 2007