NAIROBI, Kenya, Feb 17 – East Africa (EA) cables is planning to expand to 13 countries across the continent by 2012, up from the current five African states.
EA Cables Chairman Zeph Mbugua said on Tuesday that plans were underway to extend operations to Ethiopia, Southern Sudan and the Democratic Republic of Congo. Other countries include Mozambique, Malawi and Zimbabwe.”
“To be able to get into these markets, we had to dedicate some resources. We are looking to drive businesses further in those markets in this financial year,” he pledged.
EA Cables announced their annual results last week indicating an increased export growth from 16 percent in 2006 to 31 percent in 2007.
Mr Mbugua announced at an investors’ briefing on Tuesday morning that they also planned to commission a new copper cable production line.
“We have spent $6 million in upgrading our copper factory in Kenya, and we have spent $4.5 million in Tanzania. We will be spending another $3 million by the end of this year to complete the upgrade of Kenya and another $2.5 million to complete Tanzania,” he explained.
EA Cables improved its production capacity from 60 tonnes a month in 2004 to 200 tonnes by 2008 with the combined effort of Tanzania.
After the upgrades are completed, Mr Mbugua said he was certain that they could produce 400 tonnes a month to reach a total of more than 4,000 tonnes of copper every year.
The capacity of aluminium is 1,000 tonnes in Kenya, and 200 tonnes in Tanzania of raw crushed product from the input side.
In order to drive growth and profitability, the Chief Executive Officer George Mwangi explained that EA cables would be seeking to strengthen its local market positioning meanwhile, enhancing its distribution and sales capabilities in the new markets.
“We want to avoid duplication of equipment. We want to improve on efficiencies….for instance; whatever is needed in Tanzania that can be manufactured in Kenya much more competitively, then we do so. This is what we call the one company culture,” he said.
Currently operating in the five East African countries of Kenya, Uganda, Tanzania, Rwanda and Burundi, EA cables has grown its export portfolio required to achieve the regional footprint vision 2012.
Mr Mwangi accounted; “57 percent of the total reported turnover, which was Sh3.9 billion was outside the Kenyan market. So only 43 percent of the turnover reported last week was made in Kenya, which is quite positive and really demonstrates that our regional expansion is finally bearing fruit.”
On the downside, Mr Mwangi cited fluctuations in the aluminium business due to a drop in demand from the Kenya Power and Lighting Corporation (KPLC) which has accounted for about 10 percent of the group turnover.
The CEO further noted that fluctuations in metal prices coupled with competition from imported substandard products and the global financial crisis, is likely to negatively impact on their key markets.
“Unfortunately you know some of these products come from the Chinese markets and what we have to do right now is actually increase our campaigns as far as quality is concerned. We want to educate all our consumers. It is not only a Kenyan problem, it is a regional problem, therefore we cannot just sit and watch,” he stated firmly.
According to Mr Mbugua, competition from India, China, and the COMESA region especially in Egypt has led EA cables to take a different strategy of company downsizing, to respond to the demands of the market.
The chairman justified the magnitude of the company’s downsizing. “We have reduced our workforce – in Kenya especially- by half the number it was last year. We have reduced in Tanzania by 25 percent and we are in the process of reducing staff and getting more efficient. We must respond to the demands of the market and we are improving on the equipment side.”
Other than distribution of data and telecom cables and trading with utility companies in five countries, such as KPLC and Danesco in Tanzania, EA Cables plans to capitalise on medium and high voltage cables including accessories.