NAIROBI, Kenya, Dec 4 – Logistics Firm Bwala Africa plans to set up a state-of-the-art logistics distribution center in Kenya.
Bwala Chief Executive Kennedy Nyabwala says the center that will be located on a 5,000-acre piece of land and will be the single unit biggest warehouse in Kenya.
The facility will cost the firm Sh100 million and will be ready by August 2019.
“2018 has been a great year for us at Bwala Africa and for us to continue serving our customers well, we are planning huge investments that include the warehouse. Our last mile connectivity is also moving to Mombasa next month and Kisumu in January,” Nyabwala says.
The firm is planning to raise about $5 million (Sh500 million) for expansion purposes and is in talks with venture capitalists.
According to Nyabwala, the firm sees Kenya growing to be Africa’s economic hub with demand for storage expected to rise in tandem.
“We are also expanding to Uganda next year, we have gotten all the necessary requirements and we will open an office in Uganda in February,” he added.
Currently the firm has 3,000 square feet in the Industrial Area.
Kenya’s demand of warehouses is 23.7million square foot, three times the supply at 6.9 million square foot according to Grit Real Estate Income Group.
The Group in their June report says that average warehouse rentals in the Kenyan market range between Sh375 and Sh484 per square meter a month, figures that are likely to increase in light of the shortage of high-quality space.
A survey by real estate firm, Tilisi Developments Limited earlier this year indicated that warehousing is a major bottleneck to companies in Kenya.
The survey, which polled 52 manufacturing, fast-moving consumer goods, pharmaceutical, logistics, import, export, retail and e-commerce companies indicates that 62 per cent reported that they have experienced some form of warehousing shortage in the recent past.
The companies polled also reported constraints caused by the quality of their warehousing.
Half of the companies polled by Tilisi said they had sought new warehousing facilities, but pharmaceutical and food producers reported a scarcity in warehousing with cold storage, and of temperature-controlled warehousing.
The international logistics companies also reported that modern well-configured logistics space and height was scarce, with most of the Kenya’s warehousing currently falling short of international standards and is constructed for small traders rather than large companies.
In September, Bwala Africa secured Sh10 million financing from Stanbic Bank to venture into last mile logistics.
With the Sh10 million debt financing, the firm, rolled out eight new trucks from Isuzu East Africa, four directly funded by CfC and the other four funded internally by Bwala, bringing the cost of total investment to Sh24 million.