Ten years ago, South Africa had very few self-storage companies. Today, there are three chains with more than 15 sites, each concentrated in Capetown, Durban and Johannesburg. Now developers are setting their sights on attractive markets in East Africa, including Addis Ababa in Ethiopia, Dar el Salaam in Tanzania, Harare in Zimbabwe, Kampala in Uganda, and Mombasa and Nairobi in Kenya.
East Africa is the one of the highest-growth economic regions in the world, and probably the last market without a self-storage chain. Local consulting, development and finance firm Aptus Capital hopes to change this. Company co-founder Gerardo Segura, who founded South American self-storage operation Mas Espacio, explains why Aptus is putting down roots in Kenya.
Tell us about yourself and your company.
Aptus Capital was founded in 2014 with the objective of introducing proven business concepts and helping high-growth companies enter the East African markets. Prior to moving to Nairobi, my brother, Diego Segura, and I co-founded Mas Espacio, a self-storage company in Buenos Aires, Argentina, in 2008. We have two sites and are expanding into other urban centers in the country as well as the South American region.
My career background is in international investment banking, where I held senior corporate finance positions at Lehman Brothers, HSBC Bank and Dresdner Bank in Buenos Aires and London.
What’s behind your expansion into Kenya?
Kenya, and the East African economies, exhibit the highest gross domestic product (GDP) growth rates. Its relative attractiveness for business has been growing steadily in the last few years, according to Ernst & Young's latest study of the region.
Essentially, Kenya's growing middle class and small to medium-sized enterprise (SME) sector provide the essential components for the introduction of new services and products that have been proven successful in more advanced economies. In every sector you can find opportunities, including financial services, mobile communications, renewable and conventional energy, agriculture, technology, logistics, and self-storage.
What’s the state of the self-storage industry in the region?
At present, there are no self-storage operators in Kenya. You’ll find various types of removals and security companies offering storage. You’ll even find companies that sell containers for storage. That's it.
The main factors that lead me to conclude that Nairobi [the capital] is an attractive market for self-storage are the following:
- Expanding target market: 45 percent of the population is considered to be middle-class at $1,136 GDP/capita (low), but the top 10 percent of the population (4 million), is responsible for 40 percent of the GDP and exhibits Western-style consumption patterns.
- Increasing urbanization and densification: The city's population is expected to double to 6 million by 2025.
- Construction boom: People are on the move. In 2014 alone, 2.7 million square meters of space was added in Nairobi, of which 1.5 million square meters was residential. More is forecasted for the next four years, with the introduction of mortgage financing.
- Diaspora: There are an estimated 3 million Kenyans studying and living abroad. This is a group that’s highly mobile and remains connected to their home country, as evidenced by the more than $100 million remitted on a monthly basis.
- Expat community: Nairobi is the regional gateway into East Africa. The United Nations has more than 40,000 people working at its various entities, mostly on two-year contracts. In addition, there are 350,000 registered non-governmental organizations in Kenya, most with a base in Nairobi.
- SME sector: There are approximately 7.5 million registered SMEs operating in Nairobi. The economic significance of this sector has jumped to 40 percent of GDP since 2008.