Kenya's growing companies are struggling to find decent storage space

Poorly ventilated spaces, leakages, power shortages, and poor structural planning are just some of the complaints the companies cited.

Out of 52 companies polled across Kenya’s manufacturing, FMCG, pharmaceuticals, logistics, import, export, retail and e-commerce sectors, 62 per cent reported that they had experienced some kind of warehousing shortage in the recent past.

"Of the 62 per cent of warehousing users that have experienced warehousing shortages, 35 per cent said they had to rent out extra space, 10 per cent were forced to deliver the goods directly to the clients’ premises rather than storing them, incurring extra costs, 12 per cent expanded their own warehousing space, while six per cent did not find any solution,” found the report.

This hurdles respondents said had increased the rate at which their stock was getting contaminated, and in cases where food and flowers were being stored, it was accelerating their deterioration.

"Kenya has experienced exponential growth in various sectors of its economy and population. Yet, this has been in contrast to the slow growth of quality warehousing to support and sustain it. This has led to a country experiencing a demand that is vastly outstripping its supply," said Kavit Shah, co-CEO of Tilisi Developments Limited.

Of the companies polled by Tilisi, half 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.

Majority of Kenya’s warehousing currently fall short of international standards and constructed to cater for small traders, rather than large companies.

Investment in warehousing remains low and this is one of the major concerns.

The 2017 Nairobi City County Permit Activity Reports from the Kenya Property Development Association (KPDA) reported 2,303 planning permits were approved by Nairobi last year however of these, only 199 were in the warehouse class, while commercial properties registered 809 applications.

Yet, Kenya is among the top five flower exporters in the world, alongside The Netherlands, Columbia, Ecuador and Ethiopia.

In 2014, Kenya earned $531m from floriculture industry, exporting 125 tonnes of flowers.

Research has shown that poor cold chain management leads to about 20 per cent of the value of flowers getting wasted, equating to a loss of $100m for retailers, in addition to considerable losses for producers.

"The reality is that in achieving adequate storage, companies are being forced to turn to Do-It-Yourself solutions in this one area of the real estate industry, in a way that is pushing them into building approvals, planning and servicing, adding new paper trails, and raising profound infrastructure challenges,” said Ranee Nanji, Co-CEO of Tilisi.


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