Editor’s Note: Amid the chaos that is associated with Somalia and despite the many obstacles to peace and tranquility in Somalia, Somalis are known for their business entrepreneurship, among them are individuals who have contributed greatly to the greater good of humanity. In one such case WardheerNews has had a rare opportunity to interview Hass Petroleum Group, which is a prominent business leader in East Africa and the great lakes region. Hass Petroleum Company, which began organically in a field dominated by multi-national oil giants is making great strides. Hass recently contracted China State Construction Engineering Corporation (CSEC), the world’s largest construction company to construct Hass Towers, an iconic 67-floor mixed-use development in Nairobi, which will be the tallest building in Africa. Hass Towers is expected to open its doors in 2020. WardheerNews is humbled to share this interview with Garaad Abdulkadir Ahmed Hussein, Director of operations and new business development at Hass Petroleum Group. We previously published this interview on October 31, 2011 for our well-regarded readers. Abdelkarim A. Hassan has conducted this interview for WardheerNews.
WardheerNews: Garaad Abdulkadir, could you give us a brief background about “Hass Petroleum Company”?
Garaad Abdulkadir Ahmed Hussein: Thanks Abdelkarim, Hass was founded in 1997 by two brothers, the late Abdirizak Ali Hassan and Abdinasir Ali Hassan. The HASS Petroleum Group is a regional Oil Marketing Company (OMC) with significant presence in East Africa and the Great Lakes region. From its humble beginnings as a fuel re-seller, the company is now one of the most renowned oil marketers, with fully fledged operating business units in Kenya, Tanzania, Uganda, Southern Sudan, Rwanda, Burundi and the Democratic Republic of Congo (DRC).
With its corporate headquarters in Nairobi, Kenya, the company’s core business is the importation, distribution and marketing of petroleum products in countries where we have registered business units. The company also has invested significantly in retail outlets – petrol stations – and sizable oil storage terminals. The company’s recently commissioned oil terminal in Dar es Salaam, Tanzania has an installed capacity of 34 million liters, and serves our southern corridor markets of Tanzania, and the neighboring landlocked countries of D.R.C. – Katanga Province, Rwanda, Burundi and Zambia. The northern corridor markets – Kenya, Uganda, Southern Sudan, and D.R.C. (North-East provinces) – are served by imports via Kenya’s Mombasa port.
WDN: It is often reported that investing business in Africa in general and East Africa in particular is risky, primarily due to political vulnerability, government interference, a maze of bureaucracy and corruption. What are your experiences on these concerns?
Abdulkadir: We are Africans, investing in Africa. We do not see the region’s risks as being much different than many of the emerging markets. Admittedly, there have been problems in the authoritarian single party regimes of the 80’s and 90’s when there was rampant corruption, and serious public sector mismanagement of resources. However, most of these countries have made much progress since then, notably Kenya, where a new constitution has been put in place via a referendum, and subsequent enactment of the people’s wishes. The new constitution has very checks and balances between the three arms of government – the executive, judiciary, and legislature. The region’s improved socio-economic and political stature is evidenced by the sizable foreign direct investment inflows in many sectors of the economy. China and India are notable for their enhanced FDI in East Africa and the Great Lakes region
Risk is a relative concept that is related to the returns on investment. Whereas Egypt and Tunisia were considered “safe havens” just over a year ago, look at where the Arab Spring has taken their ratings, Bahrain – the country with almost the largest density of banks in the world – is not the near risk-free country it was for a long time until the recent upheavals. In a sense, there are different risks in our region, but there is no doubting the fact that the Asian demand for Africa’s agricultural and mineral commodities is making a major breakthrough in our economies. HASS Petroleum operates in D.R.C., and Southern Sudan – relatively high “risk” by conventional standards – and we have enjoyed reasonable growth, and returns. It is also a source of some satisfaction in that the company has contributed to the development of these war-torn countries in their search for economic and political stability.
WDN: HASS expanded its business in Tanzania, the Great Lakes region, and Southern Sudan. Could you elaborate on the factors behind HASS Petroleum’s growth from a simple petroleum reseller to a regional importer and exporter of fuel and lubricants within a short time?
Abdulkadir: The Company was managed fairly prudently by founder-owners in its humble beginnings when it used to buy products in-country from the multi-national oil majors for onward re-export by trucking from the Kenya oil pipeline terminal at Kisumu to the northern lake region of Tanzania. This was also at the time when the oil sector was being liberalized in the East African countries, which enabled new local entrants venture into the oil marketing business. Prior to this change, the industry was fully controlled by the oil majors – Shell, BP, Mobil, Caltex, Agip, etc. These majors sourced products from their refineries in the Arabian Gulf, controlled the available tanker vessels for moving products across oceans, and had the distribution infrastructure in the local market countries in the form of oil terminals, and branded petrol stations run by their appointed dealers selling to consumers on prices “set” by the parent majors.
In East Africa, this supply regime is called “kuku, vifaranga, na mayai”, meaning, “chicken, chick and eggs”! This anomaly was corrected by liberalization of the oil sector, and it is one of the few such measures that affected western commercial interests, as most majors complained about the likely compromise in standards, etc. The founder-owners were also very focused in their core business of oil marketing, and towards that end engaged local professionals to run the business units. The company through progressive recruitment is now run by a team of highly qualified professional managers with extensive industry experience in their various disciplines.
Historically, the Kenya market is mature, and therefore fairly difficult for newcomers to penetrate. This explains the strategy of the company’s initial entry into the northern Tanzania market as it offered the greatest potential for growth. At the time – 1998 – by some luck and coincidence, the El Nino rains had cut off the northern lake region area of Tanzania from their traditional supply route of Dar es Salaam. Most of the bridges and railway lines were washed away by the torrential floods of the El Nino rains. The opportunity to supply from Kisumu, a Kenya pipeline terminal, also on Lake Victoria, could not have come at a better time! The rest is history, as they say. Not long after this, our first service station was opened in 2002 in Kisumu. This was quickly followed by upgrading the company through the acquisition of a petrol importation license in 2003, enabling us to source products from the international oil market, thereby eliminating the local multi-national middlemen in our supply chain. In 2004, we entered the Uganda market, rapidly followed by Rwanda, Burundi and Southern Sudan – almost as the pioneer oil marketing company. Today, Uganda is one of our biggest markets, where we own and operate 20 modern petroleum stations. In Tanzania, the newly constructed 35 million liter Hass oil terminal in Dar es Salaam was commissioned in 2010. This facility serves our southern corridor markets of Tanzania, Rwanda, Burundi, Zambia, and the Katanga Province of D.R.C.
More interviews: WDN archives
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